STATE FARM P&C LICENSING EXAM QUESTIONS AND ANSWERS

STATE FARM P&C LICENSING EXAM
QUESTIONS AND ANSWERS

RISK - Answers -UNCERTAINTY OF LOSS

INSURANCE - Answers -TRANSFER OF RISK FROM THE INSURED TO THE
INSURER

PURE RISK - Answers -NO CHANCE OF GAIN; INSURABLE

SPECULATIVE RISK - Answers -A CHANCE OF LOSS OR GAIN; NOT INSURABLE

HAZARD - Answers -SOMETHING THAT INCREASES THE RISK

PRINCIPLE OF INDEMNITY - Answers -STATES THAT THE PURPOSE OF THE
POLICY IS TO RESTORE THE INSURED FINANCIALLY TO WHERE THEY WERE
PRIOR TO THE LOSS

INSURABLE INTEREST - Answers -MUST EXIST ON A CAUALTY POLICY AT TIME
OF LOSS IN ORDER FOR THE POLICY TO PROVIDE COVERAGE

LAW OF LARGE NUMBERS - Answers -USED TO PREDICT THE LIKELIHOOD OF
LOSS

ACTUAL CASH VALUE (ACV) - Answers -REPLACEMENT COST MINUS
DEPRECIATION

NEGLIGENCE - Answers -TORT, OR A CIVIL WRONG;
GROUNDS FOR A LAWSUIT;
THE FAILURE TO ACT AS A REASONABLE PERSON WOULD IN THE SAME
CIRCUMSTANCES

OCCURENCE - Answers -HAPPENS OVER A PERIOD OF TIME

BINDER - Answers -MAY BE ORAL OR WRITTEN;
PROVIDES COVERAGE UNTIL THE POLICY IS ISSUED;
INCLUDES ALL COVERAGES PROVIDED BY THE POLICY

WARRANTY - Answers -LITERAL TRUTH

REPRESENTATION - Answers -SUBSTANTIAL TRUTH;