AINS 101 Simulated Exam Questions and Correct Answers
1. Exclusive agency is contracted to sell insurance for one insurer or group of
insurers Answer -The difference between an independent agency and an exclusive agency is that an
2. Insurance shortages Answer -Destructive competition in the insurance industry could result in
3. Veronica directly contacts Maria for guidance on how to report a stolen car,
Maria provides that, and claims rep Sean takes over after an introduction from
Maria Answer -Maria is a new producer who wears many hats when forming relationships and then serving her
established customers. In this capacity, which one of the following scenarios most accurately describes her ongoing
work wearing the hat of "claims handler"?
4. $350 Replacement cost - Depreciation Answer -John's two-year-old bicycle was stolen. The
bicycle's purchase price was $700, its current replacement cost is $800, and depreciation was estimated at
$450. What was the bicycle's actual cash value?
5. Underwriting authority reports Answer -All of the following are sources of underwriting
information to evaluate an insurance submission, EXCEPT:
6. Implemented risk management techniques may prove to be ineffective or
become obsolete Answer -Which one of the following best explains why producers should be alert to
changes in clients' loss exposures?
7. Field Underwriter Answer -James works very closely with producers on a daily basis. In addition to
evaluating the applicants that the producers submit, James is involved in presenting policy quotations, processing
policy endorse- ments, helping to explain coverages, and making coverage recommendations. James works as a
8. Balance sheet Answer -Rachel is considering investing in the stock of an insurance company. Which
one of the following is likely to provide the best indication of the insurer's financial position at this point in
time?
9. Support producers and insureds Answer -At Greenfield Insurance Company, Bernadette and
Rachel are corporate underwriters, and Tomas and Jose are field underwriters. All of the following are
underwriting activities typically performed by corporate (or statt) underwriters like Bernadette and Rachel, EXCEPT:
10. Large number of similar exposure units Answer -Oscar's custom-built vehicle looks like
a sausage sandwich on wheels. He plans to drive it to special events at schools around the country where it will serve
as a mobile billboard to promote his product. Oscar is surprised to learn that insurers are reluctant to insure his
vehicle because it fails to meet one of the ideal characteristics of an insurable risk. Which characteristic is Oscar's vehicle
least likely to meet?
11. Capacity Answer -Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the policyholders' surplus?
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, AINS 101 Simulated Exam Questions and Correct Answers
12. Mutual insurer Answer -Joe is the owner of JG Auto Repair. He is always frustrated with the amount of
commercial insurance premium he pays every year, even though he has not had a single claim in over 10 years. Joe
is looking to partner with an insurance company that will share its profits and maybe return a portion of his premium
if the results are good. Which one of the following types of insurer is the right fit for Joe?
13. Transfer Answer -When the Smiths purchased their first home, they were required to purchase a homeowners
insur- ance policy in order to get a mortgage. Because they did not have a lot of extra money in their budget, they
wanted to buy as little insurance coverage as possible. The Smiths' insurance agent advised them that if they
purchase an insurance policy that adequately covers damage to their home and personal property, they only have
to budget for the insurance premium, rather than the full cost of rebuilding the house and replacing its contents.
Which one of the following key components of insurance is the insurance agent explaining to the Smiths?
14. Providing laboratory analyses Answer -Risk control can assist the claims department by
15. Loss ratio + expense ratio Answer -Which one of the following is the correct formula for calculating an
insurer's combined ratio?
16. Property-casualty insurance and life-health insurance Answer -The two main
sectors of the insurance industry are
17. Moral hazards Answer -Joel is the underwriter for Stanton Industries. He received a notice from the premium
auditor on the account. After a recent visit to the insured's location, the auditor wanted to make Joel aware of a
decline in
the business and some questionable business practices. Which one of the following types of hazards is the auditor
identifying?
18. Risk management review Answer -Donna is an insurance producer. She makes an appointment with
potential policyholder Sandie to review her loss exposures. She asks Sandie to complete a questionnaire to assist
her in this ettort. Donna is conducting a
19. Underwriting Answer -Martina, a premium auditor for Cintriell Insurance Company is conducting a
premium audit for Carolina's Cookies. Carolina mentioned to Martina that she is opening a cottee shop at another
location. By sharing this information, Martina would provide a contribution to which one of the following insurer
functions?
