State Farm Insurance License Practice Exam

What does a certificate of insurance verify?

1. That a claim has been filed successfully.

2. That a policy has been written and outlines the coverage.

3. That a premium payment has been made on time.

4. That the policyholder has no outstanding claims.

The correct answer is: That a policy has been written and outlines the coverage.

A certificate of insurance is a document that provides evidence of insurance coverage. It verifies that a specific insurance policy has been issued for an individual or entity, outlining the coverage details such as the types of insurance, limits, and effective dates. This document is often used in business transactions or contractual agreements to demonstrate that the party has the necessary coverage in place, which can satisfy risk management requirements. The other options do not accurately describe the purpose of a certificate of insurance. For instance, while it does not confirm whether a claim has been filed or resolved, it specifically focuses on the existence of coverage rather than the claims process. Similarly, it does not serve as proof of premium payments or the status of claims, as these details are not typically included in a certificate.