State Farm Insurance License Exam Questions
and Verified Answers 2025 - 2026
Annual Transit Policy - ANSWER-Nonfiled commercial inland marine transportation
form that insures a property owner's incoming or outgoing shipments of goods during a
year
Appraisal Clause - ANSWER-A survey of property to determine the insurable value of
the property or the value of the loss sustained.
Appraisal Condition - ANSWER-Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss
Assignment - ANSWER-The legal transfer of one's interest in an insurance policy to
another person.
Aviation Hull Insurance - ANSWER-Provides coverage for physical damage to an
aircraft.
Abandonment Condition - ANSWER-A condition often contained in property insurance
policies that states that the insured cannot abandon damaged property to the insurer
and demand to be reimbursed for its full value.
Accident - ANSWER-A loss that occurs at a specific time and place
Actual Cash Value (ACV) - ANSWER-Today's replacement cost minus depreciation.
Depreciation from wear and tear, or obsolescence.
admitted insurer; authorized insurer - ANSWER-Company that meets a state insurance
department's standards and is allowed to do business in that state.
Adverse Selection - ANSWER-the tendency of insureds with a greater than average
chance of loss to purchase insurance
Bailee's Customers Policy - ANSWER-Nonfiled commercial inland marine form obtained
by a bailee to cover loss or damage to customers' property in the bailee's custody
without regard to liability.
Appurtenant Structures - ANSWER-Buildings of lesser value that are on the same
premises as the main building insured under a property policy; they are usually covered
by the policy.
, Assignment Condition - ANSWER-Condition in insurance policies that specifies that the
policy cannot be transferred to another unless the company consents to the transfer in
writing.
Bailee - ANSWER-A person or organization that has temporary possession of someone
else's personal property.
Basic Perils in Homeowners Policy - ANSWER-There are 14 perils. Fire, lightening, riot,
explosion, vehicles, volcanic eruption, civil commotion, smoke, hail, aircraft, windstorm,
vandalism, malicious mischief, theft.
Basic Property Policy Structure (DICEE) - ANSWER-D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance - ANSWER-Type of insurance policy that covers more than one item
of property at a single location or one or more items of property at multiple locations
Builders Risk Coverage Form - ANSWER-Commercial property coverage forms that
covers commercial, residential, or farm buildings that are under construction or during
remodeling.
Cargo Insurance - ANSWER-Type of ocean marine insurance that covers goods while
they are in transit over water.
Binder - ANSWER-Oral or written statement that provides immediate insurance
protection for a specified period; designed to provide temporary coverage until a policy
is issued or denied.
BOP - ANSWER-Package policy designed to provide broad property and liability
coverage for small businesses; eligibility requirements are stricter than the CPP.
Business Income Policy - ANSWER-Pays for loss of income that the insured sustains
due to a direct physical loss from a covered peril that forces the insured to suspend
operations until the property can be repaired, rebuilt, or replaced with reasonable
speed; available with or without extra expense coverage.
Coverage B of homeowners policy - ANSWER-Other structures; covers building and
structures on the premises other than the dwelling set apart by a clear space from the
dwelling; 10% of Coverage A.
Coverage D on a dwelling policy - ANSWER-Fair rental value is covered on a dwelling
policy.
and Verified Answers 2025 - 2026
Annual Transit Policy - ANSWER-Nonfiled commercial inland marine transportation
form that insures a property owner's incoming or outgoing shipments of goods during a
year
Appraisal Clause - ANSWER-A survey of property to determine the insurable value of
the property or the value of the loss sustained.
Appraisal Condition - ANSWER-Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss
Assignment - ANSWER-The legal transfer of one's interest in an insurance policy to
another person.
Aviation Hull Insurance - ANSWER-Provides coverage for physical damage to an
aircraft.
Abandonment Condition - ANSWER-A condition often contained in property insurance
policies that states that the insured cannot abandon damaged property to the insurer
and demand to be reimbursed for its full value.
Accident - ANSWER-A loss that occurs at a specific time and place
Actual Cash Value (ACV) - ANSWER-Today's replacement cost minus depreciation.
Depreciation from wear and tear, or obsolescence.
admitted insurer; authorized insurer - ANSWER-Company that meets a state insurance
department's standards and is allowed to do business in that state.
Adverse Selection - ANSWER-the tendency of insureds with a greater than average
chance of loss to purchase insurance
Bailee's Customers Policy - ANSWER-Nonfiled commercial inland marine form obtained
by a bailee to cover loss or damage to customers' property in the bailee's custody
without regard to liability.
Appurtenant Structures - ANSWER-Buildings of lesser value that are on the same
premises as the main building insured under a property policy; they are usually covered
by the policy.
, Assignment Condition - ANSWER-Condition in insurance policies that specifies that the
policy cannot be transferred to another unless the company consents to the transfer in
writing.
Bailee - ANSWER-A person or organization that has temporary possession of someone
else's personal property.
Basic Perils in Homeowners Policy - ANSWER-There are 14 perils. Fire, lightening, riot,
explosion, vehicles, volcanic eruption, civil commotion, smoke, hail, aircraft, windstorm,
vandalism, malicious mischief, theft.
Basic Property Policy Structure (DICEE) - ANSWER-D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance - ANSWER-Type of insurance policy that covers more than one item
of property at a single location or one or more items of property at multiple locations
Builders Risk Coverage Form - ANSWER-Commercial property coverage forms that
covers commercial, residential, or farm buildings that are under construction or during
remodeling.
Cargo Insurance - ANSWER-Type of ocean marine insurance that covers goods while
they are in transit over water.
Binder - ANSWER-Oral or written statement that provides immediate insurance
protection for a specified period; designed to provide temporary coverage until a policy
is issued or denied.
BOP - ANSWER-Package policy designed to provide broad property and liability
coverage for small businesses; eligibility requirements are stricter than the CPP.
Business Income Policy - ANSWER-Pays for loss of income that the insured sustains
due to a direct physical loss from a covered peril that forces the insured to suspend
operations until the property can be repaired, rebuilt, or replaced with reasonable
speed; available with or without extra expense coverage.
Coverage B of homeowners policy - ANSWER-Other structures; covers building and
structures on the premises other than the dwelling set apart by a clear space from the
dwelling; 10% of Coverage A.
Coverage D on a dwelling policy - ANSWER-Fair rental value is covered on a dwelling
policy.
