AINS 102 CORRECT TEST PAPER QUESTIONS AND
ANSWERS RATED A+
✔✔B. Increased expenses - ✔✔The Davis family suffered extensive fire damage to its
home and was temporarily unable to inhabit it. The family was forced to rent a hotel
room while its home was under repair. The cost incurred to rent the hotel room is
referred to as which one of the following outcomes of loss?
A. Lost income
B. Increased expenses
C. Reduction in value of property
D. Special damages
✔✔B. Retention - ✔✔Patrick's car is 12 years-old and has been driven for over 100,000
miles. He has decided that instead of continuing to pay insurance premium for coverage
for property damage to his car, he will put the money aside to save for a new car. Which
one of the following risk management techniques is Patrick using?
A. Loss reduction
B. Retention
C. Diversification
D. Avoidance
✔✔B. Add-on plan - ✔✔Leslie is insured with a personal auto policy (PIP) with Baines
Insurance. She lives in a state that has a type of no-fault plan in which she, if injured by
an auto accident that was the fault of another person, would be compensated with no-
fault benefits but she would not be restricted in her right to sue that negligent person for
damages. This type of no-fault plan is most specifically a(n)
A. PIP benefit
B. Add-on plan
C. Modified no-fault plan
D. Choice no-fault
✔✔Named insured - ✔✔A person, corporation, partnership, or other entity identified as
an insured party in an insurance policy's declarations page.
,✔✔Policy period - ✔✔The time frame, beginning with the inception date, during which
insurance coverage applies.
✔✔Vehicle identification number (VIN) - ✔✔A unique number that is assigned to each
vehicle and that identifies certain vehicle characteristics.
✔✔Damages - ✔✔Money claimed by, or a monetary award to, a party who has suffered
bodily injury or property damage for which another party is legally responsible.
✔✔Punitive damages (exemplary damages) - ✔✔A payment awarded by a court to
punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct;
the award need not bear any relation to a party's actual damages.
✔✔Compensatory damages - ✔✔A payment awarded by a court to reimburse a victim
for actual harm.
✔✔Supplementary payments - ✔✔Various expenses the insurer agrees to pay under a
liability insurance policy (in addition to the liability limits) for items such as premiums on
bail bonds and appeal bonds, loss of the insured's earnings because of attendance at
trials, and other reasonable expenses incurred by the insured at the insurer's request.
✔✔Attachment - ✔✔The act of seizing property to secure a judgment.
✔✔Postjudgment interest - ✔✔Interest that may accrue on damages after a judgment
has been entered in a court and before the money is paid.
✔✔Uninsured motor vehicle - ✔✔A land motor vehicle or trailer that is not insured for
bodily injury liability, is insured for less than the financial responsibility limits, is a hit-
and-run vehicle, or whose insurer denies coverage or becomes insolvent.
✔✔Subrogation - ✔✔The process by which an insurer can, after it has paid a loss under
the policy, recover the amount paid from any party (other than the insured) who caused
the loss or is otherwise legally liable for the loss.
✔✔Arbitration - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding.
✔✔Deductible - ✔✔A portion of a covered loss that is not paid by the insurer.
✔✔Other than collision (OTC) coverage - ✔✔Coverage for physical damage to a
covered auto resulting from any cause of loss except collision or a cause of loss
specifically excluded.
, ✔✔C. Simple-to-understand language to define important words and phrases that are
used throughout the policy. - ✔✔The definitions section of the Personal Auto Policy
(PAP) uses
A. Legal terminology to help insureds understand how to file claims under the policy.
B. Complicated language to define important words and phrases that are used
throughout the policy.
C. Simple-to-understand language to define important words and phrases that are used
throughout the policy.
D. Technical language to explain insurance terminology to individuals who do not work
in the industry.
✔✔D. A trailer rented by the insured - ✔✔In the Personal Auto Policy (PAP) definitions,
"Your covered auto" includes all of the following classes of vehicles, EXCEPT:
A. A trailer owned by the insured
B. A temporary substitute auto or trailer
C. A newly acquired auto
D. A trailer rented by the insured
✔✔D. Jean, Lindsey, and the church - ✔✔Jean lent her van to a church member,
Lindsey, who was transporting a group of teenagers to a church sponsored picnic.
While on the way to the picnic, the van overturned, injuring one of the teenagers. The
parent of the injured teenager has sued Jean, Lindsey, and the church for the
teenager's injuries and future disability. Who is insured for liability under the Jean's
Personal Auto Policy (PAP) for this accident?
A. Jean only
B. Jean and Lindsey only
C. Lindsey and the church only
D. Jean, Lindsey, and the church
✔✔C. The Other Insurance provision will address how to address the particular
situation. - ✔✔The Part B—Medical Payments Coverage of the Personal Auto Policy
(PAP) contains an Other Insurance provision. If two automobile policies from different
insurers cover the same owned vehicle,
A. The courts will decide how to assess the payment amounts.
B. The insurer issuing the policy with the higher limits of liability will make the
determination.
C. The Other Insurance provision will address how to address the particular situation.
D. The first insurer to receive notice of the claim becomes primarily liable.
✔✔A. Would be eligible for medical payments under the Personal Auto Policy (PAP) as
the named insured and an occupant of a covered auto. - ✔✔Miguel, an insured has a
Personal Auto Policy (PAP) that includes medical payments coverage. The insured
crashed his car while trying to be the first car to pull away from a stop at a red light
when the light turned green. In this scenario, Miguel
ANSWERS RATED A+
✔✔B. Increased expenses - ✔✔The Davis family suffered extensive fire damage to its
home and was temporarily unable to inhabit it. The family was forced to rent a hotel
room while its home was under repair. The cost incurred to rent the hotel room is
referred to as which one of the following outcomes of loss?
