AINS 101 | Newest Questions and Answers |
Updated 2026 | Complete Review
• A fire destroys the kitchen in Rob and Laurie's home. Which insurance policy would
provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy -✓✓ b. Homeowners Policy (Property)
• Which insurance policy could protect Rob and Laurie's sandwich shop against losses
from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto -✓✓ b. Commercial Crime
• The best indication of an insurer's overall financial health is the -✓✓ policyholders
surplus (It shows how much cash an insurer has on hand for emergencies, unexpected
losses, and expansion of business)
• Combined ratio = -✓✓ loss ratio + expense ratio
• expense ratio = -✓✓ incurred underwriting expenses / written premiums
• loss ratio = -✓✓ incurred losses (including loss adjustment expenses) / earned
premiums
• Marco has been approved for a car insurance policy with a low premium because on
his application he gave an address in a low-crime area. However, the actual address at
which he lives and parks his car is in a high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines -✓✓ b. Adverse selection
• Emily is the underwriter for Marco's account. What is one way she could detect and
minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or losses
,d. Alter the underwriting guidelines -✓✓ c. Monitor the book of business for unusual
patterns of policy growth or losses
• These underwriters evaluate individual insurance applications and policy renewals and
manage their own books of business. In many ways, they are the public face of the
Underwriting Department -✓✓ field underwriters
• These underwriters make large-scale decisions about coverage, pricing, lines of
business, and the overall risk selection process -✓✓ corporate underwriters
• What do underwriters evaluate to determine the appropriate classification for a
commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus -✓✓ b. specific characteristics of the insured's operation
• Exposure unit to the type of insurance it's typically used for:
Each vehicle -✓✓ auto
• Exposure unit to the type of insurance it's typically used for:
Each $100 of insured value -✓✓ commercial property
• Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales -✓✓ general liability
• Exposure unit to the type of insurance it's typically used for:
Each $1,000 of insured value -✓✓ homeowners
• Exposure unit to the type of insurance it's typically used for:
Each $100 of payroll -✓✓ workers comp
• Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward, Kenneth
called Maria's insurer and talked to Javier to report the damages to his car.
______ is the claim's representative. -✓✓ Javier
• Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward, Kenneth
called Maria's insurer and talked to Javier to report the damages to his car.
_____ is the claimant. -✓✓ Kenneth
,• Belinda is a claims professional who works outside her organization's office. She
generally handles claims that require investigating the scene of a loss; resolving
complex investigative issues; and meeting with insureds, claimants, lawyers, and others
involved in a claim. What type of claims representative is she?
a. Telephone claims representative
b. Claims manager
c. Claims supervisor
d. Field claims representative -✓✓ d. Field claims representative
• If Tania needed to consult an accident-scene reconstruction specialist, she would have
been engaged in which one of these claims hand
ling activities?
a. Investigating and documenting the claim.
b. Contacting the insured or the insured's representative
c. Identifying the policy that may cover the claim
d. Acknowledging a claim and assigning it to the claims representative -✓✓ a.
Investigating and documenting the claim.
• Using the previous example, let's say the couch destroyed in the fire has a ten-year
lifespan and replacement value of $800. If it was four years old and insured for its actual
cash value, how much would the policyholder receive?
a. $480
b. $800
c. $380
d. $600 -✓✓ a. $480
• reimburses the insured for the cost of replacing the property, minus depreciation -✓✓
actual cash value
• The maximum amount that will be paid in the event of a loss is set by the insured and
insurer at the time the policy is written. -✓✓ agreed value
• reimburses the insured for the cost of replacing the property -✓✓ replacement value
• _____ reimburse a victim for actual harm -✓✓ compensatory damages
• are awarded to punish a defendant for reckless, malicious, or deceitful acts -✓✓
punitive damages
• are awarded for specific, identifiable expenses associated with the injured person's
loss -✓✓ special damages
• awarded to compensate a victim for losses such as pain and suffering -✓✓ general
damages
, • investing in the stock market is an example of _____ risk -✓✓ speculative
• driving a car is an example of ____ risk -✓✓ pure
• the principle that prevents an insured from profiting from owning an insurance policy -
✓✓ indemnity
• a self-employed hairstylist wants to make sure she's covered in case a client sues her.
Her agent suggests a ____ policy. -✓✓ manuscript
• unique information on the insured; list of forms included in policy -✓✓ declarations
• Statements containing insurer's promise to make payment -✓✓ insuring agreement
• provisions stating what the insurer will not cover -✓✓ exclusions
• qualifications on promise to make payment -✓✓ conditions
• words with special meanings in policy -✓✓ definitions
• Which one of the following statements is correct regarding the benefits provided by
insurance?
Select one:
A. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
B. Insurance helps reduce the financial burden to society by compensating accident
victims.
C. The primary role of insurance is to meet mandatory insurance requirements.
D. Insurance reduces the financial consequences of loss exposures but not the related
uncertainty. -✓✓ B. Insurance helps reduce the financial burden to society by
compensating accident victims.
• Which one of the following represents uncertainty about outcomes that can be
negative or positive?
