State Farm Test With Complete
Solutions
Gaming CORRECT ANSWERS Gaming is a manipulation the solicitation and
submission of applications to obtain compensation and or agent incentives. This type of
activity is not in the best interest of the company of its policyholders and is strictly
prohibited.
Tie in sales CORRECT ANSWERS A practice requiring a customer to purchase one
product or service in order to qualify for a different product or service.
Rebating CORRECT ANSWERS Rebating is offering a prospect or customer a special
incentive to purchase or continue a policy. This practice is illegal in most states and is
against State Farm policy even in states where it is allowed.
Unapproved vendor CORRECT ANSWERS Any vendor that does not have an
agreement in place with state farm, or services received from an approved vendor that
are outside the scope of the vendors agreement with SF.
Unauthorized Vendor CORRECT ANSWERS A specific Vendor that State Farm has
identified as not authorized to be used by SF or Sf agents due to the potential risks
posed to SF by engagement with the vendor. Agents should not use an unauthorized
vendor. If an agent uses an unauthorized vendor his could impact the relationship.
Demonstrations CORRECT ANSWERS shows guaranteed premiums for a term policy.
In addition it will include guaranteed cash values.
Illustrations CORRECT ANSWERS used as a tool to educate the customer concerning
the features and provisions of policy options.
Submission of an application for an insurance policy is best described as? CORRECT
ANSWERS offer
Information used in underwriting a policy for an insured, is made available to in insured
because of which of these? CORRECT ANSWERS Financial Services Modernization
Act
What must be done to renew your Insurance License? CORRECT ANSWERS 12 Hours
of Continuing Education within 2 Years
Which of the following is not a characteristic of a Mutual Insurance Company?
CORRECT ANSWERS A policyholder is a voting member on the Board of Directors
,Property insurance policies that apply coverage only to perils that are stated in the
policy, are considered to be written on? CORRECT ANSWERS A named peril basis
A physical hazard describes which of the following? CORRECT ANSWERS The storage
of flammables near a furnace
When a producer collects a premium on an insurance contract and deposits that in a
trust account for the insurer. This makes the producer a? CORRECT ANSWERS Broker
In Property and Casualty Insurance, when a form is attached to further define certain
policy provisions or conditions, or adds additional coverage, it is known as? CORRECT
ANSWERS An endorsement
Alpha Insurance Company does business in all fifty states, however its home office is
located in Rhode Island. To their business in California, Alpha Insurance Company is?
CORRECT ANSWERS Foreign
Agent Z is trying to sell a client a policy. Afraid of losing his sale he offers to give the
client 10% of his commissions if the client will buy the policy. That agent would be guilty
of which unfair trade practice? CORRECT ANSWERS Rebating
When does the Texas Property and Casualty Insurance Guarantee Association pay
covered claims? CORRECT ANSWERS When an Admitted Insurer becomes insolvent
Before issuing a nonresident license, the Department must find that the applicant?
CORRECT ANSWERS Has not committed an act for which a license may be denie
All of the following are hazards for insurance underwriting, EXCEPT? CORRECT
ANSWERS Incidental
A person can purchase an insurance policy to cover losses from all the following,
EXCEPT? CORRECT ANSWERS An operation of drug smuggling
Which risk management option, best describes insurance? CORRECT ANSWERS
Transfer risk
Which of the following acts does not constitute Transacting Insurance? CORRECT
ANSWERS Making phone calls to set up appointments
A binder would be which of these? CORRECT ANSWERS Temporary proof of
insurance
The standardized policy structure for insurance policies does not include which of the
following? CORRECT ANSWERS Duties
,The Department of Insurance requires all of these for Licensing, EXCEPT? CORRECT
ANSWERS High School Diploma or GED
The commissioner of Insurance can do which of these? CORRECT ANSWERS Set
continuing education requirements in Texas
The Commissioner of insurance is responsible for all of the following, EXCEPT?
CORRECT ANSWERS Make insurance laws when appropriate
The section of a property policy that specifies the obligations and duties of the insured
and the insurer is the? CORRECT ANSWERS Conditions
Which of the following is NOT found in a property insurance binder? CORRECT
ANSWERS Amount of premium
The Texas Property and Casualty Insurance Guaranty Association pays covered claims
against which of the following? CORRECT ANSWERS Insolvent insurers
A claimant told their insurer they were sure that a certain piece of property was in the
building that burned. Made a? CORRECT ANSWERS Warranty
M hit F with his personal auto causing damages. F filed on his own policy and his
insurer paid the damages. F's insurer will go after M and M's insurer for the paid
damages. This is called? CORRECT ANSWERS Subrogation
If an Agent makes incomplete comparisons of policies, that Agent would be guilty of?
