ESTUDYR
AINS 102 MOST TESTED QUESTIONS AND ANSWERS
GRADED A+ WITH RATIONALES
Property loss exposure is best defined as:
A. A temporary interruption of business operations
B. A condition that presents the possibility that a person or organization will
sustain a loss resulting from damage (including destruction, taking, or loss of
use) to property in which that person or organization has a financial interest.
C. Any intentional act causing property damage
D. The actuarial estimate used by insurers
Rationale: Property loss exposure describes potential for property-related
financial loss.
Real property (realty) includes:
A. Stocks and bonds
B. Household goods
C. Tangible property consisting of land, all structures permanently attached to
the land, and whatever is growing on the land.
D. Detached personal belongings
Rationale: Real property = land + permanently attached structures and
vegetation.
Personal property is:
A. Land and buildings only
B. Real estate held for investment
C. All tangible or intangible property that is not real property.
D. Trust assets only
Rationale: Personal property = movable or non-real assets.
A deductible is:
A. The total premium divided by policy term
B. A portion of a covered loss that is not paid by the insurer.
C. The insurer’s profit margin
,ESTUDYR
D. A legal penalty for late filing
Rationale: Deductible is the insured’s share of a loss before insurer pays.
Liability loss exposure means:
A. A company’s tax obligations
B. The amount of premiums due
C. Any condition or situation that presents the possibility of a claim alleging
legal responsibility of a person or business for injury or damage suffered by
another party.
D. Only workers’ compensation exposures
Rationale: Liability exposures arise when third parties could claim harm.
Damages (legal) are:
A. The insured’s depreciation schedule
B. Money claimed by or awarded to a party who suffered loss or injury for which
another party is legally responsible.
C. Only punitive fines
D. Internal accounting adjustments
Rationale: Damages are monetary compensation for legal liability.
Special damages are:
A. Punitive awards only
B. Compensatory payments for specific, identifiable expenses (e.g., medical bills,
lost wages).
C. Non-economic pain and suffering
D. Intangible harms only
Rationale: Special (economic) damages are objectively measurable costs.
General damages refer to:
A. Tax reimbursements
B. Intellectual property valuations
C. Monetary award for non-specific losses (pain, suffering, emotional distress).
D. Equipment replacement cost
Rationale: General damages cover non-economic harms.
,ESTUDYR
Punitive damages are intended to:
A. Compensate for medical bills
B. Cover insurance deductibles
C. Punish defendant for reckless or malicious acts and deter similar conduct.
D. Reimburse the insurer’s expenses
Rationale: Punitive damages punish and deter, not compensate.
Civil law:
A. Is criminal prosecution by the state
B. Governs traffic citations only
C. Applies to legal matters not governed by criminal law and provides remedies
for breaches of duties owed to others.
D. Is the same as common law only
Rationale: Civil law handles private disputes and remedies.
Criminal law primarily:
A. Awards damages to victims
B. Governs contracts
C. Imposes penalties for wrongs against society (crimes).
D. Is handled by civil courts only
Rationale: Criminal law punishes offenses against public order.
A tort is:
A. A contractual breach only
B. A criminal statute
C. A wrongful act or omission (not a crime) invading a legally protected right,
often remedied by damages.
D. An insurance endorsement
Rationale: Torts are civil wrongs leading to liabilities.
Negligence is:
A. An intentional tort always
B. The same as strict liability
C. Failure to exercise the degree of care a reasonable person would use in
similar circumstances, resulting in harm.
, ESTUDYR
D. Always criminal behavior
Rationale: Negligence centers on breach of reasonable care.
An intentional tort is characterized by:
A. No foreseeability of harm
B. Only corporate liability
C. An act where the person foresees (or should foresee) harm and acts anyway.
D. Always justified by consent
Rationale: Intentional torts involve purposeful actions causing harm.
Strict liability applies when:
A. Fault must be proven beyond doubt
B. Only minor damages occur
C. Liability is imposed without fault for ultrahazardous activities or products
that cause harm.
D. There is a signed waiver
Rationale: Strict liability can impose responsibility regardless of negligence.
Compulsory auto insurance laws require:
A. Drivers to be immune from suits
B. Only motorcycle owners to insure
C. Owners/operators of autos to carry liability insurance meeting minimum
limits before registration.
D. Employers to provide auto insurance to employees only
Rationale: Compulsory laws ensure drivers have required coverage to operate
vehicles.
Financial responsibility laws are enacted to:
A. Increase insurance profits
B. Limit policyholder claims
C. Ensure motorists can pay for property damage or bodily injury they cause.
D. Regulate premium taxes
Rationale: These laws protect victims by requiring proof of ability to pay.
