State Farm Insurance License Practice Exam

A stated-value policy is designed to insure what type of property?

1. High-value electronics

2. Fine arts and collectibles

3. Common household items

4. Commercial property

The correct answer is: Fine arts and collectibles

A stated-value policy is specifically tailored for insuring items that have a unique or subjective value, such as fine arts and collectibles. These types of items often do not have a readily available market value, and their worth can greatly fluctuate based on factors like rarity, desirability, and provenance. The stated-value policy allows the insured to declare a specific amount that they believe represents the value of the item at the time the policy is issued, which simplifies the process of determining how much they would receive in the event of a loss. High-value electronics might not fit this policy because they typically have more standardized values based on market trends. Common household items are generally insured under standard homeowners policies that provide replacement cost coverage rather than a stated value. Commercial property is usually insured with different types of policies that focus on business equipment and property valuation methods, rather than the subjective assessment often applied to fine arts and collectibles.