State Farm Insurance License Exam 2024 questions with correct answers 100%

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. Accident - Correct Answer A loss that occurs at a specific time and place Actual Cash Value (ACV) - Correct Answer Today's replacement cost minus depreciation. Depreciation from wear and tear, or obsolescence. admitted insurer; authorized insurer - Correct Answer Company that meets a state insurance department's standards and is allowed to do business in that state. Adverse Selection - Correct Answer the tendency of insureds with a greater than average chance of loss to purchase insurance 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 Appraisal Clause - Correct Answer A survey of property to determine the insurable value of the property or the value of the loss sustained. Appraisal Condition - Correct Answer Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss Assignment - Correct Answer The legal transfer of one's interest in an insurance policy to another person. Aviation Hull Insurance - Correct Answer Provides coverage for physical damage to an aircraft. 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. 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. 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. Bailee - Correct Answer A person or organization that has temporary possession of someone else's personal property. 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. Basic Property Policy Structure (DICEE) - Correct Answer D - Declarations I - Insuring agreement C - Conditions E - Exclusions E - Endorsements 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 Builders Risk Coverage Form - Correct Answer Commercial property coverage forms that covers commercial, residential, or farm buildings that are under construction or during remodeling. Cargo Insurance - Correct Answer Type of ocean marine insurance that covers goods while they are in transit over water. 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. BOP - Correct Answer Package policy designed to provide broad property and liability coverage for small businesses; eligibility requirements are stricter than the CPP. Business Income Policy - Correct 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. Causes of Loss Form - Correct Answer Separate form used with the commercial property coverage part of the commercial package policy that lists covered perils and exclusions. Several different versions provide increasingly broader coverage from basic to broad to special. Condominium Association Coverage Form - Correct Answer Commercial Property coverage form that covers the buildings in a condominium complex. Does not cover condominium owner's personal property. Coverage D on a HO Policy - Loss of Use - Correct Answer If property loss makes the residence premises uninhabitable, the additional living expenses are covered; or if a covered loss to the insured's property makes a part of the residence premises uninhabitable that is rented to others or held for rental by the insured, this coverage will pay the fair rental value. coverages excluded on dwelling policy - Correct Answer Theft, vandalism, and malicious mischief excluded on basic policy. Liability excluded on all policies. Coverage B of homeowners policy - Correct 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 - Correct Answer Fair rental value is covered on a dwelling policy. Coverage limit on money in HO - Correct Answer $200 limit on personal property with special limits Coinsurance Clause on Property - Correct Answer Insurance carried/Insurance required X amount of loss Coverage F on homeowners policy - Correct Answer Medical payments to others; pays all necessary medical expenses for up to three years after an accident. Deductible - Correct Answer The amount of expenses that must be paid out of pocket before an insurer will pay any expenses from a covered loss. Direct Loss - Correct Answer Financial loss resulting directly from a loss to property Equipment Breakdown Coverage; boiler and machinery coverage - Correct Answer Part of the commercial package policy that covers a loss due to breakdown of business equipment due to direct or indirect loss. Excess Insurance - Correct Answer When two or more policies or coverage apply to the same loss, the one that applies only after the limits of the primary coverage have been exhausted. Difference in Conditions Insurance (DIC) - Correct Answer Type of commercial property policy that covers most insurable perils but excludes basic fire and extended coverage perils. Eligible for Dwelling Policy - Correct Answer Provides coverage for the following: -Up to five boarders -Up to four apartments -Mobile home -Residence rented to others -Vacation home -Townhouse/rowhouse -Home under construction Estoppel - Correct Answer Principle that states that if one intentionally or unintentionally creates the impression that a certain fact exists, and an innocent party relies on that impression and is injured as a result, the guilty party may be legally prohibited from asserting that the fact does not exist Extra Expense - Correct Answer Commercial property coverage form that covers additional expenses incurred by the insured business to continue operations following a direct loss by a peril insured against. Fair Access to Insurance Requirements (FAIR) - Correct Answer Program established by law that makes property insurance available to insureds who might otherwise be uninsurable in the standard market. Fiduciary - Correct Answer Someone who has undertaken to act for and on behalf of another in a particular matter in circumstance which give rise to a relationship of trust and confidence Flood - Correct Answer - an overflow of inland or tidal waves - usual and rapid accumulation of runoff of surface water from any source, unless general flooding exists - mudslides caused by accumulations of water on the ground or underground - collapse of land as a result of excessive erosion due to flood Freight Insurance - Correct Answer Type of ocean marine insurance that protects the insured against the loss of shipping costs Farm Policy Coverages - Correct Answer Farm property Coverage A - dwelling Coverage B - other structures non-farming Coverage C - household personal property Coverage D - loss of use Farm Property Coverages Coverage E - scheduled farm personal property Coverage F - unscheduled farm personal property Coverage G - barns, outbuildings, other farm structures Farm Liability Coverages Coverage H - BI and PD Coverage I - personal and advertising injury Coverage J - medical payments to others Floater - Correct Answer An insurance