AINS 101 Exam Questions and Answers
100% Solved | Graded A+
Which of the following is an example of a legal requirement for individuals
that could be met through insurance?
a. contributing to the growth of the organization
b. paying for losses
c. obtaining personal auto insurance
d. providing a source of investment funds - ✔✔c. obtaining personal auto
insurance
A fire destroys the kitchen in Rob and Laurie's home. Which insurance
policy would provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy - ✔✔b. Homeowners Policy (Property)
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,Which insurance policy could protect Rob and Laurie's sandwich shop
against losses from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto - ✔✔b. Commercial Crime
The best indication of an insurer's overall financial health is the -
✔✔policyholders surplus (It shows how much cash an insurer has on hand
for emergencies, unexpected losses, and expansion of business)
Combined ratio = - ✔✔loss ratio + expense ratio
expense ratio = - ✔✔incurred underwriting expenses / written premiums
loss ratio = - ✔✔incurred losses (including loss adjustment expenses) /
earned premiums
Marco has been approved for a car insurance policy with a low premium
because on his application he gave an address in a low-crime area.
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,However, the actual address at which he lives and parks his car is in a
high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines - ✔✔b. Adverse selection
Emily is the underwriter for Marco's account. What is one way she could
detect and minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or
losses
d. Alter the underwriting guidelines - ✔✔c. Monitor the book of business for
unusual patterns of policy growth or losses
These underwriters evaluate individual insurance applications and policy
renewals and manage their own books of business. In many ways, they are
the public face of the Underwriting Department - ✔✔field underwriters
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, These underwriters make large-scale decisions about coverage, pricing,
lines of business, and the overall risk selection process - ✔✔corporate
underwriters
What do underwriters evaluate to determine the appropriate classification
for a commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus - ✔✔b. specific characteristics of the insured's
operation
Exposure unit to the type of insurance it's typically used for:
Each vehicle - ✔✔auto
Exposure unit to the type of insurance it's typically used for:
Each $100 of insured value - ✔✔commercial property
Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales - ✔✔general liability
4
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
100% Solved | Graded A+
Which of the following is an example of a legal requirement for individuals
that could be met through insurance?
a. contributing to the growth of the organization
b. paying for losses
c. obtaining personal auto insurance
d. providing a source of investment funds - ✔✔c. obtaining personal auto
insurance
A fire destroys the kitchen in Rob and Laurie's home. Which insurance
policy would provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy - ✔✔b. Homeowners Policy (Property)
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,Which insurance policy could protect Rob and Laurie's sandwich shop
against losses from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto - ✔✔b. Commercial Crime
The best indication of an insurer's overall financial health is the -
✔✔policyholders surplus (It shows how much cash an insurer has on hand
for emergencies, unexpected losses, and expansion of business)
Combined ratio = - ✔✔loss ratio + expense ratio
expense ratio = - ✔✔incurred underwriting expenses / written premiums
loss ratio = - ✔✔incurred losses (including loss adjustment expenses) /
earned premiums
Marco has been approved for a car insurance policy with a low premium
because on his application he gave an address in a low-crime area.
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,However, the actual address at which he lives and parks his car is in a
high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines - ✔✔b. Adverse selection
Emily is the underwriter for Marco's account. What is one way she could
detect and minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or
losses
d. Alter the underwriting guidelines - ✔✔c. Monitor the book of business for
unusual patterns of policy growth or losses
These underwriters evaluate individual insurance applications and policy
renewals and manage their own books of business. In many ways, they are
the public face of the Underwriting Department - ✔✔field underwriters
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, These underwriters make large-scale decisions about coverage, pricing,
lines of business, and the overall risk selection process - ✔✔corporate
underwriters
What do underwriters evaluate to determine the appropriate classification
for a commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus - ✔✔b. specific characteristics of the insured's
operation
Exposure unit to the type of insurance it's typically used for:
Each vehicle - ✔✔auto
Exposure unit to the type of insurance it's typically used for:
Each $100 of insured value - ✔✔commercial property
Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales - ✔✔general liability
4
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