AINS 102 MOST TESTED QUESTIONS AND ANSWERS
GRADED A+ WITH RATIONALES
Property loss exposure is best defined as:
A. A temporary interruption of business operations
B. A condition that presents the possibility that a person or organization will
sustain a loss resulting from damage (including destruction, taking, or loss of
use) to property in which that person or organization has a financial interest.
C. Any intentional act causing property damage
D. The actuarial estimate used by insurers
Rationale: Property loss exposure describes potential for property-related
financial loss.
Real property (realty) includes:
A. Stocks and bonds
B. Household goods
C. Tangible property consisting of land, all structures permanently attached to
the land, and whatever is growing on the land.
D. Detached personal belongings
Rationale: Real property = land + permanently attached structures and
vegetation.
Personal property is:
A. Land and buildings only
B. Real estate held for investment
C. All tangible or intangible property that is not real property.
D. Trust assets only
Rationale: Personal property = movable or non-real assets.
A deductible is:
A. The total premium divided by policy term
B. A portion of a covered loss that is not paid by the insurer.
C. The insurer’s profit margin
,ESTUDYR
D. A legal penalty for late filing
Rationale: Deductible is the insured’s share of a loss before insurer pays.
Liability loss exposure means:
A. A company’s tax obligations
B. The amount of premiums due
C. Any condition or situation that presents the possibility of a claim alleging
legal responsibility of a person or business for injury or damage suffered by
another party.
D. Only workers’ compensation exposures
Rationale: Liability exposures arise when third parties could claim harm.
Damages (legal) are:
A. The insured’s depreciation schedule
B. Money claimed by or awarded to a party who suffered loss or injury for which
another party is legally responsible.
C. Only punitive fines
D. Internal accounting adjustments
Rationale: Damages are monetary compensation for legal liability.
Special damages are:
A. Punitive awards only
B. Compensatory payments for specific, identifiable expenses (e.g., medical bills,
lost wages).
C. Non-economic pain and suffering
D. Intangible harms only
Rationale: Special (economic) damages are objectively measurable costs.
General damages refer to:
A. Tax reimbursements
B. Intellectual property valuations
C. Monetary award for non-specific losses (pain, suffering, emotional distress).
D. Equipment replacement cost
Rationale: General damages cover non-economic harms.
,ESTUDYR
Punitive damages are intended to:
A. Compensate for medical bills
B. Cover insurance deductibles
C. Punish defendant for reckless or malicious acts and deter similar conduct.
D. Reimburse the insurer’s expenses
Rationale: Punitive damages punish and deter, not compensate.
Civil law:
A. Is criminal prosecution by the state
B. Governs traffic citations only
C. Applies to legal matters not governed by criminal law and provides remedies
for breaches of duties owed to others.
D. Is the same as common law only
Rationale: Civil law handles private disputes and remedies.
Criminal law primarily:
A. Awards damages to victims
B. Governs contracts
C. Imposes penalties for wrongs against society (crimes).
D. Is handled by civil courts only
Rationale: Criminal law punishes offenses against public order.
A tort is:
A. A contractual breach only
B. A criminal statute
C. A wrongful act or omission (not a crime) invading a legally protected right,
often remedied by damages.
D. An insurance endorsement
Rationale: Torts are civil wrongs leading to liabilities.
Negligence is:
A. An intentional tort always
B. The same as strict liability
C. Failure to exercise the degree of care a reasonable person would use in
similar circumstances, resulting in harm.
, ESTUDYR
D. Always criminal behavior
Rationale: Negligence centers on breach of reasonable care.
An intentional tort is characterized by:
A. No foreseeability of harm
B. Only corporate liability
C. An act where the person foresees (or should foresee) harm and acts anyway.
D. Always justified by consent
Rationale: Intentional torts involve purposeful actions causing harm.
Strict liability applies when:
A. Fault must be proven beyond doubt
B. Only minor damages occur
C. Liability is imposed without fault for ultrahazardous activities or products
that cause harm.
D. There is a signed waiver
Rationale: Strict liability can impose responsibility regardless of negligence.
Compulsory auto insurance laws require:
A. Drivers to be immune from suits
B. Only motorcycle owners to insure
C. Owners/operators of autos to carry liability insurance meeting minimum
limits before registration.
D. Employers to provide auto insurance to employees only
Rationale: Compulsory laws ensure drivers have required coverage to operate
vehicles.
Financial responsibility laws are enacted to:
A. Increase insurance profits
B. Limit policyholder claims
C. Ensure motorists can pay for property damage or bodily injury they cause.
D. Regulate premium taxes
Rationale: These laws protect victims by requiring proof of ability to pay.