policy, or an addition to another insurance policy, covering personal property deemed to be easily moveable. It covers property lost, damaged, or destroyed (e.g. jewelry, electronics, and furs.) Fraud - Correct Answer A deliberate misrepresentation that causes harm; an all out effort by one party to deceive and cheat the other, must have intent. Functional Replacement Cost - Correct Answer Damaged property is repaired or replaced with less expensive, but functionally equivalent, materials HO-3 Policy Perils - Correct Answer Dwelling covered for open perils and personal property covered for broad perils in this HO policy. HO-4 Policy - Correct Answer Renters policy. Personal property covered for broad perils. Indemnity - Correct Answer Restores an insured to the approximate conditions before the loss, no better or worse. Inherent Vice - Correct Answer Characteristic in property itself causing it to depreciate, spoil, break, become defective, disintegrate, or destroy itself. Implied Warranties - Correct Answer In ocean marine insurance, warranties that are not written into the policy, but have become a part of the policy by custom. Indirect Loss - Correct Answer Loss that is the result or consequence of a direct loss Inland Marine Insurance - Correct Answer Property insurance coverage designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or insured under a standard form. Includes coverage for property in transit, overland, moveable property, instruments of transportation and communication (bridges, roads, and television/radio towers), legal liability for bailees coverage, and computerized equipment. Insuring Agreement - Correct Answer Section in the policy that describes what property is covered and the perils the policy insures against. Jettison - Correct Answer A voluntary action to rid a ship of cargo to prevent further damage or peril. Liberalization Clause - Correct Answer Condition found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies or endorsements will be construed to contain the broadened coverage MCS-90 - Correct Answer Endorsement attached to the truckers coverage form to provide public liability coverage. Intervening Cause - Correct Answer An independent action that breaks the chain of causation and sets in motion a new chain of events; when this occurs, it became the new proximate cause. Legal Liability - Correct Answer Commercial property coverage form that covers the insured for liability arising out of negligent damage to the property of others while it is in the insured's care, custody, or control. Market Value - Correct Answer The amount property could be sold for at the time of of loss. May be used to determine the amount of reimbursement for a loss. Messenger - Correct Answer In a crime policy, defined as an insured , partner, or employee who has care and custody of insured property outside the premises. Morale Hazard - Correct Answer Hazard created by an individual's tendency to contribute to a loss through his own irresponsible actions or carelessness. Motor Truck Cargo Policy - Correct Answer Commercial inland marine policy that protects a carrier against its liability for damage to domestic shipments in its custody. Named (specified) Peril Policy - Correct Answer Insurance policy that insures only against perils specifically listed in the policy. National Flood Insurance Program (NFIP) - Correct Answer Program run by the federal government that makes flood insurance available to eligible communities at subsidized rate; includes coverage for both building and personal property with separate deductible for each. Motor Carrier Coverage Form - Correct Answer commercial auto coverage form that is an alternate to the truckers coverage form; it can be used to cover anyone who transports property by auto in a commercial enterprise Mysterious Disappearance - Correct Answer Loss of property due to unknown cause; theft must be ruled out. Named Insured - Correct Answer Person, business, or other entity named in the declarations to whom the policy is issued. Nonconcurrency - Correct Answer Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided. Ocean Marine - Correct Answer Insurance designed to provide broad coverage for cargo and ships in transit over sea; includes cargo insurance, hull insurance, freight insurance, and protection and indemnity insurance. Pair and Set Provision - Correct Answer Found in some property and inland marine policies stating the company will pay for loss of part of a set by either repairing or replacing the damaged article or paying the difference between the ACV of the intact set and the ACV of the articles remaining after the loss. Parts of a legal contract (CLOC/CLAC) - Correct Answer Competent parties Lawful objective Offer and acceptance Consideration Personal effects form - Correct Answer Inland marine form that covers an insured's personal belongings, such as baggage, while traveling. Open Peril; all risk; special coverage - Correct Answer Insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy Parts of a Homeowners Policy - Correct Answer Coverage A - dwelling Coverage B - other structures Coverage C - personal property/contents Coverage D - loss of use/additional living expenses Coverage E - personal liability Coverage F - medical payments to others Personal Articles Form - Correct Answer Inland marine form that provides scheduled coverage for nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections. Primary Insurance - Correct Answer When two or more coverage or policies apply to the same loss, the one that pays first, up to its limit of liability or the amount of the loss, whichever is less. Pro Rata Basis - Correct Answer Insurance company cancels the policy; unearned premium is returned to the insured. No penalty is applied to this method of cancellation. Protection and Indemnity - Correct Answer Form of ocean marine liability insurance that covers a variety of types of liability, such as a damage to cargo through negligence and damage to other property or another boat resulting from collision. Pure Risk - Correct Answer A risk in which there in no chance of gain, only loss; only risk that is insurable. Repair Cost - Correct Answer The cost to fix a damaged or destroyed item of property; may be the basis of reimbursement for a loss. Pro Rata other insurance; contribution by limits - Correct Answer Method of handling insurance when more than one coverage applies to a loss; each coverage pays a portion of the loss in proportion to the relationship its limit of liability bears to the total limit of liability under all applicable insurance Proximate Cause - Correct Answer