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State Farm Exam with correct Answers
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State Farm Exam with correct Answers
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State Farm Exam with correct AnswersAbandonment - Answers -The abdication of insured property into the hands of another,
or into the possession of no one in particular.
Absolute Liability - Answers -A type of liability that occurs due to extremely dangerous
operations, such as the use of explosives or working at extreme heights.
Accident - Answers -An unplanned, unforeseen event which occurs suddenly and at a
specific place.
Actual Cash Value (ACV) - Answers -The required amount to pay damages or for
property loss, which is calculated based on the property's current replacement value
minus depreciation.
Additional Coverage - Answers -A provision in an insurance policy that allows for more
coverage for specific loss expense without increase in premium.
Additional Insureds - Answers -Individuals or business that are not named as insured on
the declaration page, but are protected by the policy, usually in regard to a specific
interest.
Adhesion - Answers -A contract offered on a "take-it-or-leave-it" basis by an insurer, in
which the insured's only option is to accept or reject the contract. Any ambiguities in the
contract will be settled in favor of the insured.
Admitted Insurer - Answers -An insurance company authorized and licensed to transact
business in a particular state.
Adverse Selection - Answers -The tendency of risks with higher probability of loss to
purchase and maintain insurance more often than the risks who present lower
probability.
Agent - Answers -An individual who is licensed to sell, negotiate, or effect insurance
contracts on behalf of an insurer.
Aggregate Limit - Answers -The maximum limit of coverage available under a liability
policy during a policy year regardless of the number of claims that may be made or the
number of accidents that may occur.
, Agreed Value - Answers -A property policy with a provision agreed upon by the insurer
and insured as to the amount of insurance that represents a fair valuation for the
property at the time the insurance is written.
Aleatory - Answers -A contract in which the participating parties agree to exchange
unequal amounts. Insurance contracts are aleatory in that the amount the insured will
pay in premiums is unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer - Answers -An insurance company that is incorporated outside the United
States.
Apparent Authority - Answers -The appearance or the assumption of authority based on
the actions, words, or deeds of the principal or because of circumstances the principal
created.
Appraisal - Answers -An assessment of property to determine either the correct amount
of insurance to be written or the amount of loss to be paid.
Arbitration - Answers -Method of claim settlement used when the insured and insurer
cannot agree upon the amount of the loss.
Assignment - Answers -The transfer of a legal right or interest in an insurance policy. In
property and casualty insurance, assignments of policies are usually valid only with the
prior written consent of the insurer.
Authorized Insurer - Answers -An insurance company that has qualified and received a
Certificate of Authority from the Department of Insurance to transact insurance in the
state.
Auto - Answers -A land motor vehicle, trailer, or semi-trailer designed for use on public
roads, including attached machinery or equipment; auto does not include mobile
equipment.
Avoidance - Answers -A method of dealing with risk by deliberately keeping away from it
(e.g. if a person wanted to avoid the risk of being killed in an airplane crash, he/she
might choose never to fly in a plane).
Bailee - Answers -A person or entity that has possession of personal property entrusted
to him/her by the owner. For example, a television repair person that has possession of
a customer's television would be a bailee.
Beneficiary - Answers -The person who receives the proceeds from the insurance
policy.
Binder - Answers -A temporary contract that puts an insurance policy into force before
the premium has been paid.
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