STATE FARM PROPERTY AND
CASUALTY EXAM QUESTIONS &
ANSWERS
duties of the insured - correct answer ✔✔1. pay the premium
2. take all reasonable means to save and protect the property from loss
3. give the insurance company immediate notice of loss
4. give the insurance company proof of loss within 60 days of the loss
5. separate the damaged property from the undamaged property and allow the insurance
company to inspect the undamaged property as well as the insured's books and records
6. the insured cannot sue the insurance company unless all of these requirements have been
satisfied and then he/she must sue within 12 months of the loss
duties of the insurance company - correct answer ✔✔1. must indemnify the insured within 60
days of proof of loss
2. may either pay the appraised ACV of the loss or repair or replace the damaged property
3. if the insured and insurance company disagree as the ACV of the loss and the damaged
property cannot be repaired or replaced, they each can select an appraiser. if the appraisers
disagree, they select an umpire appraiser who will make the final determination
the subrogation clause - correct answer ✔✔states that the insurance company can require the
insured to assign (transfer) to it any legal rights which the insured has against third parties to
the insurance company at the time of loss
assignment clause - correct answer ✔✔1. transfer of a policy to another person
2. assignment clause of property insurance policy says no assignment of the policy is valid
unless signed by an officer of the insurance company
, the other insurance clause - correct answer ✔✔states that the insurance company can either
prohibit other insurance or can limit the amount of other insurance by adding an endorsement
to the policy
pro rata liability clause - correct answer ✔✔1. applies when there are concurrent policies.
concurrent insurance is when 2 or more policies cover the same property. it is sometimes done
when insuring high value property. the policies should be identical in all respects except face
amounts
2. says that no insurance company shall be responsible for any more than its pro rata share of
the loss
mortgagee rights - correct answer ✔✔-if a mortgagee (lender) is named on the declarations
page, it acquires 3 rights in the policy:
1. 10 days notice of cancellation
2. to have the loss paid to the mortgagee
3. to provide proof of loss should the insured fail to
salvage - correct answer ✔✔-salvage is when an insurance company pays a claim, and then the
insurance company has the right to assume ownership of the damaged property to repair it and
sell it to recover part or all of the loss
-salvage value is the amount for which the insurance is able to sell the damaged property and
the amount of loss the insurance company is able to recover
abandonment clause - correct answer ✔✔provides that no property can be abandoned to the
insurance company without its consent
vacancy and unoccupancy clause - correct answer ✔✔1. usually found only in policies covering
commercial (business) property
CASUALTY EXAM QUESTIONS &
ANSWERS
duties of the insured - correct answer ✔✔1. pay the premium
2. take all reasonable means to save and protect the property from loss
3. give the insurance company immediate notice of loss
4. give the insurance company proof of loss within 60 days of the loss
5. separate the damaged property from the undamaged property and allow the insurance
company to inspect the undamaged property as well as the insured's books and records
6. the insured cannot sue the insurance company unless all of these requirements have been
satisfied and then he/she must sue within 12 months of the loss
duties of the insurance company - correct answer ✔✔1. must indemnify the insured within 60
days of proof of loss
2. may either pay the appraised ACV of the loss or repair or replace the damaged property
3. if the insured and insurance company disagree as the ACV of the loss and the damaged
property cannot be repaired or replaced, they each can select an appraiser. if the appraisers
disagree, they select an umpire appraiser who will make the final determination
the subrogation clause - correct answer ✔✔states that the insurance company can require the
insured to assign (transfer) to it any legal rights which the insured has against third parties to
the insurance company at the time of loss
assignment clause - correct answer ✔✔1. transfer of a policy to another person
2. assignment clause of property insurance policy says no assignment of the policy is valid
unless signed by an officer of the insurance company
, the other insurance clause - correct answer ✔✔states that the insurance company can either
prohibit other insurance or can limit the amount of other insurance by adding an endorsement
to the policy
pro rata liability clause - correct answer ✔✔1. applies when there are concurrent policies.
concurrent insurance is when 2 or more policies cover the same property. it is sometimes done
when insuring high value property. the policies should be identical in all respects except face
amounts
2. says that no insurance company shall be responsible for any more than its pro rata share of
the loss
mortgagee rights - correct answer ✔✔-if a mortgagee (lender) is named on the declarations
page, it acquires 3 rights in the policy:
1. 10 days notice of cancellation
2. to have the loss paid to the mortgagee
3. to provide proof of loss should the insured fail to
salvage - correct answer ✔✔-salvage is when an insurance company pays a claim, and then the
insurance company has the right to assume ownership of the damaged property to repair it and
sell it to recover part or all of the loss
-salvage value is the amount for which the insurance is able to sell the damaged property and
the amount of loss the insurance company is able to recover
abandonment clause - correct answer ✔✔provides that no property can be abandoned to the
insurance company without its consent
vacancy and unoccupancy clause - correct answer ✔✔1. usually found only in policies covering
commercial (business) property
