STATE FARM FIRE INDEPENDENT POLICY FINAL
PAPER 2026 QUESTIONS WITH ANSWERS
100% CORRECT
◉ mark incurred 8000$ damage to his car in an accident. he
received 8000$ from his insurance company and 4000$ from the
other driver. by receiving a profit from the loss, Mark is in violation
of.. Answer: principle of indemnity
◉ the transfer of risk from one party to another is called Answer:
insurance
◉ the principle of indemnity is designed to prevent Answer: keeps
the insured from making a profit from an insured loss.
◉ the fee paid by the insured in exchange for an insurance policy is
called a Answer: premium
◉ insurance Answer: transfers risk of financial losses from one
party to another
◉ insured Answer: individual or organization that pays premiums in
exchange for protection
,◉ insurer Answer: company group or government agency offering
financial protection
◉ insurance policy Answer: a legally binding contract in which the
insurer agrees to take on specified risks in exchange for the
insured's premiums
◉ principle of indemnity Answer: restoration to previous financial
condition; no more, no less.
◉ what are the four qualifications of a contract Answer: agreement,
consideration, competent parties, and legal purpose. must be 18
years of age
◉ what is not a requirement for a legally binding contract Answer:
notarization
◉ when an insurer issues an insurance policy, the actual item,
person or organization that is being insured is called the Answer:
the risk
◉ what is a reserve, in insurance terms Answer: a pool of collected
premiums that the insurer sets aside to pay claims
,◉ aleatory Answer: of or pertaining to accidental causes; of luck or
chance; unpredictable
◉ unilateral Answer: one-sided
◉ utmost good faith Answer: both parties must act honestly and
openly in order for the contract to be valid
◉ adhesion Answer: one party sets the terms of the contract; the
other may simply agree or not agree
◉ unilateral Answer: only the insurer makes a promise to act; the
insured can void contract at any time
◉ personal Answer: the insured person is protected from losses, not
the covered property.
◉ conditional Answer: the insurer must only honor the contract if
the insured meets certain conditions.
◉ aleatory Answer: the exectution of the contract depends on an
unknown future event.
, ◉ an insurance applicat revealing his convictions for drunk driving
to an insurer is an example of Answer: utmost good faith.
◉ tom purchases a new car from his local car dealer. he also decides
to get insurance coverage that will pay to repair the car if he were to
get into an accident. this is because tom wants to protect Answer: his
own financial interest in the car.
◉ tom decides to purchase an insurance policy to protect his home.
according to the definition of a personal contract, which of the
following most accurately describes what tomes insurance actually
protects Answer: toms financial interest in thee home
◉ what is not true about an aleatory contract Answer: in an aleatory
contract, the amount of benefit to the insured and insurer is equal.
◉ what does D.I.C.E stand for? Answer: declarations page (and
definitions), insuring agreement, conditions and exclusions (and
endorsements)
◉ 'we will provide the insurance described in this policy in return
for the premium and compliance with all applicable provisions of
this policy.' in which section of the insurance policy might this
statement be found? Answer: insuring agreement
PAPER 2026 QUESTIONS WITH ANSWERS
100% CORRECT
◉ mark incurred 8000$ damage to his car in an accident. he
received 8000$ from his insurance company and 4000$ from the
other driver. by receiving a profit from the loss, Mark is in violation
of.. Answer: principle of indemnity
◉ the transfer of risk from one party to another is called Answer:
insurance
◉ the principle of indemnity is designed to prevent Answer: keeps
the insured from making a profit from an insured loss.
◉ the fee paid by the insured in exchange for an insurance policy is
called a Answer: premium
◉ insurance Answer: transfers risk of financial losses from one
party to another
◉ insured Answer: individual or organization that pays premiums in
exchange for protection
,◉ insurer Answer: company group or government agency offering
financial protection
◉ insurance policy Answer: a legally binding contract in which the
insurer agrees to take on specified risks in exchange for the
insured's premiums
◉ principle of indemnity Answer: restoration to previous financial
condition; no more, no less.
◉ what are the four qualifications of a contract Answer: agreement,
consideration, competent parties, and legal purpose. must be 18
years of age
◉ what is not a requirement for a legally binding contract Answer:
notarization
◉ when an insurer issues an insurance policy, the actual item,
person or organization that is being insured is called the Answer:
the risk
◉ what is a reserve, in insurance terms Answer: a pool of collected
premiums that the insurer sets aside to pay claims
,◉ aleatory Answer: of or pertaining to accidental causes; of luck or
chance; unpredictable
◉ unilateral Answer: one-sided
◉ utmost good faith Answer: both parties must act honestly and
openly in order for the contract to be valid
◉ adhesion Answer: one party sets the terms of the contract; the
other may simply agree or not agree
◉ unilateral Answer: only the insurer makes a promise to act; the
insured can void contract at any time
◉ personal Answer: the insured person is protected from losses, not
the covered property.
◉ conditional Answer: the insurer must only honor the contract if
the insured meets certain conditions.
◉ aleatory Answer: the exectution of the contract depends on an
unknown future event.
, ◉ an insurance applicat revealing his convictions for drunk driving
to an insurer is an example of Answer: utmost good faith.
◉ tom purchases a new car from his local car dealer. he also decides
to get insurance coverage that will pay to repair the car if he were to
get into an accident. this is because tom wants to protect Answer: his
own financial interest in the car.
◉ tom decides to purchase an insurance policy to protect his home.
according to the definition of a personal contract, which of the
following most accurately describes what tomes insurance actually
protects Answer: toms financial interest in thee home
◉ what is not true about an aleatory contract Answer: in an aleatory
contract, the amount of benefit to the insured and insurer is equal.
◉ what does D.I.C.E stand for? Answer: declarations page (and
definitions), insuring agreement, conditions and exclusions (and
endorsements)
◉ 'we will provide the insurance described in this policy in return
for the premium and compliance with all applicable provisions of
this policy.' in which section of the insurance policy might this
statement be found? Answer: insuring agreement
