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State Farm Insurance License Exam
Typology: Exams
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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 obsolescence.
admitted insurer; authorized insurer - ANSWER - Company that meets a state insurance department's standards and is allowed to do business in that state. Adverse Selection - ANSWER - the tendency of insureds with a greater than average chance of loss to purchase insurance 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 the loss sustained. Appraisal Condition - ANSWER - Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss
transferred to another unless the company consents to the transfer in writing. Bailee - ANSWER - A person or organization that has temporary possession of someone else's personal property. 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. 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 location 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 buildings 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.
Coverage D on a HO Policy - Loss of Use - ANSWER - If property loss makes the residence premises uninhabitable, the additional living expenses are covered; or if a covered loss to the insured's property makes a part of the residence premises uninhabitable that is rented to others or held for rental by the insured, this coverage will pay the fair rental value. coverages excluded on dwelling policy - ANSWER - Theft, vandalism, and malicious mischief excluded on basic policy. Liability excluded on all policies. 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. Coverage D on a dwelling policy - ANSWER - Fair rental value is covered on a dwelling policy.
Coverage limit on money in HO - ANSWER - $200 limit on personal property with special limits Coinsurance Clause on Property - ANSWER - Insurance carried/Insurance required X amount of loss Coverage F on homeowners policy - ANSWER - Medical payments to others; pays all necessary medical expenses for up to three years after an accident. Deductible - ANSWER - The amount of expenses that must be paid out of pocket before an insurer will pay any expenses from a covered loss. Direct Loss - ANSWER - Financial loss resulting directly from a loss to property
insurance available to insureds who might otherwise be uninsurable in the standard market. Fiduciary - ANSWER - Someone who has undertaken to act for and on behalf of another in a particular matter in circumstance which give rise to a relationship of trust and confidence Flood - ANSWER -- an overflow of inland or tidal waves
Fraud - ANSWER - A deliberate misrepresentation that causes harm; an all out effort by one party to deceive and cheat the other, must have intent. Functional Replacement Cost - ANSWER - Damaged property is repaired or replaced with less expensive, but functionally equivalent, materials HO-3 Policy Perils - ANSWER - Dwelling covered for open perils and personal property covered for broad perils in this HO policy. HO-4 Policy - ANSWER - Renters policy. Personal property covered for broad perils. Indemnity - ANSWER - Restores an insured to the approximate conditions before the loss, no better or worse.
Inherent Vice - ANSWER - Characteristic in property itself causing it to depreciate, spoil, break, become defective, disintegrate, or destroy itself. Implied Warranties - ANSWER - In ocean marine insurance, warranties that are not written into the policy, but have become a part of the policy by custom. Indirect Loss - ANSWER - Loss that is the result or consequence of a direct loss Inland Marine Insurance - ANSWER - Property insurance coverage designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or insured under a standard form. Includes coverage for property in transit, overland, moveable property, instruments of transportation and communication (bridges, roads, and television/radio towers), legal liability for bailees coverage, and computerized equipment.
chain of events; when this occurs, it became the new proximate cause. Legal Liability - ANSWER - Commercial property coverage form that covers the insured for liability arising out of negligent damage to the property of others while it is in the insured's care, custody, or control. 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. Messenger - ANSWER - In a crime policy, defined as an insured , partner, or employee who has care and custody of insured property outside the premises. Morale Hazard - ANSWER - Hazard created by an individual's tendency to contribute to a loss through his own irresponsible actions or carelessness.
Motor Truck Cargo Policy - ANSWER - Commercial inland marine policy that protects a carrier against its liability for damage to domestic shipments in its custody. Named (specified) Peril Policy - ANSWER - Insurance policy that insures only against perils specifically listed in the policy. National Flood Insurance Program (NFIP) - ANSWER - Program run by the federal government that makes flood insurance available to eligible communities at subsidized rate; includes coverage for both building and personal property with separate deductible for each. Motor Carrier Coverage Form - ANSWER - commercial auto coverage form that is an alternate to the truckers coverage form; it can be used to cover anyone who transports property by auto in a commercial enterprise
replacing the damaged article or paying the difference between the ACV of the intact set and the ACV of the articles remaining after the loss. Parts of a legal contract (CLOC/CLAC) - ANSWER - Competent parties Lawful objective Offer and acceptance Consideration Personal effects form - ANSWER - Inland marine form that covers an insured's personal belongings, such as baggage, while traveling. 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
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 Personal Articles Form - ANSWER - Inland marine form that provides scheduled coverage for nine optional classes of personal property: jewelry, furs, cameras, musical instruments, silverware, golf equipment, fine arts, stamp collections, and coin collections. Primary Insurance - ANSWER - When two or more coverage or policies apply to the same loss, the one that pays first, up to its limit of liability or the amount of the loss, whichever is less.
