STATE FARM INSURANCE LICENSE EXAM

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STATE FARM INSURANCE LICENSE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Pro Rata Basis

Answer:

Insurance company cancels the policy; unearned premium is returned to the insured. No penalty is applied to this method of cancellation.

Question 2: 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.

Question 3: Open Peril; all risk; special coverage

Answer:

Insurance policy that protects the insured from losses caused by any peril that is not specifically excluded by the policy

Question 4: Eligible for Dwelling Policy

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

Question 5: Repair Cost

Answer:

The cost to fix a damaged or destroyed item of property; may be the basis of reimbursement for a loss.

Question 6: Indirect Loss

Answer:

Loss that is the result or consequence of a direct loss

Question 7: Representation

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.

Question 8: Estoppel

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

Question 9: MCS-90

Answer:

Endorsement attached to the truckers coverage form to provide public liability coverage.

Question 10: Basic Perils in Homeowners Policy

Answer:

There are 14 perils. Fire, lightening, riot, explosion, vehicles, volcanic eruption, civil commotion, smoke, hail, aircraft, windstorm, vandalism, malicious mischief, theft.

Question 11: Personal effects form

Answer:

Inland marine form that covers an insured's personal belongings, such as baggage, while traveling.

Question 12: Parts of a Homeowners Policy

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

Question 13: Motor Truck Cargo Policy

Answer:

Commercial inland marine policy that protects a carrier against its liability for damage to domestic shipments in its custody.

Question 14: Farm Policy Coverages

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

Question 15: Subrogation

Answer:

Prevents double recovery by assigning or substituting the right of one party (insured) to another (insurer) to collect damages from another party.

Question 16: HO-4 Policy

Answer:

Renters policy. Personal property covered for broad perils.

Question 17: Market Value

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.

Question 18: Scheduled Coverage

Answer:

Property that is specifically listed in the declarations and covered for a specific amount; also called specific insurance.

Question 19: Recovery Clause

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.

Question 20: Adverse Selection

Answer:

the tendency of insureds with a greater than average chance of loss to purchase insurance

Question 21: Fraud

Answer:

A deliberate misrepresentation that causes harm; an all out effort by one party to deceive and cheat the other, must have intent.

Question 22: Coverage B of homeowners policy

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.

Question 23: Salvage

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.