AINS 101 | INSURANCE EXAM |
QUESTIONS AND CORRECT ANSWERS
RATED A+ | 2024/2025 GUIDE
What is replacement cost valuation?
- Correct Answer - Does not consider depreciation, but what it would cost to
replace the item
What is Agreed Value?
- Correct Answer - This method is used to insure property that is difficult to
value (fine arts, antiques, collections)
What is a moral hazard?
- Correct Answer - Questionable business practices or a failing business
What is a morale hazard?
- Correct Answer - Indifference to properly maintaining property or poor
financial recordkeeping
What is a physical hazard?
- Correct Answer - Construction, hazardous materials, poor safety and hygiene
practices
What is risk?
- Correct Answer - Uncertainty about outcomes
, Explain the concept of transfer
- Correct Answer - Transferring the financial consequences of unanticipated
events to an insurer
Explain the concept of pooling
- Correct Answer - all insureds share the costs of each other's losses
What is the amount of business that an insurer can write based on regulatory
guidelines? (usually a comparison of the insurer's written premiums to the
policyholder's surplus)
- Correct Answer - Capacity
What is policyholder's surplus?
- Correct Answer - the difference between an insurance company's assets and
liabilities
What is an admitted asset?
- Correct Answer - Items that insurers can easily turn into cash (stocks, bonds,
real estate)
What is a nonadmitted asset?
- Correct Answer - Types of property that insurers can't easily convert to cash
What gives a snapshot of the insurer's financial position at a specific point in
time?
- Correct Answer - Balance sheet
QUESTIONS AND CORRECT ANSWERS
RATED A+ | 2024/2025 GUIDE
What is replacement cost valuation?
- Correct Answer - Does not consider depreciation, but what it would cost to
replace the item
What is Agreed Value?
- Correct Answer - This method is used to insure property that is difficult to
value (fine arts, antiques, collections)
What is a moral hazard?
- Correct Answer - Questionable business practices or a failing business
What is a morale hazard?
- Correct Answer - Indifference to properly maintaining property or poor
financial recordkeeping
What is a physical hazard?
- Correct Answer - Construction, hazardous materials, poor safety and hygiene
practices
What is risk?
- Correct Answer - Uncertainty about outcomes
, Explain the concept of transfer
- Correct Answer - Transferring the financial consequences of unanticipated
events to an insurer
Explain the concept of pooling
- Correct Answer - all insureds share the costs of each other's losses
What is the amount of business that an insurer can write based on regulatory
guidelines? (usually a comparison of the insurer's written premiums to the
policyholder's surplus)
- Correct Answer - Capacity
What is policyholder's surplus?
- Correct Answer - the difference between an insurance company's assets and
liabilities
What is an admitted asset?
- Correct Answer - Items that insurers can easily turn into cash (stocks, bonds,
real estate)
What is a nonadmitted asset?
- Correct Answer - Types of property that insurers can't easily convert to cash
What gives a snapshot of the insurer's financial position at a specific point in
time?
- Correct Answer - Balance sheet
