AINS 21 EXAM WITH CORRECT
ANSWERS 2025
Rating agencies such as Dun & Bradstreet (D&B)
provide Select one:
A.Data on credit ratings of businesses.Correct. Rating agencies provide
data on credit ratings of businesses.
B. Data on motor vehicle reports.
C. Information about business operations' safety records.
D.Aggregate loss experience data. ( correct answers ) A. Data on
credit ratings of businesses.
Which one of the following statements is correct regarding the benefits of
insurance? Select one:
E. One disadvantage of insurance is that it promotes inefficient use of
policyholders'
funds.
B.Insurers generally do not provide incentives to organizations to
implement risk control measures.
C. Insurance policies typically cannot be used to provide evidence of financial
resources.
D.Contractors must usually provide evidence of liability insurance before a
construction contract is granted ( correct answers ) D. Contractors must
usually provide evidence of liability insurance before a construction contract
is granted
Which one of the following statements is correct regarding the benefits
that insurance provides?
Select one:
E. Insurance provides a source of investment funds for insurers but not for
insureds.
F.Investment income helps keep insurance premiums at a reasonable
level. Correct. Investment income helps keep insurance premiums at a
reasonable level.
G. Insurers are prohibited from investing in such things as research or
technological
advancements.
D.The premiums collected by insurers must be held in cash to be
available to pay claims. ( correct answers ) B. Investment income helps
keep insurance premiums at a reasonable level.
Which one of the following is an opportunity cost of
insurance? Select one:
E. An insurer's loss on invested premiums
F.The cost of claims payments that would not have been necessary
if insureds' carelessness had not caused losses
,C. The payment of commissions to agents
D. An insured's funds that could be invested elsewhere if purchasing
insurance were not necessary( correct answers ) D. An insured's funds
that could be invested elsewhere if purchasing insurance were not necessary
Which one of the following describes the characteristics of a mutual
insurance company?
Select one:
A. A corporation owned by policyholders that provides insurance to its
policyholders. Correct. A mutual insurer is owned by its policyholders and
formed as a corporation for the purpose of providing insurance to them.
B. A corporation owned by stockholders that earns profits for the
stockholders.
C. An unincorporated association that earns profits for its individual
investors.
D. An unincorporated association that provides reciprocal coverage to
subscribers. ( correct answers ) A. A corporation owned by policyholders
that provides insurance to its policyholders.
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following
examples best illustrates Mehmet's point?
Select one:
A. When her car's transmission goes out a month after the warranty
expires, Ciara is faced with a $1,100 repair bill.
B. Ciara needs her car to get to her job, and she needs her job to make car
payments and pay for her car insurance.
C. Ciara finds it difficult to come up with a $787 auto insurance
premium every six months.
D. When her car's windshield breaks, Ciara has to pay only $100 of the
$600 cost of replacing it. ( correct answers ) D. When her car's
windshield breaks, Ciara has to
pay only $100 of the $600 cost of replacing it.
Excella Insurance is a private insurer operating in the state of Arkansas. It
primarily sells personal auto and homeowners policies and complies with all
the necessary licensing and regulations required. Which one of the following
is true for Excella in regard to this? Select one:
A. Excella must fully comply with insurance regulations so that the federal
government does not revoke its license.
B. Paying expenses and making a reasonable profit is the ultimate
measure of the insurer's success.
C. Excella strives to make sure its revenue is equal to or less than its
expenses and claim payments to remain financially viable.
D. State insurance regulators are only one of many stakeholders that are
interested in an insurer's financial health. ( correct answers ) D. State
insurance regulators are
only one of many stakeholders that are interested in an insurer's financial
health.
,Some loss exposures are not easy to retain, avoid, or control. Which one
of the following risk management techniques is frequently used to treat
such exposures? Select one:
A. Reunderwriting
B. Prevention
C. Transfer
D. Reinsurance ( correct answers ) C. Transfer
From a risk management viewpoint, insurance is
used to Select one:
E. Isolate the cost of losses.
F. Transfer the cost of losses.
G. Prevent the cost of losses.
H. Reduce the cost of losses. ( correct answers )
B. Transfer the cost of losses.
Harry has a new sports car that is insured with an Insurance Services Office,
Inc. (ISO) Personal Auto Policy sold through his neighborhood agent. Because
this is the first new car he's ever owned, Harry is interested in making sure
he is fully covered and knowledgeable about his insurance policy. Which one
of the following is true for Harry? Select one:
I.Harry can rest assured that if his new car is a total loss, he can
expect to make a profit while being restored to his pre-loss financial
position.
