AIC 302 EXAM QUESTIONS WELL ANSWERED LATEST UPDATE 2026
First-party claim - Answers A demand by an insured person or organization seeking
to recover from its insurer for a loss that its insurance policy may cover.
Third-party claim - Answers A demand against an insured by a person or
organization other than the insured or the insurer, seeking to recover damages that
may be payable by the insured's liability insurance.
Negligence - Answers The failure to exercise the degree of care that a reasonable
person in a similar situation would exercise to avoid harming others.
Proximate cause - Answers A cause that, in a natural and continuous sequence
unbroken by any new and independent cause, produces an event and without which
the event would not have happened.
Dram shop act - Answers A statute holding establishments that serve alcoholic
beverages responsible for harm that results from serving patrons alcohol in violation
of the statute.
Negligent entrustment - Answers The act of leaving a dangerous article with a person
who the lender knows, or should know, is likely to use it in an unreasonably risky
manner.
Negligence per se - Answers An act that is considered inherently negligent because
of a violation of a law or an ordinance.
Vicarious liability - Answers A legal responsibility that occurs when one party is held
liable for the actions of a subordinate or an associate because of the relationship
between the two parties.
Agent - Answers In the agency relationship, the party that is authorized by the
principal to act on the principal's behalf.
Principal - Answers The party in an agency relationship that authorizes the agent to
act on that party's behalf.
Rescue doctrine - Answers A legal doctrine providing that a party causing an
accident can be liable to any people involved in rescue efforts as a result of the
accident.
Joint and several liability - Answers The liability of multiple defendants either
collectively or individually for the entire amount of damages sought by the plaintiff
regardless of their relative degree of responsibility.
Tortfeasor - Answers A person or organization that has committed a tort.
Successive tortfeasors - Answers Parties whose independent acts do not produce a
single event but unite to cause a single injury that can be easily apportioned among
the wrongdoers.
Bailee - Answers The party temporarily possessing the personal property in a
bailment.
Bailor - Answers The owner of the personal property in a bailment.
Compensatory damages - Answers A payment awarded by a court to reimburse a
victim for actual harm.
Punitive damages (exemplary damages) - Answers 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.
Uninsured motor vehicle - Answers 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.
, Split limit basis - Answers Separate coverage limits that allow one limit for bodily
injury to each person; a second, usually higher, limit for bodily injury to all persons in
each accident; and a third limit for all property damage in each accident.
Single-limits basis - Answers One coverage limit that applies to all damages arising
from bodily injury or property damage or both, resulting from a single accident.
Arbitration - Answers 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.
Personal loss exposure - Answers Any condition or situation that presents the
possibility of a financial loss to an individual or a family by such causes as death,
sickness, injury, or unemployment.
Commercial package policy (CPP) - Answers Policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts.
Monoline policy - Answers Policy that covers only one line of business.
Garagekeepers coverage - Answers Coverage for damage to customer's autos left in
the named insured's care while the insured is attending, servicing, repairing, parking,
or storing them.
Motor Carrier Coverage Form - Answers The coverage form filed by ISO that can be
used to insure a person or organization providing transportation by auto in the
furtherance of a commercial enterprise.
Owner-operators - Answers Individuals who lease themselves and their owned trucks
to motor carriers to transport property for the motor carrier.
Hold-harmless agreement (or indemnity agreement) - Answers A contractual
provision that obligates one of the parties to assume the legal liability of another
party.
Trailer interchange agreement - Answers A contract under which two motor carriers
agree to swap trailers and to indemnify each other for any damage that occurs to the
other's trailer while it is in the borrowing motor carrier's possession.
Trailer interchange coverage - Answers Coverage for motor carrier's liability for
damage to trailers in its possession under a written trailer interchange agreement.
MCS 90 endorsement - Answers The commercial auto endorsement required by the
Motor Carrier Act of 1980, in which the insurer agrees to pay, up to specified limits,
damages that the insured becomes legally obligated to pay for liability resulting from
negligence in the operation, maintenance, or use of any motor vehicle subject to that
law.
Transportation network company - Answers A company that uses a mobile
application or website to connect riders with drivers and arrange transportation in a
personal auto for a fee.
Material misrepresentation - Answers A fact that has been misstated or omitted and
that could be reasonably considered as affecting the insurer's decision to enter into the
contract, the insurer's evaluation of the degree or character of the risk, or the
calculation of the premium.
Contribution by equal shares - Answers Method of sharing loss when two or more
policies apply in which each insurer pays an equal amount until the claim is fully paid
or until one insurer exhausts its limit, in which case the other insurer pays the
remainder of the claim (up to its limit).
Pro rata contribution - Answers An approach to the other insurance by which the
insurers contribute to the loss payment in the proportion to which they contribute to
the total amount of coverage purchased (their limits of liability).
