State Farm

STATE FARM EXAM 2024 WITH 100% CORRECT ANSWERS Abandonment -correct answer The abdication of insured property into the hands of another, or into the possession of no one in particular. Absolute Liability -correct answer A type of liability that occurs due to extremely dangerous operations, such as the use of explosives or working at extreme heights. Accident -correct answer An unplanned, unforeseen event which occurs suddenly and at a specific place. Actual Cash Value (ACV) -correct answer The required amount to pay damages or for property loss, which is calculated based on the property's current replacement value minus depreciation. Additional Coverage -correct answer A provision in an insurance policy that allows for more coverage for specific loss expense without increase in premium. Additional Insureds -correct answer Individuals or business that are not named as insured on the declaration page, but are protected by the policy, usually in regard to a specific interest. Adhesion -correct answer A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured. Admitted Insurer -correct answer An insurance company authorized and licensed to transact business in a particular state. Adverse Selection -correct answer The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability. Agent -correct answer An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer. Aggregate Limit -correct answer The maximum limit of coverage available under a liability policy during a policy year regardless of the number of claims that may be made or the number of accidents that may occur. Agreed Value -correct answer A property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. Aleatory -correct answer A contract in which the participating parties agree to exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss. Alien Insurer -correct answer An insurance company that is incorporated outside the United States. Apparent Authority -correct answer The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Appraisal -correct answer An assessment of property to determine either the correct amount of insurance to be written or the amount of loss to be paid. Arbitration -correct answer Method of claim settlement used when the insured and insurer cannot agree upon the amount of the loss. Assignment -correct answer The transfer of a legal right or interest in an insurance policy. In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer. Authorized Insurer -correct answer An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state. Auto -correct answer A land motor vehicle, trailer, or semi-trailer designed for use on public roads, including attached machinery or equipment; auto does not include mobile equipment. Avoidance -correct answer A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she might choose never to fly in a plane). Bailee -correct answer A person or entity that has possession of personal property entrusted to him/her by the owner. For example, a television repair person that has possession of a customer's television would be a bailee. Beneficiary -correct answer The person who receives the proceeds from the insurance policy. Binder -correct answer A temporary contract that puts an insurance policy into force before the premium has been paid. Blanket Bond -correct answer A type of bond that covers losses caused by dishonest employees. Blanket Insurance -correct answer A single property insurance policy that provides coverage for multiple classes of property at one location, or provides coverage for one or more classes of property at multiple locations. Bodily Injury Liability -correct answer Legal liability arising from death or physical trauma to a person as a result of a negligent or purposeful act and omissions by an insured. Boycott -correct answer An unfair trade practice in which one person refuses to do business with another until he or she agrees to certain conditions. Builder's Risk Coverage Form -correct answer A commercial property form that covers buildings under construction.