ASSOCIATE IN CLAIMS (AIC) EXAM QUESTIONS
AND CORRECT ANSWERS (VERIFIED ANSWERS)
Q&A 2026/2027 |INSTANT DOWNLOAD PDF
1. What is the primary purpose of insurance claims handling?
A. To maximize insurer profits
B. To determine whether and how much the insurer owes under the
policy
C. To eliminate all insurance fraud
D. To guarantee payment to every claimant
Answer: B. To determine whether and how much the insurer owes
under the policy
Rationale: Claims handling involves investigating the loss, determining
coverage and liability, evaluating damages, and resolving the claim
according to the policy.
2. Which activity normally occurs first after an insurer receives a new
claim?
A. Litigation
B. Settlement negotiation
C. Claim acknowledgment and initial investigation
D. Subrogation recovery
Answer: C. Claim acknowledgment and initial investigation
Rationale: The claim must first be reported, acknowledged, and
investigated before coverage, liability, and damages can be evaluated.
,3. What is a claim?
A. A premium payment
B. A demand for payment or benefits under an insurance policy
C. A policy endorsement
D. An underwriting guideline
Answer: B. A demand for payment or benefits under an insurance policy
Rationale: A claim generally involves a request for benefits because an
insured event or loss has occurred.
4. Which principle requires an insurer to act honestly and fairly
toward an insured?
A. Contribution
B. Good faith
C. Indemnity
D. Subrogation
Answer: B. Good faith
Rationale: Good faith requires parties, particularly insurers in claims
handling, to deal honestly and fairly and comply with applicable legal
and policy obligations.
5. What is the principle of indemnity intended to accomplish?
A. Allow the insured to profit from a loss
B. Restore the insured financially, subject to policy terms, to
approximately the position occupied before the loss
C. Eliminate deductibles
D. Increase the insured's policy limits
,Answer: B. Restore the insured financially, subject to policy terms, to
approximately the position occupied before the loss
Rationale: Indemnity is designed to compensate for covered loss rather
than create a financial gain from the loss.
6. Which document generally establishes the contractual agreement
between the insurer and insured?
A. Police report
B. Insurance policy
C. Claim diary
D. Repair estimate
Answer: B. Insurance policy
Rationale: The policy establishes the rights, duties, coverage,
exclusions, conditions, and limits applicable to the insurance contract.
7. What is the main purpose of a deductible?
A. To increase the policy limit
B. To transfer every loss to the insurer
C. To require the insured to bear a specified portion of the loss
D. To eliminate exclusions
Answer: C. To require the insured to bear a specified portion of the loss
Rationale: A deductible represents the portion of a covered loss that
the insured is responsible for before the insurer pays, subject to policy
terms.
8. Which of the following is most important when determining
whether a loss is covered?
, A. The claimant's preferred settlement amount
B. The applicable policy language
C. The adjuster's personal opinion
D. The insured's occupation alone
Answer: B. The applicable policy language
Rationale: Coverage is determined by interpreting the policy's insuring
agreement, conditions, exclusions, definitions, endorsements, and
applicable law.
9. What is the purpose of an insurance policy exclusion?
A. To expand coverage
B. To identify losses or circumstances that are not covered
C. To establish premium rates
D. To determine the adjuster's salary
Answer: B. To identify losses or circumstances that are not covered
Rationale: Exclusions remove specified causes, property,
circumstances, or types of loss from coverage.
10. What is a reservation of rights letter primarily used for?
A. To cancel every claim
B. To inform the insured that the insurer may deny coverage while
investigating or defending the claim
C. To guarantee coverage
D. To increase policy limits
Answer: B. To inform the insured that the insurer may deny coverage
while investigating or defending the claim
Rationale: A reservation of rights preserves the insurer's ability to
AND CORRECT ANSWERS (VERIFIED ANSWERS)
Q&A 2026/2027 |INSTANT DOWNLOAD PDF
1. What is the primary purpose of insurance claims handling?
A. To maximize insurer profits
B. To determine whether and how much the insurer owes under the
policy
C. To eliminate all insurance fraud
D. To guarantee payment to every claimant
Answer: B. To determine whether and how much the insurer owes
under the policy
Rationale: Claims handling involves investigating the loss, determining
coverage and liability, evaluating damages, and resolving the claim
according to the policy.
2. Which activity normally occurs first after an insurer receives a new
claim?
A. Litigation
B. Settlement negotiation
C. Claim acknowledgment and initial investigation
D. Subrogation recovery
Answer: C. Claim acknowledgment and initial investigation
Rationale: The claim must first be reported, acknowledged, and
investigated before coverage, liability, and damages can be evaluated.
,3. What is a claim?
A. A premium payment
B. A demand for payment or benefits under an insurance policy
C. A policy endorsement
D. An underwriting guideline
Answer: B. A demand for payment or benefits under an insurance policy
Rationale: A claim generally involves a request for benefits because an
insured event or loss has occurred.
4. Which principle requires an insurer to act honestly and fairly
toward an insured?
A. Contribution
B. Good faith
C. Indemnity
D. Subrogation
Answer: B. Good faith
Rationale: Good faith requires parties, particularly insurers in claims
handling, to deal honestly and fairly and comply with applicable legal
and policy obligations.
5. What is the principle of indemnity intended to accomplish?
A. Allow the insured to profit from a loss
B. Restore the insured financially, subject to policy terms, to
approximately the position occupied before the loss
C. Eliminate deductibles
D. Increase the insured's policy limits
,Answer: B. Restore the insured financially, subject to policy terms, to
approximately the position occupied before the loss
Rationale: Indemnity is designed to compensate for covered loss rather
than create a financial gain from the loss.
6. Which document generally establishes the contractual agreement
between the insurer and insured?
A. Police report
B. Insurance policy
C. Claim diary
D. Repair estimate
Answer: B. Insurance policy
Rationale: The policy establishes the rights, duties, coverage,
exclusions, conditions, and limits applicable to the insurance contract.
7. What is the main purpose of a deductible?
A. To increase the policy limit
B. To transfer every loss to the insurer
C. To require the insured to bear a specified portion of the loss
D. To eliminate exclusions
Answer: C. To require the insured to bear a specified portion of the loss
Rationale: A deductible represents the portion of a covered loss that
the insured is responsible for before the insurer pays, subject to policy
terms.
8. Which of the following is most important when determining
whether a loss is covered?
, A. The claimant's preferred settlement amount
B. The applicable policy language
C. The adjuster's personal opinion
D. The insured's occupation alone
Answer: B. The applicable policy language
Rationale: Coverage is determined by interpreting the policy's insuring
agreement, conditions, exclusions, definitions, endorsements, and
applicable law.
9. What is the purpose of an insurance policy exclusion?
A. To expand coverage
B. To identify losses or circumstances that are not covered
C. To establish premium rates
D. To determine the adjuster's salary
Answer: B. To identify losses or circumstances that are not covered
Rationale: Exclusions remove specified causes, property,
circumstances, or types of loss from coverage.
10. What is a reservation of rights letter primarily used for?
A. To cancel every claim
B. To inform the insured that the insurer may deny coverage while
investigating or defending the claim
C. To guarantee coverage
D. To increase policy limits
Answer: B. To inform the insured that the insurer may deny coverage
while investigating or defending the claim
Rationale: A reservation of rights preserves the insurer's ability to
