AINS 101 PRACTICE Questions With 100% Correct Answers latest Update

AINS 101 PRACTICE Questions With 100% Correct Answers latest Update Which of the following is an example of a legal requirement for individuals that could be met through insurance? • Obtaining personal auto insurance The concepts of Risk, Transfer and Pooling form the basis of insurance. Transfers the risk to the insurer Typical Insurance Needs: Personal & Commercial policies if someone has a business and house or cars. Personal Insurance: • Property Insurance • Liability Insurance – Injury to others or other properties • Life Insurance • Health Insurance What are the most common types of personal property -casualty insurance? • Homeowners • Personal auto • Personal umbrella A fire destroys the kitchen in Rob and Laurie’s home. Which insurance policy would provide coverage for the damage? • Homeowners Policy (Property) Commercial Insurance: What are the most common types of commercial property -casualty insurance? • Commercial property – Covers damage to buildings or their contents that results from fire, vandalism, and other causes of loss. • Commercial crime – Protects against losses from theft of business property and money, including employee theft. • Commercial general liability – Protects a business against its legal liability to others for bodily injury and property damage. • Commercial auto – Covers liability for bodily injury and property damage caused by the use of the business’s autos and also damage to the business’s own autos when they are in an accident. • Workers’ compensation – Covers legally required benefits that businesses are required to pay to their employees for job-related injuries and illnesses. • Commercial umbrella – Provides additional liability limits beyond those provided by other commercial policies, protecting a business in the event of a large liability loss. Which insurance policy could protect Rob and Laurie’s sandwich shop against losses from employee theft? • Commercial Crime Which insurance policy would protect Rob and Laurie if a customer slipped and fell on the sandwich shop’s wet floor? • Commercial General Liability Personal insurance policies will cover losses related to ownership of home and cars. Commercial insurance policies will cover losses related to their business. Personal property casualty insurance will cover residenc es, cars, and property. Commercial insurance policies often combine liability and property coverages into a single policy. Private insurers are classified by two basic forms of ownership: • Proprietary: Earn a profit for their owners • Cooperative: Provide insurance at a minimum cost to their owners who are the policy holders Common Private Insurers: • Stock Insurers: Earn a profit and attract stockholders by the expectation of investment returns • Mutual Insurers: Pay dividends to policyholders as a return of a portion of premium paid • Surplus Lines Insurers: Provide insurance coverage unavailable in a standard market • Reinsurers: Allows a primary insurer to transfer some loss exposure to another insurer (the reinsurer) helps a small insurer provide insurance for large accounts • Reciprocal Insurance Exchanges: Each member is both an insured and an insurer • Lloyd’s: An insurance and reinsurance marketplace, similar to stock exchange • Captive: Formed to cover the loss exposure of specific organizations (has earned a reputation for accepting applications for unusual types of insurance, such as insuring the legs of a famous athlete against injury) Government Insurance: • To fill unmet insurance needs • To facilitate required insurance purchases • To provide efficiency and convenience • To achieve social goals The government can act as an insurer or partner with private insurers. Can you think of examples of federal and state insurance programs? • Common examples of federal government insurance plans include the National Flood Insurance Program and the Terrorist Risk Insurance Program. • Common examples of state government insurance plans include Fair Access to Insurance Requirements plans (for consumers who can’t buy insurance in the private market) and beach and windstorm plans. Pure Risk: Can result in a loss or unchanged value. The risk of fire can be managed by purchasing insurance. Speculative Risk: Can result in a loss, no loss or gain of value. The risk of property devaluation can be managed by maintaining the property to enhance the resale value. Evolving Technology: • Artificial Intelligence • Sensors • Computer Vision You can see how emerging technologies can benefit risk management, but can you think of any risks created by these same emerging technologies? • As emerging technologies are used, emerging risks arise as well, particularly related to privacy and data protection, cybersecurity, and liability (for example, driverless autos). Regulation levels the playing field for insurers and policy holders: • To protect consumers • To maintain insurer solvency • To prevent destructive competition Strategic Risk Arises from trends in the economy and society. Ex. Economic environment, Political environment, Demographics, Competition Financial Risk Arises from the effect of market forces on financial assets or liabilities. Ex. Market risk, Credit risk, Price risk, Liquidity risk Speculative Risk Pure Risk Hazard Risk Arises from property, liability, or personnel loss exposures. Ex. Property risk, Legal risk, Personnel risk, Consequential loss Operational Risk Arises from people, processes, systems, or controls. Ex. People risk, IT risk, Management oversight, Business processes