Select one:
A. Pooling
B. Loss exposure
C. Transfer
D. Risk -✓✓ D. Risk
• A homeowners policy is a type of
Select one:
A. Commercial insurance policy.
B. Personal umbrella policy.
C. Personal property-casualty insurance policy.
Updated 2026 | Complete Review
• A fire destroys the kitchen in Rob and Laurie's home. Which insurance policy would
provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy -✓✓ b. Homeowners Policy (Property)
• Which insurance policy could protect Rob and Laurie's sandwich shop against losses
from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto -✓✓ b. Commercial Crime
• The best indication of an insurer's overall financial health is the -✓✓ policyholders
surplus (It shows how much cash an insurer has on hand for emergencies, unexpected
losses, and expansion of business)
• Combined ratio = -✓✓ loss ratio + expense ratio
• expense ratio = -✓✓ incurred underwriting expenses / written premiums
• loss ratio = -✓✓ incurred losses (including loss adjustment expenses) / earned
premiums
• Marco has been approved for a car insurance policy with a low premium because on
his application he gave an address in a low-crime area. However, the actual address at
which he lives and parks his car is in a high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines -✓✓ b. Adverse selection
• Emily is the underwriter for Marco's account. What is one way she could detect and
minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or losses
,d. Alter the underwriting guidelines -✓✓ c. Monitor the book of business for unusual
patterns of policy growth or losses
• These underwriters evaluate individual insurance applications and policy renewals and
manage their own books of business. In many ways, they are the public face of the
Underwriting Department -✓✓ field underwriters
• These underwriters make large-scale decisions about coverage, pricing, lines of
business, and the overall risk selection process -✓✓ corporate underwriters
• What do underwriters evaluate to determine the appropriate classification for a
commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus -✓✓ b. specific characteristics of the insured's operation
• Exposure unit to the type of insurance it's typically used for:
Each vehicle -✓✓ auto
• Exposure unit to the type of insurance it's typically used for:
Each $100 of insured value -✓✓ commercial property
• Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales -✓✓ general liability
• Exposure unit to the type of insurance it's typically used for:
Each $1,000 of insured value -✓✓ homeowners
• Exposure unit to the type of insurance it's typically used for:
Each $100 of payroll -✓✓ workers comp
• Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward, Kenneth
called Maria's insurer and talked to Javier to report the damages to his car.
______ is the claim's representative. -✓✓ Javier
• Maria accidentally rear-ended Kenneth at a stop light. After the two made sure they
were both uninjured, they exchanged insurance information. Shortly afterward, Kenneth
called Maria's insurer and talked to Javier to report the damages to his car.
_____ is the claimant. -✓✓ Kenneth
,• Belinda is a claims professional who works outside her organization's office. She
generally handles claims that require investigating the scene of a loss; resolving
complex investigative issues; and meeting with insureds, claimants, lawyers, and others
involved in a claim. What type of claims representative is she?
a. Telephone claims representative
b. Claims manager
c. Claims supervisor
d. Field claims representative -✓✓ d. Field claims representative
• If Tania needed to consult an accident-scene reconstruction specialist, she would have
been engaged in which one of these claims hand
ling activities?
a. Investigating and documenting the claim.
b. Contacting the insured or the insured's representative
c. Identifying the policy that may cover the claim
d. Acknowledging a claim and assigning it to the claims representative -✓✓ a.
Investigating and documenting the claim.
• Using the previous example, let's say the couch destroyed in the fire has a ten-year
lifespan and replacement value of $800. If it was four years old and insured for its actual
cash value, how much would the policyholder receive?
a. $480
b. $800
c. $380
d. $600 -✓✓ a. $480
• reimburses the insured for the cost of replacing the property, minus depreciation -✓✓
actual cash value
• The maximum amount that will be paid in the event of a loss is set by the insured and
insurer at the time the policy is written. -✓✓ agreed value
• reimburses the insured for the cost of replacing the property -✓✓ replacement value
• _____ reimburse a victim for actual harm -✓✓ compensatory damages
• are awarded to punish a defendant for reckless, malicious, or deceitful acts -✓✓
punitive damages
• are awarded for specific, identifiable expenses associated with the injured person's
loss -✓✓ special damages
• awarded to compensate a victim for losses such as pain and suffering -✓✓ general
damages
, • investing in the stock market is an example of _____ risk -✓✓ speculative
• driving a car is an example of ____ risk -✓✓ pure
• the principle that prevents an insured from profiting from owning an insurance policy -
✓✓ indemnity
• a self-employed hairstylist wants to make sure she's covered in case a client sues her.
Her agent suggests a ____ policy. -✓✓ manuscript
• unique information on the insured; list of forms included in policy -✓✓ declarations
• Statements containing insurer's promise to make payment -✓✓ insuring agreement
• provisions stating what the insurer will not cover -✓✓ exclusions
• qualifications on promise to make payment -✓✓ conditions
• words with special meanings in policy -✓✓ definitions
• Which one of the following statements is correct regarding the benefits provided by
insurance?
Select one:
A. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
B. Insurance helps reduce the financial burden to society by compensating accident
victims.
C. The primary role of insurance is to meet mandatory insurance requirements.
D. Insurance reduces the financial consequences of loss exposures but not the related
uncertainty. -✓✓ B. Insurance helps reduce the financial burden to society by
compensating accident victims.
• Which one of the following represents uncertainty about outcomes that can be
negative or positive?
Select one:
A. Pooling
B. Loss exposure
C. Transfer
D. Risk -✓✓ D. Risk
• A homeowners policy is a type of
Select one:
A. Commercial insurance policy.
B. Personal umbrella policy.
C. Personal property-casualty insurance policy.
