AINS 101 Exam | Expert Verified Questions
and Answers | Most Recent 2026 Update
• Transferring . CORRECT ANSWER: The act of transferring the financial
consequences of unanticipated events to an insurer
• Pooling . CORRECT ANSWER: All insureds share the costs of eachothers' losses.
Insurers combine all premiums collected to pay losses as they occur
• Personal Insurance (Property) . CORRECT ANSWER: Protects an insured's assets
by covering the cost of repairing or replacing property that is damaged, lost, or
destroyed.
• Personal Insurance (Liability) . CORRECT ANSWER: Provides payments for injury to
others or damage to other's property for which the insured is legally responsible. Also
covers the cost to defend the insured against related lawsuits
• Personal Insurance (Health) . CORRECT ANSWER: Protects individuals and families
from financial losses caused by sickness or accidents
• Personal P&C Insurance (Homeowners) . CORRECT ANSWER: Provides protection
when people's homes and/or belongings are damaged or stolen and liability coverage
for situations such as the family dog biting a desk
• Personal Auto Insurance . CORRECT ANSWER: If insured is at fault in an accident,
provides coverage for personal bodily injury to another person or damage to another
person's auto. Also provides coverage for damaged to insured auto (not wear + tear).
Legally required
• Personal Umbrella Insurance . CORRECT ANSWER: Provides additional protection
for people with a high potential for large liability losses
• Commercial Property Insurance . CORRECT ANSWER: Covers damage to buildings
or their contents that results from fire, vandalism, and other causes of loss
• Commercial Crime Insurance . CORRECT ANSWER: Protects against losses from
theft of business property and money, including employee theft
• Commercial General Liability . CORRECT ANSWER: Protects a business against its
legal liability to others for bodily injury or property damage
• Commercial Auto Insurance . CORRECT ANSWER: Covers liability for bodily injury
and property damage caused by the use of the businesses' autos and also damage to
the business own autos when they are in an accident
,• Workers Compensation . CORRECT ANSWER: Covers legally required benefits that
businesses are required to pay to their employees for job-related injuries and illnesses
• Commercial Umbrella Insurance . CORRECT ANSWER: Provides additional liability
limits beyond those provided by other commercial policies, protecting a business in the
event of large liability loss
• Stock Insurers (Private Insurers) . CORRECT ANSWER: Objective is to earn a profit,
and they attract stockholders by the expectation of investment returns. Many large PC
insurers are this.
• Mutual Insurers (Private Insurers) . CORRECT ANSWER: Share profits, pay
dividends to policyholders as a return of a portion of premiums paid. Some large
insurers and many regional insurers are this.
• Surplus Lines Insurers (Private Insurers) . CORRECT ANSWER: Provide insurance
coverages unavailable in the standard market
• Reinsurance (Private Insurers) . CORRECT ANSWER: Allows a primary insurer to
transfer some loss exposures to another insurer, the reinsurer. It can help a small
insurer provide insurance for large accounts.
• What role does the government play in insurance? . CORRECT ANSWER: - If a type
of insurance is required, the government makes sure it is available at a reasonable price
- Reduces time or resources needed to obtain insurance coverage
- Can help find insurance for accounts that private insurers are unwilling or unable to
provide
• Pure Risk . CORRECT ANSWER: A chance of loss or no loss, but no chance of gain.
• Speculative Risk . CORRECT ANSWER: A chance of loss, no loss, or gain.
• Hazard Risk . CORRECT ANSWER: Arises from property, liability, or personnel loss
exposures
• Operational Risk . CORRECT ANSWER: Arises from people, processes, systems, or
controls
• Financial Risk . CORRECT ANSWER: Arises from the effect of market forces on
financial assets or liabilities
• Strategic Risk . CORRECT ANSWER: Arises from trends in the economy or society
• Artificial Intelligence . CORRECT ANSWER: Allows computers to perform tasks that
require critical thinking, such as making decisions. Allows robots to work alongside
humans and cars and to operate without human drivers.
