STATE FARM INSURANCE LICENSE EXAM
QUESTIONS AND ANSWERS 2025
Abandonment,Condition,-
,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,-,ANSWER,A,loss,that,occurs,at,a,specific,time,and,place
Actual,Cash,Value,(ACV),-
,ANSWER,Today's,replacement,cost,minus,depreciation.,Depreciation,from,wear,and,tear,,or,obs
olescence.
admitted,insurer;,authorized,insurer,-
,ANSWER,Company,that,meets,a,state,insurance,department's,standards,and,is,allowed,to,do,bu
siness,in,that,state.
Adverse,Selection,-
,ANSWER,the,tendency,of,insureds,with,a,greater,than,average,chance,of,loss,to,purchase,insura
nce
Annual,Transit,Policy,-
,ANSWER,Nonfiled,commercial,inland,marine,transportation,form,that,insures,a,property,owner'
s,incoming,or,outgoing,shipments,of,goods,during,a,year
Appraisal,Clause,-
,ANSWER,A,survey,of,property,to,determine,the,insurable,value,of,the,property,or,the,value,of,t
he,loss,sustained.
Appraisal,Condition,-
,ANSWER,Policy,condition,that,outlines,a,procedure,for,when,the,insured,and,insurer,disagree,o
n,the,amount,of,a,loss
,Assignment,-
,ANSWER,The,legal,transfer,of,one's,interest,in,an,insurance,policy,to,another,person.
Aviation,Hull,Insurance,-,ANSWER,Provides,coverage,for,physical,damage,to,an,aircraft.
Bailee's,Customers,Policy,-
,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,-
,ANSWER,Buildings,of,lesser,value,that,are,on,the,same,premises,as,the,main,building,insured,un
der,a,property,policy;,they,are,usually,covered,by,the,policy.
Assignment,Condition,-
,ANSWER,Condition,in,insurance,policies,that,specifies,that,the,policy,cannot,be,transferred,to,a
nother,unless,the,company,consents,to,the,transfer,in,writing.
Bailee,-
,ANSWER,A,person,or,organization,that,has,temporary,possession,of,someone,else's,personal,pr
operty.
Basic,Perils,in,Homeowners,Policy,-
,ANSWER,There,are,14,perils.,Fire,,lightening,,riot,,explosion,,vehicles,,volcanic,eruption,,civil,co
mmotion,,smoke,,hail,,aircraft,,windstorm,,vandalism,,malicious,mischief,,theft.
Basic,Property,Policy,Structure,(DICEE),-,ANSWER,D,-,Declarations
I,-,Insuring,agreement
C,-,Conditions
E,-,Exclusions
E,-,Endorsements
, Blanket,Insurance,-
,ANSWER,Type,of,insurance,policy,that,covers,more,than,one,item,of,property,at,a,single,locatio
n,or,one,or,more,items,of,property,at,multiple,locations
Builders,Risk,Coverage,Form,-
,ANSWER,Commercial,property,coverage,forms,that,covers,commercial,,residential,,or,farm,buil
dings,that,are,under,construction,or,during,remodeling.
Cargo,Insurance,-
,ANSWER,Type,of,ocean,marine,insurance,that,covers,goods,while,they,are,in,transit,over,water.
Binder,-
,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,-
,ANSWER,Package,policy,designed,to,provide,broad,property,and,liability,coverage,for,small,busi
nesses;,eligibility,requirements,are,stricter,than,the,CPP.
Business,Income,Policy,-
,ANSWER,Pays,for,loss,of,income,that,the,insured,sustains,due,to,a,direct,physical,loss,from,a,cov
ered,peril,that,forces,the,insured,to,suspend,operations,until,the,property,can,be,repaired,,rebui
lt,,or,replaced,with,reasonable,speed;,available,with,or,without,extra,expense,coverage.
Causes,of,Loss,Form,-
,ANSWER,Separate,form,used,with,the,commercial,property,coverage,part,of,the,commercial,pa
ckage,policy,that,lists,covered,perils,and,exclusions.,Several,different,versions,provide,increasingl
y,broader,coverage,from,basic,to,broad,to,special.
Condominium,Association,Coverage,Form,-
,ANSWER,Commercial,Property,coverage,form,that,covers,the,buildings,in,a,condominium,compl
ex.,Does,not,cover,condominium,owner's,personal,property.