First-party claim - Answers A demand by an insured person or organization seeking
to recover from its insurer for a loss that its insurance policy may cover.
Third-party claim - Answers A demand against an insured by a person or
organization other than the insured or the insurer, seeking to recover damages that
may be payable by the insured's liability insurance.
Negligence - Answers The failure to exercise the degree of care that a reasonable
person in a similar situation would exercise to avoid harming others.
Proximate cause - Answers A cause that, in a natural and continuous sequence
unbroken by any new and independent cause, produces an event and without which
the event would not have happened.
Dram shop act - Answers A statute holding establishments that serve alcoholic
beverages responsible for harm that results from serving patrons alcohol in violation
of the statute.
Negligent entrustment - Answers The act of leaving a dangerous article with a person
who the lender knows, or should know, is likely to use it in an unreasonably risky
manner.
Negligence per se - Answers An act that is considered inherently negligent because
of a violation of a law or an ordinance.
Vicarious liability - Answers A legal responsibility that occurs when one party is held
liable for the actions of a subordinate or an associate because of the relationship
between the two parties.
Agent - Answers In the agency relationship, the party that is authorized by the
principal to act on the principal's behalf.
Principal - Answers The party in an agency relationship that authorizes the agent to
act on that party's behalf.
Rescue doctrine - Answers A legal doctrine providing that a party causing an
accident can be liable to any people involved in rescue efforts as a result of the
accident.
Joint and several liability - Answers The liability of multiple defendants either
collectively or individually for the entire amount of damages sought by the plaintiff
regardless of their relative degree of responsibility.
Tortfeasor - Answers A person or organization that has committed a tort.
Successive tortfeasors - Answers Parties whose independent acts do not produce a
single event but unite to cause a single injury that can be easily apportioned among
the wrongdoers.
Bailee - Answers The party temporarily possessing the personal property in a
bailment.
Bailor - Answers The owner of the personal property in a bailment.
Compensatory damages - Answers A payment awarded by a court to reimburse a
victim for actual harm.
Punitive damages (exemplary damages) - Answers 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.
Uninsured motor vehicle - Answers 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.
, Split limit basis - Answers Separate coverage limits that allow one limit for bodily
injury to each person; a second, usually higher, limit for bodily injury to all persons in
each accident; and a third limit for all property damage in each accident.
Single-limits basis - Answers One coverage limit that applies to all damages arising
from bodily injury or property damage or both, resulting from a single accident.
Arbitration - Answers 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.
Personal loss exposure - Answers Any condition or situation that presents the
possibility of a financial loss to an individual or a family by such causes as death,
sickness, injury, or unemployment.
Commercial package policy (CPP) - Answers Policy that covers two or more lines of
business by combining ISO's commercial lines coverage parts.
Monoline policy - Answers Policy that covers only one line of business.
Garagekeepers coverage - Answers Coverage for damage to customer's autos left in
the named insured's care while the insured is attending, servicing, repairing, parking,
or storing them.
Motor Carrier Coverage Form - Answers The coverage form filed by ISO that can be
used to insure a person or organization providing transportation by auto in the
furtherance of a commercial enterprise.
Owner-operators - Answers Individuals who lease themselves and their owned trucks
to motor carriers to transport property for the motor carrier.
Hold-harmless agreement (or indemnity agreement) - Answers A contractual
provision that obligates one of the parties to assume the legal liability of another
party.
Trailer interchange agreement - Answers A contract under which two motor carriers
agree to swap trailers and to indemnify each other for any damage that occurs to the
other's trailer while it is in the borrowing motor carrier's possession.
Trailer interchange coverage - Answers Coverage for motor carrier's liability for
damage to trailers in its possession under a written trailer interchange agreement.
MCS 90 endorsement - Answers The commercial auto endorsement required by the
Motor Carrier Act of 1980, in which the insurer agrees to pay, up to specified limits,
damages that the insured becomes legally obligated to pay for liability resulting from
negligence in the operation, maintenance, or use of any motor vehicle subject to that
law.
Transportation network company - Answers A company that uses a mobile
application or website to connect riders with drivers and arrange transportation in a
personal auto for a fee.
Material misrepresentation - Answers A fact that has been misstated or omitted and
that could be reasonably considered as affecting the insurer's decision to enter into the
contract, the insurer's evaluation of the degree or character of the risk, or the
calculation of the premium.
Contribution by equal shares - Answers Method of sharing loss when two or more
policies apply in which each insurer pays an equal amount until the claim is fully paid
or until one insurer exhausts its limit, in which case the other insurer pays the
remainder of the claim (up to its limit).
Pro rata contribution - Answers An approach to the other insurance by which the
insurers contribute to the loss payment in the proportion to which they contribute to
the total amount of coverage purchased (their limits of liability).
