State Farm Auto Insurance Practice Test

What does the change code in a policy indicate?

1. It reflects the total cost of the insurance

2. It tracks the number of policy changes made

3. It lists the names of all insured individuals

4. It identifies the policy expiration date

The correct answer is: It tracks the number of policy changes made

The change code in a policy is used to track the number of changes that have been made to the policy. This includes any adjustments to coverage, changes in vehicle or driver information, or updates to the policyholder's details. By keeping a record of these changes, insurance providers can assess the policy's history, understand how often adjustments are made, and maintain accurate records for underwriting and billing purposes. The other options focus on different aspects of a policy but do not relate directly to the function of a change code. For instance, the total cost of insurance, names of insured individuals, and the policy expiration date serve different functions within the overall policy structure and are not what a change code is designed to reflect. By identifying the change code as a record of modifications, it underscores its role in monitoring policy dynamics.