CORRECT ANSWERS Unfair Comparisons
Which License is required for a person who supervises others for an Insurance
Company? CORRECT ANSWERS Managing General Agent
___________ insurance is used to provide coverage when insurance is not available
from an admitted carrier. CORRECT ANSWERS Surplus
The named insured is found in what section of a property policy? CORRECT
ANSWERS Declarations
A ___________ covers an employee in a position of private trust and protects an
employer against loss caused by the employee's dishonesty. CORRECT ANSWERS
Fidelity bond
A Builder's Risk policy automatically ends ___________ days after construction is
complete. CORRECT ANSWERS 90
, T is the managing lawyer in his firm and wants professional liability coverage for his firm
that would cover which of the following? CORRECT ANSWERS A client sues the lawyer
for purposely losing his case
Inland Marine Policies are generally written on what basis? CORRECT ANSWERS
Open Peril
Errors and omissions insurance will NOT pay for which of the following claims?
CORRECT ANSWERS Attorney inadvertently breaks a client's leg
If an insurance producer negligently fails to renew an insured's policy and a claim
occurs, the wrongful action by the producer should be covered by which of the
following? CORRECT ANSWERS It would be covered under the producer's Errors and
Omissions Liability Policy
In the commercial package policy, the Earthquake and Volcanic Eruption Endorsement
covers an earthquake and all shocks or eruptions that occur within what period?
CORRECT ANSWERS 168 hours
The Broad Causes of Loss Form in the commercial package policy adds which of these
perils? CORRECT ANSWERS Weight of ice, snow, or sleet
The Extra Expense form pays the necessary expenses incurred by the insured during
which of the following? CORRECT ANSWERS Period of Restoration
Who is allowed under the Common Policy Conditions of a Commercial Package Policy
to make changes with insurer consent? CORRECT ANSWERS The first named insured
The basic cause of loss form in the commercial property policy covers which of these?
CORRECT ANSWERS Vandalism
Which of these is not added under the Broad Form of the Commercial Package Policy?
CORRECT ANSWERS Sinkhole
In a Commercial Package Policy, which of these supplemental coverages is not subject
to a deductible? CORRECT ANSWERS Fire Department service charge
Who is responsible for the premium payments in a commercial property policy?
CORRECT ANSWERS The first named Insured
Which of the following coverage forms pays for loss of income during the period a
business is shut down due to a covered property loss in the Commercial Package
policy? CORRECT ANSWERS Business Income
Solutions
Gaming CORRECT ANSWERS Gaming is a manipulation the solicitation and
submission of applications to obtain compensation and or agent incentives. This type of
activity is not in the best interest of the company of its policyholders and is strictly
prohibited.
Tie in sales CORRECT ANSWERS A practice requiring a customer to purchase one
product or service in order to qualify for a different product or service.
Rebating CORRECT ANSWERS Rebating is offering a prospect or customer a special
incentive to purchase or continue a policy. This practice is illegal in most states and is
against State Farm policy even in states where it is allowed.
Unapproved vendor CORRECT ANSWERS Any vendor that does not have an
agreement in place with state farm, or services received from an approved vendor that
are outside the scope of the vendors agreement with SF.
Unauthorized Vendor CORRECT ANSWERS A specific Vendor that State Farm has
identified as not authorized to be used by SF or Sf agents due to the potential risks
posed to SF by engagement with the vendor. Agents should not use an unauthorized
vendor. If an agent uses an unauthorized vendor his could impact the relationship.
Demonstrations CORRECT ANSWERS shows guaranteed premiums for a term policy.
In addition it will include guaranteed cash values.
Illustrations CORRECT ANSWERS used as a tool to educate the customer concerning
the features and provisions of policy options.
Submission of an application for an insurance policy is best described as? CORRECT
ANSWERS offer
Information used in underwriting a policy for an insured, is made available to in insured
because of which of these? CORRECT ANSWERS Financial Services Modernization
Act
What must be done to renew your Insurance License? CORRECT ANSWERS 12 Hours
of Continuing Education within 2 Years
Which of the following is not a characteristic of a Mutual Insurance Company?
CORRECT ANSWERS A policyholder is a voting member on the Board of Directors
,Property insurance policies that apply coverage only to perils that are stated in the
policy, are considered to be written on? CORRECT ANSWERS A named peril basis
A physical hazard describes which of the following? CORRECT ANSWERS The storage
of flammables near a furnace
When a producer collects a premium on an insurance contract and deposits that in a
trust account for the insurer. This makes the producer a? CORRECT ANSWERS Broker
In Property and Casualty Insurance, when a form is attached to further define certain
policy provisions or conditions, or adds additional coverage, it is known as? CORRECT
ANSWERS An endorsement
Alpha Insurance Company does business in all fifty states, however its home office is
located in Rhode Island. To their business in California, Alpha Insurance Company is?
