State Farm Insurance License Exam Updated Actual Questions and Correct Answers ()

State Farm Insurance License Exam Updated Actual Questions
and Correct Answers (2026-2027)

Question 1.
Abandonment Condition

Correct 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.


Question 2.
Accident

Correct Answer: A loss that occurs at a specific time and place


Question 3.
Actual Cash Value (ACV)

Correct Answer: Today's replacement cost minus depreciation. Depreciation
from wear and tear, or obsolescence.


Question 4.
admitted insurer; authorized insurer

Correct Answer: Company that meets a state insurance department's standards
and is allowed to do business in that state.


Question 5.
Adverse Selection

Correct Answer: the tendency of insureds with a greater than average chance of
loss to purchase insurance


Question 6.
Annual Transit Policy

Correct Answer: Nonfiled commercial inland marine transportation form that
insures a property owner's incoming or outgoing shipments of goods during a
year

,Question 7.
Appraisal Clause

Correct Answer: A survey of property to determine the insurable value of the
property or the value of the loss sustained.


Question 8.
Appraisal Condition

Correct Answer: Policy condition that outlines a procedure for when the insured
and insurer disagree on the amount of a loss


Question 9.
Assignment

Correct Answer: The legal transfer of one's interest in an insurance policy to
another person.


Question 10.
Aviation Hull Insurance

Correct Answer: Provides coverage for physical damage to an aircraft.


Question 11.
Bailee's Customers Policy

Correct 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.


Question 12.
Appurtenant Structures

Correct 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.


Question 13.
Assignment Condition

Correct Answer: Condition in insurance policies that specifies that the policy
cannot be transferred to another unless the company consents to the transfer in
writing.

, Question 14.
Bailee

Correct Answer: A person or organization that has temporary possession of
someone else's personal property.


Question 15.
Basic Perils in Homeowners Policy

Correct Answer: There are 14 perils. Fire, lightening, riot, explosion, vehicles,
volcanic eruption, civil commotion, smoke, hail, aircraft, windstorm, vandalism,
malicious mischief, theft.


Question 16.
Basic Property Policy Structure (DICEE)

Correct Answer: D - Declarations I - Insuring agreement C - Conditions E -
Exclusions E - Endorsements


Question 17.
Blanket Insurance

Correct 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


Question 18.
Builders Risk Coverage Form

Correct Answer: Commercial property coverage forms that covers commercial,
residential, or farm buildings that are under construction or during remodeling.


Question 19.
Cargo Insurance

Correct Answer: Type of ocean marine insurance that covers goods while they
are in transit over water.


Question 20.
Binder

Correct 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.