, • Smart Sensors . CORRECT ANSWER: Detect and measure objects or conditions
continuously to warn of problems or malfunctions. May trigger a response to an issue,
which helps reduce losses.
• Computer Vision . CORRECT ANSWER: Helps a machine recognize an object and
respond to it as a human would
• Three Primary Reasons for Insurance Regulation . CORRECT ANSWER: 1. To
protect consumers
2. To maintain insurer solvency
3. To protect destructive competition
• What is shown on an insurer's income statement? . CORRECT ANSWER: Total
Revenue, Expenses,, Net Income
• Insurer's Balance Sheet . CORRECT ANSWER: Includes Assets, Liabilities, and
Policyholder's surplus.
• Policyholder's surplus . CORRECT ANSWER: Assets minus Liabilities
• Combined Ratio Use . CORRECT ANSWER: Indicates whether an insurer is making
an underwriting loss or gain. Loss Ratio = how much of the premium dollar pays for
losses and adjustments. Expense Ratio = How much of the premium dollar is used to
pay the insurer's expenses.
• Combined Ratio Formula . CORRECT ANSWER: Combined Ratio = Loss Ratio +
Expense Ratio
• How to interpret the combined ratio . CORRECT ANSWER: A combined ratio less
than 100 means the insurer is making a UW profit. More than 100 means the insurer is
not making a UW profit. Ex. A combined ratio of 85 means it is earning 15 cents profit
from UW on every dollar of premium.
• Independent Agents and Brokers . CORRECT ANSWER: Both sell insurance
products to individuals and businesses. The broker represents the customer, the agent
represents one or more insurers. Typically not employees of an insurer and are usually
free to work with as many insurers as they want. Own their own expiration lists.
• Expiration List . CORRECT ANSWER: Lists that contain policyholder information and
policy expiration dates
• Exclusive Agency . CORRECT ANSWER: An agency contracted to sell insurance for
one insurer or group of insurers. Are not employees of the insurer, but cannot sell
policies from another insurer due to a contract. Do not own policy expiration lists. Leave
expiration lists behind when contracting with another insurer.
and Answers | Most Recent 2026 Update
• Transferring . CORRECT ANSWER: The act of transferring the financial
consequences of unanticipated events to an insurer
• Pooling . CORRECT ANSWER: All insureds share the costs of eachothers' losses.
Insurers combine all premiums collected to pay losses as they occur
• Personal Insurance (Property) . CORRECT ANSWER: Protects an insured's assets
by covering the cost of repairing or replacing property that is damaged, lost, or
destroyed.
• Personal Insurance (Liability) . CORRECT ANSWER: Provides payments for injury to
others or damage to other's property for which the insured is legally responsible. Also
covers the cost to defend the insured against related lawsuits
• Personal Insurance (Health) . CORRECT ANSWER: Protects individuals and families
from financial losses caused by sickness or accidents
• Personal P&C Insurance (Homeowners) . CORRECT ANSWER: Provides protection
when people's homes and/or belongings are damaged or stolen and liability coverage
for situations such as the family dog biting a desk
• Personal Auto Insurance . CORRECT ANSWER: If insured is at fault in an accident,
provides coverage for personal bodily injury to another person or damage to another
person's auto. Also provides coverage for damaged to insured auto (not wear + tear).
Legally required
• Personal Umbrella Insurance . CORRECT ANSWER: Provides additional protection
for people with a high potential for large liability losses
• Commercial Property Insurance . CORRECT ANSWER: Covers damage to buildings
or their contents that results from fire, vandalism, and other causes of loss
• Commercial Crime Insurance . CORRECT ANSWER: Protects against losses from
theft of business property and money, including employee theft
• Commercial General Liability . CORRECT ANSWER: Protects a business against its
legal liability to others for bodily injury or property damage
• Commercial Auto Insurance . CORRECT ANSWER: Covers liability for bodily injury
and property damage caused by the use of the businesses' autos and also damage to
the business own autos when they are in an accident
,• Workers Compensation . CORRECT ANSWER: Covers legally required benefits that
businesses are required to pay to their employees for job-related injuries and illnesses
• Commercial Umbrella Insurance . CORRECT ANSWER: Provides additional liability
limits beyond those provided by other commercial policies, protecting a business in the
event of large liability loss
• Stock Insurers (Private Insurers) . CORRECT ANSWER: Objective is to earn a profit,
and they attract stockholders by the expectation of investment returns. Many large PC
insurers are this.
