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AIC 302 Practice Exam: 100 Questions with Answers
Section 1: The Auto Liability Claims Environment (Questions 1–20)
Q1. What is the primary difference between a first-party claim and a third-party claim?
A. First-party claims involve commercial vehicles; third-party claims involve personal vehicles
B. First-party claims are demands by an insured seeking recovery from their own insurer;
third-party claims are demands against an insured by another party
C. First-party claims always involve property damage; third-party claims always involve
bodily injury
D. First-party claims require litigation; third-party claims do not
Answer: B
Rationale: A first-party claim is a demand by an insured seeking to recover from their own
insurer. A third-party claim is a demand against an insured by another party seeking recovery
from the insured's liability insurance.
Q2. What is the legal definition of negligence?
A. The intentional act of causing harm to another person
B. The failure to exercise the degree of care that a reasonable person in a similar situation
would exercise
C. Any violation of a traffic law
D. The act of driving while distracted
Answer: B
Rationale: Negligence is the failure to exercise the degree of care that a reasonable person in
a similar situation would exercise to avoid harming others.
Q3. A dram shop act is a statute that:
A. Regulates the sale of automobile parts
B. Holds establishments that serve alcoholic beverages responsible for harm resulting from
serving patrons alcohol in violation of the statute
C. Regulates the operation of auto repair shops
D. Establishes minimum insurance requirements for bars
Answer: B
Rationale: A dram shop act holds establishments that serve alcoholic beverages responsible
for harm resulting from serving patrons alcohol in violation of the statute.
Q4. Negligent entrustment occurs when:
A. A vehicle owner fails to properly maintain a vehicle
B. A person leaves a dangerous article with someone who the lender knows, or should know,
is likely to use it in an unreasonably risky manner
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C. A driver operates a vehicle without proper insurance
D. A vehicle is sold without proper title transfer
Answer: B
Rationale: Negligent entrustment is 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.
Q5. Vicarious liability occurs when:
A. A person is held liable for their own negligent actions
B. One party is held liable for the actions of a subordinate or associate because of the
relationship between the parties
C. A manufacturer is held liable for defective products
D. A landlord is held liable for tenant injuries
Answer: B
Rationale: Vicarious liability occurs when one party is held liable for the actions of a
subordinate or associate because of the relationship between the parties.
Q6. The rescue doctrine provides that:
A. Rescuers are always immune from liability
B. A party causing an accident can be liable to any people involved in rescue efforts as a
result of the accident
C. Only professional rescuers can be compensated
D. Rescuers cannot sue for injuries
Answer: B
Rationale: The rescue doctrine provides that a party causing an accident can be liable to any
people involved in rescue efforts as a result of the accident.
Q7. Joint and several liability means:
A. Each defendant is only responsible for their share of fault
B. Multiple defendants are either collectively or individually liable for the entire amount of
damages
C. The policy cannot be assigned to another without the insurer's consent
D. The policy coverage follows the vehicle
Answer: B
Rationale: Joint and several liability means multiple defendants are either collectively or
individually liable for the entire amount of damages regardless of their individual share of
fault.
Q8. In the agency relationship, the party authorized to act on the principal's behalf is called
the:
, 3
A. Principal
B. Agent
C. Third party
D. Insured
Answer: B
Rationale: An agent is the party in the agency relationship that is authorized by the principal
to act on the principal's behalf.
Q9. What is proximate cause?
A. The immediate cause of an accident
B. 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
C. Any cause that contributes to an accident
D. The final event in a chain of causation
Answer: B
Rationale: Proximate cause is 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.
Q10. Negligence per se is:
A. An act that is considered inherently negligent because of a violation of a law or ordinance
B. Any negligent act
C. A criminal act
D. An intentional tort
Answer: A
Rationale: Negligence per se is an act that is considered inherently negligent because of a
violation of a law or an ordinance.
Q11. What is the "danger invites rescue" doctrine?
A. A doctrine that discourages rescue attempts
B. A doctrine that holds a tortfeasor liable for injuries to rescuers who attempt to save
victims
C. A doctrine that limits liability to professional rescuers
D. A doctrine that applies only to fires
Answer: B
Rationale: The "danger invites rescue" doctrine holds a tortfeasor liable for injuries to
rescuers who attempt to save victims.
Q12. What is a tort?