A. Lost income
B. Increased expenses
C. Reduction in value of property
D. Special damages
✔✔B. Retention - ✔✔Patrick's car is 12 years-old and has been driven for over 100,000
miles. He has decided that instead of continuing to pay insurance premium for coverage
for property damage to his car, he will put the money aside to save for a new car. Which
one of the following risk management techniques is Patrick using?
A. Loss reduction
B. Retention
C. Diversification
D. Avoidance
✔✔B. Add-on plan - ✔✔Leslie is insured with a personal auto policy (PIP) with Baines
Insurance. She lives in a state that has a type of no-fault plan in which she, if injured by
an auto accident that was the fault of another person, would be compensated with no-
fault benefits but she would not be restricted in her right to sue that negligent person for
damages. This type of no-fault plan is most specifically a(n)
A. PIP benefit
B. Add-on plan
C. Modified no-fault plan
D. Choice no-fault
✔✔Named insured - ✔✔A person, corporation, partnership, or other entity identified as
an insured party in an insurance policy's declarations page.
,✔✔Policy period - ✔✔The time frame, beginning with the inception date, during which
insurance coverage applies.
✔✔Vehicle identification number (VIN) - ✔✔A unique number that is assigned to each
vehicle and that identifies certain vehicle characteristics.
✔✔Damages - ✔✔Money claimed by, or a monetary award to, a party who has suffered
bodily injury or property damage for which another party is legally responsible.
✔✔Punitive damages (exemplary damages) - ✔✔A payment awarded by a court to
punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct;
the award need not bear any relation to a party's actual damages.
✔✔Compensatory damages - ✔✔A payment awarded by a court to reimburse a victim
for actual harm.
✔✔Supplementary payments - ✔✔Various expenses the insurer agrees to pay under a
liability insurance policy (in addition to the liability limits) for items such as premiums on
bail bonds and appeal bonds, loss of the insured's earnings because of attendance at
trials, and other reasonable expenses incurred by the insured at the insurer's request.
✔✔Attachment - ✔✔The act of seizing property to secure a judgment.
✔✔Postjudgment interest - ✔✔Interest that may accrue on damages after a judgment
has been entered in a court and before the money is paid.
✔✔Uninsured motor vehicle - ✔✔A land motor vehicle or trailer that is not insured for
bodily injury liability, is insured for less than the financial responsibility limits, is a hit-
and-run vehicle, or whose insurer denies coverage or becomes insolvent.
✔✔Subrogation - ✔✔The process by which an insurer can, after it has paid a loss under
the policy, recover the amount paid from any party (other than the insured) who caused
the loss or is otherwise legally liable for the loss.
✔✔Arbitration - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding.
✔✔Deductible - ✔✔A portion of a covered loss that is not paid by the insurer.
✔✔Other than collision (OTC) coverage - ✔✔Coverage for physical damage to a
covered auto resulting from any cause of loss except collision or a cause of loss
specifically excluded.
, ✔✔C. Simple-to-understand language to define important words and phrases that are
used throughout the policy. - ✔✔The definitions section of the Personal Auto Policy
(PAP) uses
A. Legal terminology to help insureds understand how to file claims under the policy.
B. Complicated language to define important words and phrases that are used
throughout the policy.
C. Simple-to-understand language to define important words and phrases that are used
throughout the policy.
D. Technical language to explain insurance terminology to individuals who do not work
in the industry.
✔✔D. A trailer rented by the insured - ✔✔In the Personal Auto Policy (PAP) definitions,
"Your covered auto" includes all of the following classes of vehicles, EXCEPT:
A. A trailer owned by the insured
B. A temporary substitute auto or trailer
C. A newly acquired auto
D. A trailer rented by the insured
✔✔D. Jean, Lindsey, and the church - ✔✔Jean lent her van to a church member,
Lindsey, who was transporting a group of teenagers to a church sponsored picnic.
While on the way to the picnic, the van overturned, injuring one of the teenagers. The
parent of the injured teenager has sued Jean, Lindsey, and the church for the
teenager's injuries and future disability. Who is insured for liability under the Jean's
Personal Auto Policy (PAP) for this accident?
A. Jean only
B. Jean and Lindsey only
C. Lindsey and the church only
D. Jean, Lindsey, and the church
✔✔C. The Other Insurance provision will address how to address the particular
situation. - ✔✔The Part B—Medical Payments Coverage of the Personal Auto Policy
(PAP) contains an Other Insurance provision. If two automobile policies from different
insurers cover the same owned vehicle,
A. The courts will decide how to assess the payment amounts.
B. The insurer issuing the policy with the higher limits of liability will make the
determination.
C. The Other Insurance provision will address how to address the particular situation.
D. The first insurer to receive notice of the claim becomes primarily liable.
✔✔A. Would be eligible for medical payments under the Personal Auto Policy (PAP) as
the named insured and an occupant of a covered auto. - ✔✔Miguel, an insured has a
Personal Auto Policy (PAP) that includes medical payments coverage. The insured
crashed his car while trying to be the first car to pull away from a stop at a red light
when the light turned green. In this scenario, Miguel
