STATE FARM FIRE INDEPENDENT POLICY FINAL EXAM
PAPER 2025/2026 QUESTIONS WITH ANSWERS GRADED
A+
✔✔Select the choice below that most accurately describes treatment of a deductible
under the HO-3 policy.
Select the single best answer:
A. The deductible may be partially absorbed.
B. The deductible may be completely absorbed.
C. The deductible is not applied to Fire Department Service Charges.
D. The deductible may be absorbed due to covered loss in excess of a coverage limit or
a special limit.
E. All the above are true. - ✔✔E. All the above are true.
✔✔The insured (HO-3 policy in force) is building a barn on property where he plans to
build a new home and move in the future. The property is not listed on the Declaration
Page. During the construction process he stores construction materials and supplies for
the barn in his detached garage at the insured premises. These building materials and
supplies are destroyed. They are not covered under Coverage A.
True or False - ✔✔True
✔✔Chuck Bailey has a HO-3 policy with Loss Settlement Provisions of A1 & B1. After
Chuck has made repairs to Coverage A items and replaced Coverage B items, claim
payment (subject to any limit of liability) will be based upon which of the following
amounts?
Select the single best answer:
A. Salvage value
B. Replacement cost
C. Market value
D. \Original purchase price
E. Actual cash value - ✔✔Replacement cost
✔✔In the HO-3 policy, temporary repairs:
Select the single best answer:
A. Are available for reasonable and necessary costs incurred, caused by a loss insured.
B. Provide an additional amount of insurance for temporary repairs to covered property.
C. Are to protect the property from further immediate damage or loss.
D. A, B and C are correct.
,E. A and C are correct - ✔✔E. A and C are correct
✔✔Option ID under the HO-3 applies to:
Select the single best answer:
A. The dwelling and other building structures
B. All covered structures
C. The dwelling
D. The dwelling and all other structures
E. Both A and D - ✔✔The dwelling and other building structures
✔✔Which of the following statements can apply to Debris Removal Coverage in the
HO-3 policy?
Select the single best answer:
A. Pay up to $500 in the aggregate for each loss to cover the reasonable expenses
incurred in the removal of tree debris from the residence premises when the tree has
caused a loss insured to Coverage A property.
B. We will pay the reasonable expenses incurred in the removal of debris of covered
property damaged by a loss insured. This expense is included in the limit applying to the
damaged property.
C. When the amount payable for the property damage plus the debris removal exceeds
the limit for the damaged property, an additional 5% of that limit is available for debris
removal expense.
D. All of the above
E. None of the above - ✔✔all of the above
✔✔Assume an HO-3 is in force. The insured's home is damaged by a severe windstorm
and the family is forced to move into a motel for 2 weeks. The insured provided the
following receipts. The water, electricity and telephone remained in service following the
loss.
Amount Paid Amount Normally Spent
Mortgage Payment $985 $985
Hotel Bills $1,075 $0
Water $25 $35
Electricity $125 $95
Telephone $10 $38
Cable TV $0 $29
Meals in Restaurants $505 $150
Food prepared at home $0 $210
Automobile $35 $20
Laundry $60 $10
Dry cleaning $15 $15
, How much do you owe for ALE. Do not consider a deductible.
Select the single best answer:
A. $ 253
B. $ 320
C. $1,520
D. $1,305
E. $1,248 - ✔✔1248
✔✔Bill and Mary Johnson have a HO-3 policy on their home with Coverage A limits of
$400,000 and Coverage B limits of $300,000 with a $1,000 deductible. Very high
straight-line winds struck their home, blowing down six large trees on the residence
premises. One tree fell on the split-rail fence of the rear yard, damaging 24 LF of the
fence. Another fell on a portable picnic table, destroying it. The remaining four trees
were simply blown down in the yard.
Bill and Mary submitted the following receipts for payment:
Remove tree from fence in order to repair fence (two cuts with chainsaw) $ 50
Repair 24 LF of split-rail fence ($15 per foot) $360
Remove tree debris (tree that fell on fence) from residence premises $300
Remove tree from picnic table (three cuts with chainsaw) $75
Replace picnic table (Lowe's - treated pine - assembled) $120
Remove tree debris (tree that fell on table) from residence premises $410
Remove rem - ✔✔0
✔✔The insured has a storage shed on a foundation in his backyard. It is damaged by a
windstorm and has not been repaired or replaced. Which one of the following
statements is correct under the HO-3?
Select the single best answer:
A. The shed is not a Coverage A item
B. The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit
C. The shed is a Coverage B item, damaged by a named Peril
D. Both B and C
E. None of the above - ✔✔The shed is a Coverage A-Dwelling Extension, subject to the
dwelling extension limit
✔✔Sue Kojack is the named insured. Other residents in the household are:
Sue's 21 year old son, Louis
Tammy, Louis's wife
Matt, a 16 year foster child
Mildred, a 38 year old friend who lost her job
Who would qualify as insureds under a HO-3 policy?