An action that, in a natural and continuous sequence produces a loss. "If it had not been for..." Recovery Clause - Correct Answer In a property form, if the property is recovered after the insured have received payment for the loss the insured must notify the insurance company. The insured must make a decision either to keep property or the settlement amount but not both. Replacement Cost - Correct Answer The cost to replace the lost or damaged property with property of like, kind, and quality without a deduction for depreciation Representation - Correct Answer Statements on an insurance application that the applicant believes are true; not considered a matter to which the parties contract, so a policy cannot be voided on this basis. Scheduled Coverage - Correct Answer Property that is specifically listed in the declarations and covered for a specific amount; also called specific insurance. Short Rate - Correct Answer When an insured cancels a policy before the expiration date, the insurance company keeps the premium for insurance already provided (called earned premium), but also keeps an allowance (called penalty or surcharge) for expenses on the unearned premium. Subrogation - Correct Answer Prevents double recovery by assigning or substituting the right of one party (insured) to another (insurer) to collect damages from another party. Salvage - Correct Answer Insured property that is damaged by a covered peril; the insured is paid by the insurance company who may take possession of the property. Self-insurance - Correct Answer alternative to purchasing insurance where a company or individual assumes the risk of paying for its losses and sets aside the necessary funds to pay for such losses Stated-value Policy - Correct Answer Insurance contract written to insure property or a piece of property for specific amount. Fine arts, collectibles, and other hard-to-value assets may be valued this way. Terrorism Risk Insurance Act (TRIA) - Correct Answer Federal law designed to ensure that insurance coverage for terrorism losses under commercial line policies will be available and affordable; it requires insurers to pay a specified amount for terrorism losses in a given calendar year; once that limit is reached, the federal government will reimburse insurers 85% of insured losses that exceed the limit. Act of terrorism to be certified by the Secretary of the Treasury in concurrence with Secretary of State and Attorney General of the United States. Time Element Coverage - Correct Answer Coverage for the loss of business income over a period of time that results from direct physical loss. Unilateral Contract - Correct Answer A type of contract that is one-sided; an insurance policy is one-sided because only the insurer is bound to perform its part of the agreement. Vacancy - Correct Answer Absence of both people and property from the insured premises - no contents/no activity Warranty - Correct Answer A specific agreement between the insured and the insurer that becomes a part of the insurance policy; a breach of warranty can void the policy. Trip Transit Policy - Correct Answer Nonfiled commercial inland marine policy that covers a single shipment of goods. Unoccupied - Correct Answer Absence of people from the insured premises - contents with no activity. Value Reporting Endorsement - Correct Answer Endorsement used with the commercial property coverage part to provide coverage based on the actual values of property at certain locations at specific times. Watercraft Policy - Correct Answer Package policy that provides property liability and medical payments coverage for losses arising out of the ownership maintenance or use of a watercraft. Absolute Liability - Correct Answer Type of liability imposed by law on those participating in certain activities that are considered especially hazardous; a person involved in such operations may be held liable for the damages of another even though the individual was not negligent Advertising Injury - Correct Answer Coverage in the CGL that covers losses caused by oral or written material that slanders or libels, violates privacy rights or infringes on copyrights, titles or slogans. Assigned Risk Plan; Automobile Insurance Plan - Correct Answer A state-sponsored plan that provides automobile insurance to those who are uninsurable under standard auto insurance policies. Bid Bond - Correct Answer Type of surety bond that if a contractor's price is accepted, the contractor will enter into a contract and provide the required performance bond. Additional Coverage; Coverage Extensions; Extended Coverages; Other Coverages - Correct Answer Supplement insurance coverage that apply only in certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable Aggregate Limit - Correct Answer Type of policy limit found in liability policies that limits coverage to a specified total amount for all losses occurring within the policy period Assumption Risk - Correct Answer Defense against liability based on the common law principle that a person who knowingly exposes themselves to danger or injury takes on the risk of loss and cannot hold another person responsible for the loss. Bodily Injury (BI) - Correct Answer Defined in most policies to include injury sickness disease and death resulting from any of these at any time. Burglary - Correct Answer The taking of property by a person unlawfully entering or leaving the premises as evidenced by visible signs of forced entry or exit Claims-made Form - Correct Answer CGL coverage form that pays off bodily injury (BI) or property damage (PD) losses for which a claim was first made against the insured during the policy period Farm Insurance License Exam State 2024 questions with correct answers 100% Comparative Negligence - Correct Answer Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to her own loss. Damages are reduced to the extent of the injured party's negligence. Blanket Position Bond - Correct Answer Fidelity bond that covers losses arising from the dishonesty of one or more employees acting separately or in collusion; provides a single limit of liability applicable to each employee involved in a loss. Certificate of Insurance - Correct Answer Written form that verifies a policy has been written. Provides a summary of the coverage provided under the policy. Collision - Correct Answer Type of physical damage coverage that covers loss that occurs when the insured auto strikes another object or vehicle; may also include upset or overturn of the insured auto. Compensatory Damages - Correct Answer Damages that reimburse an injured party for losses that were actually sustained.