State Farm Vocabulary Exam
2023-2024 Questions & Answers (Solved)
- 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.
- Absolute Liability
Answer: Type of liability imposed by law on those participating
in certain activities that are considered specially hazardous; a person involved in such operations may be held liable for the damages of another event though the individual was not negligent.
- Accident
Answer: A loss that occurs at a specific time and place
- Accounts Receivable Insurance
Answer: Filed commercial inland marine form that insures against
loss the insured suffers because of an inability to collect from customers when when accounts receivable records are damaged or destroyed.
- Actual Cash Value (ACV)
Answer: The cost to replace an item of property at the time of
loss, less an allowance for depreciation; often used to determine the amount of reimbursement for a loss. 1 / 2
- Additional Coverages
Answer: Supplemental insurance coverages that apply only in
certain circumstances, have reduced or separate limits of liability, or require the insured to meet certain requirements before they are applicable; also called coverage extensions, other coverages, and extended coverages.
- Additional Insured
Answer: An individual or company, in addition to the insured, who
is listed in the declarations; an example is a mortgage company that has an insurable interest in the property insured.
- Additional Insured-Lessor Endorsement
Answer: Commercial auto endorsement used to make leased
vehicles considered owned vehicles for coverage purposes.
- Adhesion Contract
Answer: A contract where one party has more power than the other
party in drafting the contract; an insurance policy is an adhesion contract- the insurer is the one with more power.
- Adverse Selection
Answer: The tendency of insureds with a greater than average
chance of loss to purchase insurance.
- Agency
Answer: Principles governing the authority of any agent that
represents a principal.
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