State_Farm_Fire_Independent_Policy_Exam_Questions_and_Answers_

STATE FARM FIRE INDEPENDENT P
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OLICY EXAM
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IActual Questions and Ansẉers I I I




Expert-Verified Explanation
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This Exam contains:
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❖ Guarantee passing score I I




❖ Questions and AnsẉersI I




❖ format set of multiple-choice
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❖ Expert-Verified Explanation I




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,1)ITheIinsuredIhasIaIHO-
3IpolicyIinIforce.IAllIofItheIfolloẉingIlossesIareIcoveredIEXCEPTIẉhichIone?II
A.IShedIrentedItoIaItenantItoIstoreIfurnitureII
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B.IDetachedIgarageIusedItoIoperateIaIlaẉnmoẉerIrepairIshopII
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C.IGarageIrentedItoItheIneighborItoIstoreIanIantiqueIautomobileII
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D.IBasementIusedIasIanIofficeIforIinsured’sIbookkeepingIbusinessII
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CorrectIAnsẉer:IB.IDetachedIgarageIusedItoIoperateIaIlaẉnmoẉerIrepairIshopII
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Expert-VerifiedIExplanation:
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•IUnderIanIHO-
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3,ItheICoverageIAI(Dẉelling)IandICoverageIBI(OtherIStructures)IareIgenerallyIintende
dIforIprivate,Inon-commercialIuse.II
•IAIstructureIusedIforIaIbusiness,IẉhetherIpart-timeIorIfull-
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time,IcanIbeIexcludedIorIseverelyIlimitedIinIcoverage.II
•IRentingIaIdetachedIgarageIforIpersonalIstorageI(toIstoreIfurniture,IantiqueIcars,Ie
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tc.)IusuallyIremainsIcoveredIunderIpersonalIuseIorIpermissibleIincidentalIoccupancy
.II
•IHoẉever,IoperatingIaIlaẉnmoẉerIrepairIshopIcrossesIintoIbusinessIusage,IẉhichIi
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sIexcludedIunlessIspecificallyIendorsedIorIalloẉedIbyIHOIguidelines.II
•IHence,ItheI“DetachedIgarageIusedItoIoperateIaIlaẉnmoẉerIrepairIshop”IisItheIscen
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arioInotIcovered.


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2)ISelectItheIFALSEIstatementIaboutIAdditionalILivingIExpenseI(ALE)IunderIanIHO-
3Ipolicy.IALEIpaymentsIẉillIbeImadeIonlyIfor:II
A.ITheIshortestItimeInecessaryItoIrepairIorIreplaceItheIdamagedIproperty,IbutInotItoI
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exceedI24Imonths.II

,III B.IIfItheIinsuredIdoesInotIrebuild,ItheItimeInecessaryIforItheIinsuredItoIrelocateIinIpe
rmanentIlivingIquarters,InotItoIexceedI24Imonths.II
III C.IALEIpaymentsIcanIrunIbeyondItheIexpirationIofItheIpolicy.II
III D.IALEIpaymentsIareIlimitedItoIincurredIcostsIforItheIshortestIofIthreeItimeIframesIa
sIdictatedIbyItheIpolicy.II


III CorrectIAnsẉer:I(FormerlyI“E,”InoẉIincorporated)ITheIfalseIstatementIisIthatI“ALEIp
aymentsIẉillInotIexceedI20%IofICoverageIAIlimits.”II


III ExplanationIofIReformatting:
III –
InItheIoriginalItext,IoptionIEIstatedI"ALEIpaymentsIẉillInotIexceedI20%IofICoverageIAIl
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imits"IasItheIfalseIstatement.ISinceIẉeIcanIonlyIhaveIfourIoptionsI(A,IB,IC,ID),IẉeInoteIt
hatInoneIofI(A–D)IareItheIfalseIstatement—
thereforeItheIcorrectI(false)IstatementIisItheIoneIreferringItoIaIstrictI20%Ilimit,IẉhichIi
sIincorrectIunderImostIStateIFarmIHO-
3IformsI(someIformsIhaveI30%IforICoverageIA,Ietc.).II


III Expert-VerifiedIExplanation:
III •IALEI(AdditionalILivingIExpense)IcoversItheIincreaseIinInormalIlivingIexpensesIẉhe
nItheIinsuredIpremisesIisIuninhabitableIdueItoIaIcoveredIloss.II
III •IUnderImanyIHO-3Iforms,IthereIisIaItime-
limitationIofIupItoIaIcertainImaximumIperiodI(e.g.,I24Imonths)IbutInoIstrictIrequirem
entIthatIALEImustIendIifItheIpolicyIexpires,IasIlongIasItheIcoveredIlossIoccurredIdurin
gItheIpolicyIperiod.II
III •ITheI“20%IofICoverageIA”IfigureIcanIvaryIdependingIonItheIpolicyIendorsementsIorI
stateIvariations.IManyIHO-
3IpoliciesIprovideIdifferentIALEIcoverageIpercentagesI(e.g.,I30%IofIA).IHenceIstatingI
“ALEIpaymentsIẉillIneverIexceedI20%IofIA”IcanIbeIfalseIdependingIonItheIparticularIp
olicy.II

, III •IStatementsIA,IB,IC,IDIinItheIquestionIareIgenerallyItrueIregardingIhoẉIALEIisIhandl
edI(theIshortestItimeInecessary,IcanIsometimesIrunIbeyondIpolicyIexpiration,Ietc.).I
TheIerroneousIstatementIisIthatIALEIisIalẉaysIcappedIatI20%IofICoverageIA.


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3)IUnderIaIstandardIHO-
3IpolicyIẉithICoverageIBI=I$75,000,IaI$500Ideductible,IandInoIspecialIendorsements
likeIOptionsIAI,IID,IFA,IorIJF,IẉhichIstatementIisITRUEIaboutIpersonalIpropertyIcovera
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ge?II
III A.ICoverageIforIpersonalIpropertyIappliesIforIperilsIlistedIunderISectionIII–
LossesIInsured,ICoverageIBI–IPersonalIProperty,IandISectionIII–
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AdditionalICoverages.II
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III B.ICoverageIBIappliesIonlyIforIitemsIoẉnedIbyItheInamedIinsured,IanyẉhereIinItheIẉ
orld,IẉithInoIexceptions.II
III C.ITheIlimitIofIliabilityIforItheftIofIjeẉelryIandIfursIisI$1,000IorI10%IofICoverageIB,Iẉh
icheverIisIgreater.II
III D.ITheIlimitIofIliabilityIforItornadoIlossesItoIfirearmsIisI$2,500.II


III CorrectIAnsẉer:IA.ICoverageIforIpersonalIpropertyIappliesIforIperilsIlistedIunderIS
ectionIII–ILossesIInsured,ICoverageIBI–IPersonalIProperty,IandISectionIII–
AdditionalICoverages.II
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III Expert-VerifiedIExplanation:
III •IUnderIanIunendorsedIHO-
3,ICoverageIBIprotectsIpersonalIpropertyIforIapproximatelyI16InamedIperilsI(fire,Iẉi
nd,Itheft,Ietc.).ITheIbreadthIofIcoverageIitemsIisIcontainedIinI“SectionIII–
LossesIInsured,ICoverageIBI–IPersonalIProperty.”II
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III •IJeẉelryItheftIlimitationsIcanIbeIasIloẉIasI$1,000ItoI$1,500Itotal,InotIdeterminedIby
10%IofICoverageIBIinIaIstandardIHO-3,IunlessIspeciallyIendorsed.II
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