2026 STATE FARM INSURANCE LICENSE
CERTIFICATION EXAM QUESTIONS WITH
CORRECT ANSWERS GRADED A+
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.
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,Adverse Selection ANSWER >> the tendency of insureds with a greater than average
chance of loss to purchase insurance
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.
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.
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, 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.
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CERTIFICATION EXAM QUESTIONS WITH
CORRECT ANSWERS GRADED A+
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.
1
,Adverse Selection ANSWER >> the tendency of insureds with a greater than average
chance of loss to purchase insurance
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.
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.
2
, 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.
3
