State Farm Independent Auto Exam Questions And
Correct Answers With Rationales.
State Farm Independent Auto Exam – Questions 1–30
Question 1
Which of the following is true about liability coverage in auto insurance?
A. Pays for bodily injury or property damage caused by the insured to others
B. Pays for damages to the insured’s own vehicle only
C. Optional only for commercial vehicles
D. Always included in renters insurance
Correct Answer: A
Rationale:
Liability coverage protects the insured against financial loss from claims or lawsuits by third parties.
Question 2
Which of the following is true about collision coverage?
A. Pays for damage to the insured’s vehicle caused by a collision, regardless of fault
B. Covers only liability
C. Only applies to commercial vehicles
D. Optional only for homeowners
Correct Answer: A
Rationale:
Collision coverage ensures repair or replacement of the insured vehicle after a collision.
Question 3
Which of the following is true about comprehensive coverage?
A. Covers damage to the insured vehicle from non-collision events like theft, fire, or natural disasters
B. Covers liability only
C. Optional only for renters
D. Always included in auto insurance
Correct Answer: A
,Rationale:
Comprehensive coverage protects against non-collision risks to the vehicle.
Question 4
Which of the following is true regarding uninsured/underinsured motorist (UM/UIM) coverage?
A. Pays for injuries or damages caused by drivers with insufficient or no insurance
B. Only covers property damage
C. Optional only for homeowners
D. Only applies to commercial liability
Correct Answer: A
Rationale:
UM/UIM coverage ensures protection when at-fault drivers cannot pay damages.
Question 5
Which of the following is true about personal injury protection (PIP)?
A. Pays medical expenses and sometimes lost wages for the insured and passengers regardless of
fault
B. Covers only vehicle repair
C. Optional for commercial vehicles
D. Only for liability claims
Correct Answer: A
Rationale:
PIP provides immediate medical and financial support after an accident.
Question 6
Which of the following is true regarding policy limits in auto insurance?
A. Defines the maximum the insurer will pay for a covered loss per occurrence
B. Deductible automatically reduces limits
C. Optional for homeowners
D. Only applies to liability
Correct Answer: A
Rationale:
Policy limits set the ceiling for financial responsibility, ensuring clarity on coverage.
Question 7
Which of the following is true about deductibles in auto insurance?
, A. Amount the insured pays out-of-pocket before coverage applies
B. The premium paid monthly
C. Maximum claim payout
D. Optional only for liability
Correct Answer: A
Rationale:
Deductibles share risk between the insured and insurer and reduce minor claim frequency.
Question 8
Which of the following is true about gap insurance?
A. Pays the difference between the vehicle’s loan balance and actual cash value if totaled
B. Covers liability only
C. Optional for homeowners
D. Only applies to commercial vehicles
Correct Answer: A
Rationale:
Gap insurance prevents the insured from owing money on a loan for a totaled vehicle.
Question 9
Which of the following is true about endorsements in auto policies?
A. Modify, add, or remove coverage without issuing a new policy
B. Cosmetic improvements only
C. Only for liability
D. Replace the policy entirely
Correct Answer: A
Rationale:
Endorsements allow customization for unique exposures, such as towing coverage or rental
reimbursement.
Question 10
Which of the following is true about rental reimbursement coverage?
A. Pays for a rental car while the insured vehicle is being repaired due to a covered loss
B. Covers liability only
C. Only applies to homeowners
D. Optional only for commercial policies
Correct Answer: A
Correct Answers With Rationales.
State Farm Independent Auto Exam – Questions 1–30
Question 1
Which of the following is true about liability coverage in auto insurance?
A. Pays for bodily injury or property damage caused by the insured to others
B. Pays for damages to the insured’s own vehicle only
C. Optional only for commercial vehicles
D. Always included in renters insurance
Correct Answer: A
Rationale:
Liability coverage protects the insured against financial loss from claims or lawsuits by third parties.
Question 2
Which of the following is true about collision coverage?
A. Pays for damage to the insured’s vehicle caused by a collision, regardless of fault
B. Covers only liability
C. Only applies to commercial vehicles
D. Optional only for homeowners
Correct Answer: A
Rationale:
Collision coverage ensures repair or replacement of the insured vehicle after a collision.
Question 3
Which of the following is true about comprehensive coverage?
A. Covers damage to the insured vehicle from non-collision events like theft, fire, or natural disasters
B. Covers liability only
C. Optional only for renters
D. Always included in auto insurance
Correct Answer: A
,Rationale:
Comprehensive coverage protects against non-collision risks to the vehicle.
Question 4
Which of the following is true regarding uninsured/underinsured motorist (UM/UIM) coverage?
A. Pays for injuries or damages caused by drivers with insufficient or no insurance
B. Only covers property damage
C. Optional only for homeowners
D. Only applies to commercial liability
Correct Answer: A
Rationale:
UM/UIM coverage ensures protection when at-fault drivers cannot pay damages.
Question 5
Which of the following is true about personal injury protection (PIP)?
A. Pays medical expenses and sometimes lost wages for the insured and passengers regardless of
fault
B. Covers only vehicle repair
C. Optional for commercial vehicles
D. Only for liability claims
Correct Answer: A
Rationale:
PIP provides immediate medical and financial support after an accident.
Question 6
Which of the following is true regarding policy limits in auto insurance?
A. Defines the maximum the insurer will pay for a covered loss per occurrence
B. Deductible automatically reduces limits
C. Optional for homeowners
D. Only applies to liability
Correct Answer: A
Rationale:
Policy limits set the ceiling for financial responsibility, ensuring clarity on coverage.
Question 7
Which of the following is true about deductibles in auto insurance?
, A. Amount the insured pays out-of-pocket before coverage applies
B. The premium paid monthly
C. Maximum claim payout
D. Optional only for liability
Correct Answer: A
Rationale:
Deductibles share risk between the insured and insurer and reduce minor claim frequency.
Question 8
Which of the following is true about gap insurance?
A. Pays the difference between the vehicle’s loan balance and actual cash value if totaled
B. Covers liability only
C. Optional for homeowners
D. Only applies to commercial vehicles
Correct Answer: A
Rationale:
Gap insurance prevents the insured from owing money on a loan for a totaled vehicle.
Question 9
Which of the following is true about endorsements in auto policies?
A. Modify, add, or remove coverage without issuing a new policy
B. Cosmetic improvements only
C. Only for liability
D. Replace the policy entirely
Correct Answer: A
Rationale:
Endorsements allow customization for unique exposures, such as towing coverage or rental
reimbursement.
Question 10
Which of the following is true about rental reimbursement coverage?
A. Pays for a rental car while the insured vehicle is being repaired due to a covered loss
B. Covers liability only
C. Only applies to homeowners
D. Optional only for commercial policies
Correct Answer: A