• Mutual Insurers (Private Insurers) . CORRECT ANSWER: Share profits, pay
dividends to policyholders as a return of a portion of premiums paid. Some large
insurers and many regional insurers are this.
• Surplus Lines Insurers (Private Insurers) . CORRECT ANSWER: Provide insurance
coverages unavailable in the standard market
• Reinsurance (Private Insurers) . CORRECT ANSWER: Allows a primary insurer to
transfer some loss exposures to another insurer, the reinsurer. It can help a small
insurer provide insurance for large accounts.
• What role does the government play in insurance? . CORRECT ANSWER: - If a type
of insurance is required, the government makes sure it is available at a reasonable price
- Reduces time or resources needed to obtain insurance coverage
- Can help find insurance for accounts that private insurers are unwilling or unable to
provide
• Pure Risk . CORRECT ANSWER: A chance of loss or no loss, but no chance of gain.
• Speculative Risk . CORRECT ANSWER: A chance of loss, no loss, or gain.
• Hazard Risk . CORRECT ANSWER: Arises from property, liability, or personnel loss
exposures
• Operational Risk . CORRECT ANSWER: Arises from people, processes, systems, or
controls
• Financial Risk . CORRECT ANSWER: Arises from the effect of market forces on
financial assets or liabilities
• Strategic Risk . CORRECT ANSWER: Arises from trends in the economy or society
• Artificial Intelligence . CORRECT ANSWER: Allows computers to perform tasks that
require critical thinking, such as making decisions. Allows robots to work alongside
humans and cars and to operate without human drivers.
, • Smart Sensors . CORRECT ANSWER: Detect and measure objects or conditions
continuously to warn of problems or malfunctions. May trigger a response to an issue,
which helps reduce losses.
• Computer Vision . CORRECT ANSWER: Helps a machine recognize an object and
respond to it as a human would
• Three Primary Reasons for Insurance Regulation . CORRECT ANSWER: 1. To
protect consumers
2. To maintain insurer solvency
3. To protect destructive competition
• What is shown on an insurer's income statement? . CORRECT ANSWER: Total
Revenue, Expenses,, Net Income
• Insurer's Balance Sheet . CORRECT ANSWER: Includes Assets, Liabilities, and
Policyholder's surplus.
• Policyholder's surplus . CORRECT ANSWER: Assets minus Liabilities
• Combined Ratio Use . CORRECT ANSWER: Indicates whether an insurer is making
an underwriting loss or gain. Loss Ratio = how much of the premium dollar pays for
losses and adjustments. Expense Ratio = How much of the premium dollar is used to
pay the insurer's expenses.
• Combined Ratio Formula . CORRECT ANSWER: Combined Ratio = Loss Ratio +
Expense Ratio
• How to interpret the combined ratio . CORRECT ANSWER: A combined ratio less
than 100 means the insurer is making a UW profit. More than 100 means the insurer is
not making a UW profit. Ex. A combined ratio of 85 means it is earning 15 cents profit
from UW on every dollar of premium.
• Independent Agents and Brokers . CORRECT ANSWER: Both sell insurance
products to individuals and businesses. The broker represents the customer, the agent
represents one or more insurers. Typically not employees of an insurer and are usually
free to work with as many insurers as they want. Own their own expiration lists.
• Expiration List . CORRECT ANSWER: Lists that contain policyholder information and
policy expiration dates
• Exclusive Agency . CORRECT ANSWER: An agency contracted to sell insurance for
one insurer or group of insurers. Are not employees of the insurer, but cannot sell
policies from another insurer due to a contract. Do not own policy expiration lists. Leave
expiration lists behind when contracting with another insurer.