PAPER 2025/2026 QUESTIONS WITH ANSWERS GRADED
A+
✔✔Select the choice below that most accurately describes treatment of a deductible
under the HO-3 policy.
Select the single best answer:
A. The deductible may be partially absorbed.
B. The deductible may be completely absorbed.
C. The deductible is not applied to Fire Department Service Charges.
D. The deductible may be absorbed due to covered loss in excess of a coverage limit or
a special limit.
E. All the above are true. - ✔✔E. All the above are true.
✔✔The insured (HO-3 policy in force) is building a barn on property where he plans to
build a new home and move in the future. The property is not listed on the Declaration
Page. During the construction process he stores construction materials and supplies for
the barn in his detached garage at the insured premises. These building materials and
supplies are destroyed. They are not covered under Coverage A.
True or False - ✔✔True
✔✔Chuck Bailey has a HO-3 policy with Loss Settlement Provisions of A1 & B1. After
Chuck has made repairs to Coverage A items and replaced Coverage B items, claim
payment (subject to any limit of liability) will be based upon which of the following
amounts?
Select the single best answer:
A. Salvage value
B. Replacement cost
C. Market value
D. \Original purchase price
E. Actual cash value - ✔✔Replacement cost
✔✔In the HO-3 policy, temporary repairs:
Select the single best answer:
A. Are available for reasonable and necessary costs incurred, caused by a loss insured.
B. Provide an additional amount of insurance for temporary repairs to covered property.
C. Are to protect the property from further immediate damage or loss.
D. A, B and C are correct.
,E. A and C are correct - ✔✔E. A and C are correct
✔✔Option ID under the HO-3 applies to:
Select the single best answer:
A. The dwelling and other building structures
B. All covered structures
C. The dwelling
D. The dwelling and all other structures
E. Both A and D - ✔✔The dwelling and other building structures
✔✔Which of the following statements can apply to Debris Removal Coverage in the
HO-3 policy?
Select the single best answer:
A. Pay up to $500 in the aggregate for each loss to cover the reasonable expenses
incurred in the removal of tree debris from the residence premises when the tree has
caused a loss insured to Coverage A property.
B. We will pay the reasonable expenses incurred in the removal of debris of covered
property damaged by a loss insured. This expense is included in the limit applying to the
damaged property.
C. When the amount payable for the property damage plus the debris removal exceeds
the limit for the damaged property, an additional 5% of that limit is available for debris
removal expense.
D. All of the above
E. None of the above - ✔✔all of the above
✔✔Assume an HO-3 is in force. The insured's home is damaged by a severe windstorm
and the family is forced to move into a motel for 2 weeks. The insured provided the
following receipts. The water, electricity and telephone remained in service following the
loss.
Amount Paid Amount Normally Spent
Mortgage Payment $985 $985
Hotel Bills $1,075 $0
Water $25 $35
Electricity $125 $95
Telephone $10 $38
Cable TV $0 $29
Meals in Restaurants $505 $150
Food prepared at home $0 $210
Automobile $35 $20
Laundry $60 $10
Dry cleaning $15 $15
, How much do you owe for ALE. Do not consider a deductible.
Select the single best answer:
A. $ 253
B. $ 320
C. $1,520
D. $1,305
E. $1,248 - ✔✔1248
✔✔Bill and Mary Johnson have a HO-3 policy on their home with Coverage A limits of
$400,000 and Coverage B limits of $300,000 with a $1,000 deductible. Very high
straight-line winds struck their home, blowing down six large trees on the residence
premises. One tree fell on the split-rail fence of the rear yard, damaging 24 LF of the
fence. Another fell on a portable picnic table, destroying it. The remaining four trees
were simply blown down in the yard.
Bill and Mary submitted the following receipts for payment:
Remove tree from fence in order to repair fence (two cuts with chainsaw) $ 50
Repair 24 LF of split-rail fence ($15 per foot) $360
Remove tree debris (tree that fell on fence) from residence premises $300
Remove tree from picnic table (three cuts with chainsaw) $75
Replace picnic table (Lowe's - treated pine - assembled) $120
Remove tree debris (tree that fell on table) from residence premises $410
Remove rem - ✔✔0
✔✔The insured has a storage shed on a foundation in his backyard. It is damaged by a
windstorm and has not been repaired or replaced. Which one of the following
statements is correct under the HO-3?
Select the single best answer:
A. The shed is not a Coverage A item
B. The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit
C. The shed is a Coverage B item, damaged by a named Peril
D. Both B and C
E. None of the above - ✔✔The shed is a Coverage A-Dwelling Extension, subject to the
dwelling extension limit
✔✔Sue Kojack is the named insured. Other residents in the household are:
Sue's 21 year old son, Louis
Tammy, Louis's wife
Matt, a 16 year foster child
Mildred, a 38 year old friend who lost her job
Who would qualify as insureds under a HO-3 policy?