AIC 302 Practice Exam: 100 Questions with Answers
Section 1: The Auto Liability Claims Environment (Questions 1–20)
Q1. What is the primary difference between a first-party claim and a third-party claim?
A. First-party claims involve commercial vehicles; third-party claims involve personal vehicles
B. First-party claims are demands by an insured seeking recovery from their own insurer;
third-party claims are demands against an insured by another party
C. First-party claims always involve property damage; third-party claims always involve
bodily injury
D. First-party claims require litigation; third-party claims do not
Answer: B
Rationale: A first-party claim is a demand by an insured seeking to recover from their own
insurer. A third-party claim is a demand against an insured by another party seeking recovery
from the insured's liability insurance.
Q2. What is the legal definition of negligence?
A. The intentional act of causing harm to another person
B. The failure to exercise the degree of care that a reasonable person in a similar situation
would exercise
C. Any violation of a traffic law
D. The act of driving while distracted
Answer: B
Rationale: Negligence is the failure to exercise the degree of care that a reasonable person in
a similar situation would exercise to avoid harming others.
Q3. A dram shop act is a statute that:
A. Regulates the sale of automobile parts
B. Holds establishments that serve alcoholic beverages responsible for harm resulting from
serving patrons alcohol in violation of the statute
C. Regulates the operation of auto repair shops
D. Establishes minimum insurance requirements for bars
Answer: B
Rationale: A dram shop act holds establishments that serve alcoholic beverages responsible
for harm resulting from serving patrons alcohol in violation of the statute.
Q4. Negligent entrustment occurs when:
A. A vehicle owner fails to properly maintain a vehicle
B. A person leaves a dangerous article with someone who the lender knows, or should know,
is likely to use it in an unreasonably risky manner
, 2
C. A driver operates a vehicle without proper insurance
D. A vehicle is sold without proper title transfer
Answer: B
Rationale: Negligent entrustment is 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.
Q5. Vicarious liability occurs when:
A. A person is held liable for their own negligent actions
B. One party is held liable for the actions of a subordinate or associate because of the
relationship between the parties
C. A manufacturer is held liable for defective products
D. A landlord is held liable for tenant injuries
Answer: B
Rationale: Vicarious liability occurs when one party is held liable for the actions of a
subordinate or associate because of the relationship between the parties.
Q6. The rescue doctrine provides that:
A. Rescuers are always immune from liability
B. A party causing an accident can be liable to any people involved in rescue efforts as a
result of the accident
C. Only professional rescuers can be compensated
D. Rescuers cannot sue for injuries
Answer: B
Rationale: The rescue doctrine provides that a party causing an accident can be liable to any
people involved in rescue efforts as a result of the accident.
Q7. Joint and several liability means:
A. Each defendant is only responsible for their share of fault
B. Multiple defendants are either collectively or individually liable for the entire amount of
damages
C. The policy cannot be assigned to another without the insurer's consent
D. The policy coverage follows the vehicle
Answer: B
Rationale: Joint and several liability means multiple defendants are either collectively or
individually liable for the entire amount of damages regardless of their individual share of
fault.
Q8. In the agency relationship, the party authorized to act on the principal's behalf is called
the:
, 3
A. Principal
B. Agent
C. Third party
D. Insured
Answer: B
Rationale: An agent is the party in the agency relationship that is authorized by the principal
to act on the principal's behalf.
Q9. What is proximate cause?
A. The immediate cause of an accident
B. 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
C. Any cause that contributes to an accident
D. The final event in a chain of causation
Answer: B
Rationale: Proximate cause is 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.
Q10. Negligence per se is:
A. An act that is considered inherently negligent because of a violation of a law or ordinance
B. Any negligent act
C. A criminal act
D. An intentional tort
Answer: A
Rationale: Negligence per se is an act that is considered inherently negligent because of a
violation of a law or an ordinance.
Q11. What is the "danger invites rescue" doctrine?
A. A doctrine that discourages rescue attempts
B. A doctrine that holds a tortfeasor liable for injuries to rescuers who attempt to save
victims
C. A doctrine that limits liability to professional rescuers
D. A doctrine that applies only to fires
Answer: B
Rationale: The "danger invites rescue" doctrine holds a tortfeasor liable for injuries to
rescuers who attempt to save victims.
Q12. What is a tort?
