State Farm Auto Insurance Practice Test

What must an agent do when replacing a vehicle on a policy?

1. Change the driver's license details

2. Update the year, make, and model of the new vehicle

3. Remove all previous coverage

4. Change the address of the policyholder

The correct answer is: Update the year, make, and model of the new vehicle

When replacing a vehicle on a policy, the agent must update the year, make, and model of the new vehicle. This is critical because the insurance premium can fluctuate based on the specifics of the new car. Different vehicles come with varying levels of risk and value, which can significantly affect the coverage needed and the overall cost of the insurance policy. Moreover, ensuring that the information accurately reflects the current vehicle helps to maintain compliance with policy terms and ensures that the policyholder is adequately covered in case of an incident involving the new vehicle. While there may be other relevant changes to consider, such as updating the driver's license or adjusting coverage levels, the most essential and immediate action required is accurately documenting the new vehicle's details.