J.Harry understands his policy is modular one, combining various
coverage forms and other documents especially tailored to his needs.
K.An insurance contract, like the ISO policy Harry purchased, has
certain additional characteristics other than those of typical valid
contracts.
L.As the policy is a contract of utmost good faith, both his insurer and his
agent are the parties expected to be ethical in their dealings ( correct
answers ) C. An insurance
contract, like the ISO policy Harry purchased, has certain additional
characteristics other than those of typical valid contracts.
Sally is a recent college graduate who lives in the suburbs and drives to
work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances the
most practical risk management technique for dealing with her auto-
related loss exposures is
Select one:
M.Risk transfer.
N. Retention.
O. Loss control.
P. Avoidance. ( correct answers ) A. Risk transfer
Which one of the following is true regarding a
homeowners policy? Select one:
Q. It excludes losses caused by wind and lightning.
R. It only provides property coverage.
, C. It only provides liability coverage.
D. Most include coverage for theft of contents within ( correct answers )
the home. Most include coverage for theft of contents
within the home. D.
The two primary types of health insurance
coverage are Select one:
A. Accident and Medical.
B. Medical and Disability Income.
C. Sickness and Accident.
D.Disability Income and Sickness. ( correct answers ) B. Medical
and Disability Income
Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by Select one:
E. Professional liability insurance.
F. Commercial general liability insurance.
G. Auto liability insurance.
H. Personal liability insurance. ( correct answers )D. Personal liability
insurance.
Coverage for miscellaneous types of property such as movable property,
goods in domestic transit, and property used in transportation and
communication, typically is provided by
Select one:
I. Business income insurance.
J. Inland marine insurance.
K. Auto physical damage insurance.
L. Crime insurance. ( correct answers ) B. Inland marine insurance
A policy that combines property, crime, and liability coverages into one
policy is referred to as a(n)
Select one:
M.Workers compensation policy.
N. Employee dishonesty policy.
O. Commercial umbrella policy.
P.Commercial package policy (CPP). ( correct answers )
D. Commercial package policy (CPP).
All of the following describe Lloyd's, EXCEPT:
Select one:
Q. Insurance underwritten by a Name
R. Operated by syndicates
S. An insurance and reinsurance marketplace
T.Primarily insurers unusual exposures ( correct answers ) D.
Primarily insurers unusual exposures
ANSWERS 2025
Rating agencies such as Dun & Bradstreet (D&B)
provide Select one:
A.Data on credit ratings of businesses.Correct. Rating agencies provide
data on credit ratings of businesses.
B. Data on motor vehicle reports.
C. Information about business operations' safety records.
D.Aggregate loss experience data. ( correct answers ) A. Data on
credit ratings of businesses.
Which one of the following statements is correct regarding the benefits of
insurance? Select one:
E. One disadvantage of insurance is that it promotes inefficient use of
policyholders'
funds.
B.Insurers generally do not provide incentives to organizations to
implement risk control measures.
C. Insurance policies typically cannot be used to provide evidence of financial
resources.
D.Contractors must usually provide evidence of liability insurance before a
construction contract is granted ( correct answers ) D. Contractors must
usually provide evidence of liability insurance before a construction contract
is granted
Which one of the following statements is correct regarding the benefits
that insurance provides?
Select one:
E. Insurance provides a source of investment funds for insurers but not for
insureds.
F.Investment income helps keep insurance premiums at a reasonable
level. Correct. Investment income helps keep insurance premiums at a
reasonable level.
G. Insurers are prohibited from investing in such things as research or
technological
advancements.
D.The premiums collected by insurers must be held in cash to be
available to pay claims. ( correct answers ) B. Investment income helps
keep insurance premiums at a reasonable level.
Which one of the following is an opportunity cost of
insurance? Select one:
E. An insurer's loss on invested premiums
F.The cost of claims payments that would not have been necessary
if insureds' carelessness had not caused losses
,C. The payment of commissions to agents
D. An insured's funds that could be invested elsewhere if purchasing
insurance were not necessary( correct answers ) D. An insured's funds
that could be invested elsewhere if purchasing insurance were not necessary
Which one of the following describes the characteristics of a mutual
insurance company?
Select one:
A. A corporation owned by policyholders that provides insurance to its
policyholders. Correct. A mutual insurer is owned by its policyholders and
formed as a corporation for the purpose of providing insurance to them.
B. A corporation owned by stockholders that earns profits for the
stockholders.
C. An unincorporated association that earns profits for its individual
investors.
D. An unincorporated association that provides reciprocal coverage to
subscribers. ( correct answers ) A. A corporation owned by policyholders
that provides insurance to its policyholders.