20. Robots Answer -Many auto manufacturers have automated a portion of their assembly lines by introducing a
smart product. The smart product performs repetitive tasks, such as making the same weld on each vehicle frame as it
passes the smart product. These smart products, which can be fixed or mobile, reduce repetitive motion injuries. They can
also be used to perform dangerous tasks and for heavy-lifting jobs. These smart products, enabled by artificial
intelligence, are called
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1. Exclusive agency is contracted to sell insurance for one insurer or group of
insurers Answer -The difference between an independent agency and an exclusive agency is that an
2. Insurance shortages Answer -Destructive competition in the insurance industry could result in
3. Veronica directly contacts Maria for guidance on how to report a stolen car,
Maria provides that, and claims rep Sean takes over after an introduction from
Maria Answer -Maria is a new producer who wears many hats when forming relationships and then serving her
established customers. In this capacity, which one of the following scenarios most accurately describes her ongoing
work wearing the hat of "claims handler"?
4. $350 Replacement cost - Depreciation Answer -John's two-year-old bicycle was stolen. The
bicycle's purchase price was $700, its current replacement cost is $800, and depreciation was estimated at
$450. What was the bicycle's actual cash value?
5. Underwriting authority reports Answer -All of the following are sources of underwriting
information to evaluate an insurance submission, EXCEPT:
6. Implemented risk management techniques may prove to be ineffective or
become obsolete Answer -Which one of the following best explains why producers should be alert to
changes in clients' loss exposures?
7. Field Underwriter Answer -James works very closely with producers on a daily basis. In addition to
evaluating the applicants that the producers submit, James is involved in presenting policy quotations, processing
policy endorse- ments, helping to explain coverages, and making coverage recommendations. James works as a
8. Balance sheet Answer -Rachel is considering investing in the stock of an insurance company. Which
one of the following is likely to provide the best indication of the insurer's financial position at this point in
time?
9. Support producers and insureds Answer -At Greenfield Insurance Company, Bernadette and
Rachel are corporate underwriters, and Tomas and Jose are field underwriters. All of the following are
underwriting activities typically performed by corporate (or statt) underwriters like Bernadette and Rachel, EXCEPT:
10. Large number of similar exposure units Answer -Oscar's custom-built vehicle looks like
a sausage sandwich on wheels. He plans to drive it to special events at schools around the country where it will serve
as a mobile billboard to promote his product. Oscar is surprised to learn that insurers are reluctant to insure his
vehicle because it fails to meet one of the ideal characteristics of an insurable risk. Which characteristic is Oscar's vehicle
least likely to meet?
11. Capacity Answer -Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the policyholders' surplus?
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, AINS 101 Simulated Exam Questions and Correct Answers
12. Mutual insurer Answer -Joe is the owner of JG Auto Repair. He is always frustrated with the amount of
commercial insurance premium he pays every year, even though he has not had a single claim in over 10 years. Joe
is looking to partner with an insurance company that will share its profits and maybe return a portion of his premium
if the results are good. Which one of the following types of insurer is the right fit for Joe?
13. Transfer Answer -When the Smiths purchased their first home, they were required to purchase a homeowners
insur- ance policy in order to get a mortgage. Because they did not have a lot of extra money in their budget, they
wanted to buy as little insurance coverage as possible. The Smiths' insurance agent advised them that if they
purchase an insurance policy that adequately covers damage to their home and personal property, they only have
to budget for the insurance premium, rather than the full cost of rebuilding the house and replacing its contents.
Which one of the following key components of insurance is the insurance agent explaining to the Smiths?
14. Providing laboratory analyses Answer -Risk control can assist the claims department by
15. Loss ratio + expense ratio Answer -Which one of the following is the correct formula for calculating an
insurer's combined ratio?
16. Property-casualty insurance and life-health insurance Answer -The two main
sectors of the insurance industry are
17. Moral hazards Answer -Joel is the underwriter for Stanton Industries. He received a notice from the premium
auditor on the account. After a recent visit to the insured's location, the auditor wanted to make Joel aware of a
decline in
the business and some questionable business practices. Which one of the following types of hazards is the auditor
identifying?
18. Risk management review Answer -Donna is an insurance producer. She makes an appointment with
potential policyholder Sandie to review her loss exposures. She asks Sandie to complete a questionnaire to assist
her in this ettort. Donna is conducting a
19. Underwriting Answer -Martina, a premium auditor for Cintriell Insurance Company is conducting a
premium audit for Carolina's Cookies. Carolina mentioned to Martina that she is opening a cottee shop at another
location. By sharing this information, Martina would provide a contribution to which one of the following insurer
functions?
20. Robots Answer -Many auto manufacturers have automated a portion of their assembly lines by introducing a
smart product. The smart product performs repetitive tasks, such as making the same weld on each vehicle frame as it
passes the smart product. These smart products, which can be fixed or mobile, reduce repetitive motion injuries. They can
also be used to perform dangerous tasks and for heavy-lifting jobs. These smart products, enabled by artificial
intelligence, are called
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