Page 1 of 17
AINS 101 Exam Practice Questions and Answers 2024/2025
Complete Guide
1. Bill is an insurance producer for and employed by ABC Insurance Company (ABC). He
represents only ABC when marketing insurance products, and uses an administrative staff also
employed by ABC. Bill is a producer in the:
Direct writer marketing system
2. Because the insurance company usually determines policy wording and the insured has little
choice but to "take it or leave it," an insurance contract is a:
Contract of adhesion
3. Which one of the following best explains why producers should be alert to changes in clients'
loss exposures?:
Implemented risk management techniques may prove to be ineffective or become obsolete
4. At Greenfield Insurance Company, Bernadette and Rachel are corporate underwriters, and
Tomas and Jose are field underwriters. All of the following are underwriting activities typically
performed by corporate (or staff) underwriters like Bernadette and Rachel, EXCEPT:
Support producers and insureds
5. Joel is the underwriter for Stanton Industries. He received a notice from the premium auditor
on the account. After a recent visit to the insured's location, the auditor wanted to make Joel
aware of a decline in the business and some questionable business practices. Which one of the
following types of hazards is the auditor identifying?:
Moral hazards
6. Moral hazards:
Include questionable business practices or a failing business.
, Page 2 of 17
7. James West is a claims rep with Hatters Insurance. As he learns how to handle a claim from
start to finish, which one of the following best describes the correct order for him to follow
during this process?:
Identifying the policy, calculating a loss reserve, determining the cause of loss, preparing a
loss statement
8. Margaret was severely injured and scarred due to a recent accident. Which one of the
following is an example of general damages Margaret received?:
- Compensation for disfigurement
9. Donna is an insurance producer. She makes an appointment with potential policyholder Sandie
to review her loss exposures. She asks Sandie to complete a questionnaire to assist her in this
effort. Donna is conducting a:
Risk management review
10. Rachel is a new employee of Westley Insurance, and has been asked to review some existing
policies to become familiar with the types of policies she will be working with. Which one of the
following will Rachel find is true as she conducts her review?:
Rachel finds the policy begins with a coverage overview and then goes into more coverage
details.
11. Sports, Inc. is looking to obtain a commercial property policy on its building for $400,000. If
their insurer decides to charge them a rate of $0.50 per $100 of building insurance, what
premium must Sports, Inc. pay?:
$2,000
12. Destructive competition in the insurance industry could result in:
Insurance shortages
13. The financial report for Hometown Insurer contains the following information: Earned
premiums$4,000,000Written premiums$5,000,000Net investment income$1,000,000Incurred
losses$3,000,000Incurred underwriting expenses$2,000,000 What is Hometown Insurer's loss
ratio?
75% 14. Loss Ratio: incurred losses divided by its earned premiums
, Page 3 of 17
15. Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie usually
engages in all the following activities, EXCEPT:
Determining coverage quotes
16. Riley Turner is performing a comprehensive evaluation of Hardwick Enterprises to make
sure its insurance and risk management efforts are serving the organization appropriately. Which
one of the following will be true in regard to this effort?:
Besides risk management goals being attainable, they should also pose a challenge.
17. Rachel is considering investing in the stock of an insurance company. Which one of the
following is likely to provide the best indication of the insurer's financial position at this point in
time?:
Balance sheet
18. Balance Sheet:
Provides the best indication of its financial position because it shows admitted assets,
liabilities, and policyholders' surplus at a particular point in time.
19. Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the
policyholders' surplus?
Capacity
20. The two main sectors of the insurance industry are:
Property-casualty insurance and life-health insurance
21. The difference between an independent agency and an exclusive agency is that an:
Exclusive agency is contracted to sell insurance for one insurer or group of insurers
AINS 101 Exam Practice Questions and Answers 2024/2025
Complete Guide
1. Bill is an insurance producer for and employed by ABC Insurance Company (ABC). He
represents only ABC when marketing insurance products, and uses an administrative staff also
employed by ABC. Bill is a producer in the:
Direct writer marketing system
2. Because the insurance company usually determines policy wording and the insured has little
choice but to "take it or leave it," an insurance contract is a:
Contract of adhesion
3. Which one of the following best explains why producers should be alert to changes in clients'
loss exposures?:
Implemented risk management techniques may prove to be ineffective or become obsolete
4. At Greenfield Insurance Company, Bernadette and Rachel are corporate underwriters, and
Tomas and Jose are field underwriters. All of the following are underwriting activities typically
performed by corporate (or staff) underwriters like Bernadette and Rachel, EXCEPT:
Support producers and insureds
5. Joel is the underwriter for Stanton Industries. He received a notice from the premium auditor
on the account. After a recent visit to the insured's location, the auditor wanted to make Joel
aware of a decline in the business and some questionable business practices. Which one of the
following types of hazards is the auditor identifying?:
Moral hazards
6. Moral hazards:
Include questionable business practices or a failing business.
, Page 2 of 17
7. James West is a claims rep with Hatters Insurance. As he learns how to handle a claim from
start to finish, which one of the following best describes the correct order for him to follow
during this process?:
Identifying the policy, calculating a loss reserve, determining the cause of loss, preparing a
loss statement
8. Margaret was severely injured and scarred due to a recent accident. Which one of the
following is an example of general damages Margaret received?:
- Compensation for disfigurement
9. Donna is an insurance producer. She makes an appointment with potential policyholder Sandie
to review her loss exposures. She asks Sandie to complete a questionnaire to assist her in this
effort. Donna is conducting a:
Risk management review
10. Rachel is a new employee of Westley Insurance, and has been asked to review some existing
policies to become familiar with the types of policies she will be working with. Which one of the
following will Rachel find is true as she conducts her review?:
Rachel finds the policy begins with a coverage overview and then goes into more coverage
details.
11. Sports, Inc. is looking to obtain a commercial property policy on its building for $400,000. If
their insurer decides to charge them a rate of $0.50 per $100 of building insurance, what
premium must Sports, Inc. pay?:
$2,000
12. Destructive competition in the insurance industry could result in:
Insurance shortages
13. The financial report for Hometown Insurer contains the following information: Earned
premiums$4,000,000Written premiums$5,000,000Net investment income$1,000,000Incurred
losses$3,000,000Incurred underwriting expenses$2,000,000 What is Hometown Insurer's loss
ratio?
75% 14. Loss Ratio: incurred losses divided by its earned premiums
, Page 3 of 17
15. Jessie is a new customer service representative (CSR) at the Winfield Agency. Jessie usually
engages in all the following activities, EXCEPT:
Determining coverage quotes
16. Riley Turner is performing a comprehensive evaluation of Hardwick Enterprises to make
sure its insurance and risk management efforts are serving the organization appropriately. Which
one of the following will be true in regard to this effort?:
Besides risk management goals being attainable, they should also pose a challenge.
17. Rachel is considering investing in the stock of an insurance company. Which one of the
following is likely to provide the best indication of the insurer's financial position at this point in
time?:
Balance sheet
18. Balance Sheet:
Provides the best indication of its financial position because it shows admitted assets,
liabilities, and policyholders' surplus at a particular point in time.
19. Which one of the following is the amount of business an insurer can write based on
regulatory guidelines, usually a comparsion of the insurer's written premiums to the
policyholders' surplus?
Capacity
20. The two main sectors of the insurance industry are:
Property-casualty insurance and life-health insurance
21. The difference between an independent agency and an exclusive agency is that an:
Exclusive agency is contracted to sell insurance for one insurer or group of insurers