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following
examples best illustrates Mehmet's point?
Select one:
A. When her car's transmission goes out a month after the warranty
expires, Ciara is faced with a $1,100 repair bill.
B. Ciara needs her car to get to her job, and she needs her job to make car
payments and pay for her car insurance.
C. Ciara finds it difficult to come up with a $787 auto insurance
premium every six months.
D. When her car's windshield breaks, Ciara has to pay only $100 of the
$600 cost of replacing it. ( correct answers ) D. When her car's
windshield breaks, Ciara has to
pay only $100 of the $600 cost of replacing it.
Excella Insurance is a private insurer operating in the state of Arkansas. It
primarily sells personal auto and homeowners policies and complies with all
the necessary licensing and regulations required. Which one of the following
is true for Excella in regard to this? Select one:
A. Excella must fully comply with insurance regulations so that the federal
government does not revoke its license.
B. Paying expenses and making a reasonable profit is the ultimate
measure of the insurer's success.
C. Excella strives to make sure its revenue is equal to or less than its
expenses and claim payments to remain financially viable.
D. State insurance regulators are only one of many stakeholders that are
interested in an insurer's financial health. ( correct answers ) D. State
insurance regulators are
only one of many stakeholders that are interested in an insurer's financial
health.
,Some loss exposures are not easy to retain, avoid, or control. Which one
of the following risk management techniques is frequently used to treat
such exposures? Select one:
A. Reunderwriting
B. Prevention
C. Transfer
D. Reinsurance ( correct answers ) C. Transfer
From a risk management viewpoint, insurance is
used to Select one:
E. Isolate the cost of losses.
F. Transfer the cost of losses.
G. Prevent the cost of losses.
H. Reduce the cost of losses. ( correct answers )
B. Transfer the cost of losses.
Harry has a new sports car that is insured with an Insurance Services Office,
Inc. (ISO) Personal Auto Policy sold through his neighborhood agent. Because
this is the first new car he's ever owned, Harry is interested in making sure
he is fully covered and knowledgeable about his insurance policy. Which one
of the following is true for Harry? Select one:
I.Harry can rest assured that if his new car is a total loss, he can
expect to make a profit while being restored to his pre-loss financial
position.
J.Harry understands his policy is modular one, combining various
coverage forms and other documents especially tailored to his needs.
K.An insurance contract, like the ISO policy Harry purchased, has
certain additional characteristics other than those of typical valid
contracts.
L.As the policy is a contract of utmost good faith, both his insurer and his
agent are the parties expected to be ethical in their dealings ( correct
answers ) C. An insurance
contract, like the ISO policy Harry purchased, has certain additional
characteristics other than those of typical valid contracts.
Sally is a recent college graduate who lives in the suburbs and drives to
work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances the
most practical risk management technique for dealing with her auto-
related loss exposures is
Select one:
M.Risk transfer.
N. Retention.
O. Loss control.
P. Avoidance. ( correct answers ) A. Risk transfer
Which one of the following is true regarding a
homeowners policy? Select one:
Q. It excludes losses caused by wind and lightning.
R. It only provides property coverage.
, C. It only provides liability coverage.
D. Most include coverage for theft of contents within ( correct answers )
the home. Most include coverage for theft of contents
within the home. D.
The two primary types of health insurance
coverage are Select one:
A. Accident and Medical.
B. Medical and Disability Income.
C. Sickness and Accident.
D.Disability Income and Sickness. ( correct answers ) B. Medical
and Disability Income
Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by Select one:
E. Professional liability insurance.
F. Commercial general liability insurance.
G. Auto liability insurance.
H. Personal liability insurance. ( correct answers )D. Personal liability
insurance.
Coverage for miscellaneous types of property such as movable property,
goods in domestic transit, and property used in transportation and
communication, typically is provided by
Select one:
I. Business income insurance.
J. Inland marine insurance.
K. Auto physical damage insurance.
L. Crime insurance. ( correct answers ) B. Inland marine insurance
A policy that combines property, crime, and liability coverages into one
policy is referred to as a(n)
Select one:
M.Workers compensation policy.
N. Employee dishonesty policy.
O. Commercial umbrella policy.
P.Commercial package policy (CPP). ( correct answers )
D. Commercial package policy (CPP).
All of the following describe Lloyd's, EXCEPT:
Select one:
Q. Insurance underwritten by a Name
R. Operated by syndicates
S. An insurance and reinsurance marketplace
T.Primarily insurers unusual exposures ( correct answers ) D.
Primarily insurers unusual exposures