CORRECT ANSWERS Foreign
Agent Z is trying to sell a client a policy. Afraid of losing his sale he offers to give the
client 10% of his commissions if the client will buy the policy. That agent would be guilty
of which unfair trade practice? CORRECT ANSWERS Rebating
When does the Texas Property and Casualty Insurance Guarantee Association pay
covered claims? CORRECT ANSWERS When an Admitted Insurer becomes insolvent
Before issuing a nonresident license, the Department must find that the applicant?
CORRECT ANSWERS Has not committed an act for which a license may be denie
All of the following are hazards for insurance underwriting, EXCEPT? CORRECT
ANSWERS Incidental
A person can purchase an insurance policy to cover losses from all the following,
EXCEPT? CORRECT ANSWERS An operation of drug smuggling
Which risk management option, best describes insurance? CORRECT ANSWERS
Transfer risk
Which of the following acts does not constitute Transacting Insurance? CORRECT
ANSWERS Making phone calls to set up appointments
A binder would be which of these? CORRECT ANSWERS Temporary proof of
insurance
The standardized policy structure for insurance policies does not include which of the
following? CORRECT ANSWERS Duties
,The Department of Insurance requires all of these for Licensing, EXCEPT? CORRECT
ANSWERS High School Diploma or GED
The commissioner of Insurance can do which of these? CORRECT ANSWERS Set
continuing education requirements in Texas
The Commissioner of insurance is responsible for all of the following, EXCEPT?
CORRECT ANSWERS Make insurance laws when appropriate
The section of a property policy that specifies the obligations and duties of the insured
and the insurer is the? CORRECT ANSWERS Conditions
Which of the following is NOT found in a property insurance binder? CORRECT
ANSWERS Amount of premium
The Texas Property and Casualty Insurance Guaranty Association pays covered claims
against which of the following? CORRECT ANSWERS Insolvent insurers
A claimant told their insurer they were sure that a certain piece of property was in the
building that burned. Made a? CORRECT ANSWERS Warranty
M hit F with his personal auto causing damages. F filed on his own policy and his
insurer paid the damages. F's insurer will go after M and M's insurer for the paid
damages. This is called? CORRECT ANSWERS Subrogation
If an Agent makes incomplete comparisons of policies, that Agent would be guilty of?
CORRECT ANSWERS Unfair Comparisons
Which License is required for a person who supervises others for an Insurance
Company? CORRECT ANSWERS Managing General Agent
___________ insurance is used to provide coverage when insurance is not available
from an admitted carrier. CORRECT ANSWERS Surplus
The named insured is found in what section of a property policy? CORRECT
ANSWERS Declarations
A ___________ covers an employee in a position of private trust and protects an
employer against loss caused by the employee's dishonesty. CORRECT ANSWERS
Fidelity bond
A Builder's Risk policy automatically ends ___________ days after construction is
complete. CORRECT ANSWERS 90
, T is the managing lawyer in his firm and wants professional liability coverage for his firm
that would cover which of the following? CORRECT ANSWERS A client sues the lawyer
for purposely losing his case
Inland Marine Policies are generally written on what basis? CORRECT ANSWERS
Open Peril
Errors and omissions insurance will NOT pay for which of the following claims?
CORRECT ANSWERS Attorney inadvertently breaks a client's leg
If an insurance producer negligently fails to renew an insured's policy and a claim
occurs, the wrongful action by the producer should be covered by which of the
following? CORRECT ANSWERS It would be covered under the producer's Errors and
Omissions Liability Policy
In the commercial package policy, the Earthquake and Volcanic Eruption Endorsement
covers an earthquake and all shocks or eruptions that occur within what period?
CORRECT ANSWERS 168 hours
The Broad Causes of Loss Form in the commercial package policy adds which of these
perils? CORRECT ANSWERS Weight of ice, snow, or sleet
The Extra Expense form pays the necessary expenses incurred by the insured during
which of the following? CORRECT ANSWERS Period of Restoration
Who is allowed under the Common Policy Conditions of a Commercial Package Policy
to make changes with insurer consent? CORRECT ANSWERS The first named insured
The basic cause of loss form in the commercial property policy covers which of these?
CORRECT ANSWERS Vandalism
Which of these is not added under the Broad Form of the Commercial Package Policy?
CORRECT ANSWERS Sinkhole
In a Commercial Package Policy, which of these supplemental coverages is not subject
to a deductible? CORRECT ANSWERS Fire Department service charge
Who is responsible for the premium payments in a commercial property policy?
CORRECT ANSWERS The first named Insured
Which of the following coverage forms pays for loss of income during the period a
business is shut down due to a covered property loss in the Commercial Package
policy? CORRECT ANSWERS Business Income
