AINS 101 SIMULATED EXAM WITH
CORRECT ANSWERS 2025
Exclusive agency is contracted to sell insurance for one insurer or group of
insurers ( correct answers )
The difference between an independent agency and an exclusive agency is
that an
Insurance shortages ( correct answers ) Destructive competition in the
insurance industry could result in
Veronica directly contacts Maria for guidance on how to report a stolen car,
Maria provides that, and claims rep Sean takes over after an introduction
from Maria ( correct answers ) Maria
is a new producer who wears many hats when forming relationships and
then serving her established customers. In this capacity, which one of the
following scenarios most accurately describes her ongoing work wearing the
hat of "claims handler"?
$350 Replacement cost - Depreciation ( correct answers )
John's two-year-old bicycle was stolen.
The bicycle's purchase price was $700, its current replacement cost is $800,
and depreciation was estimated at $450. What was the bicycle's actual cash
value?
Underwriting authority reports ( correct answers ) All of the
following are sources of underwriting information to evaluate an insurance
submission, EXCEPT:
Implemented risk management techniques may prove to be ineffective or
become obsolete ( correct answers ) Which one of the following
best explains why producers should be alert to changes in clients' loss
exposures?
Field Underwriter ( correct answers ) James works very closely with
producers on a daily basis. In addition to evaluating the applicants that the
producers submit, James is involved in presenting policy quotations,
processing policy endorsements, helping to explain coverages, and making
coverage recommendations. James works as a
Balance sheet ( correct answers ) 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?
Support producers and insureds ( correct answers ) 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:
, Large number of similar exposure units ( correct answers ) Oscar's
custom-built vehicle looks like a sausage sandwich on wheels. He plans to
drive it to special events at schools around the country where it will serve
as a mobile billboard to promote his product. Oscar is surprised to learn
that insurers are reluctant to insure his vehicle because it fails to meet one
of the ideal characteristics of an insurable risk. Which characteristic is
Oscar's vehicle least likely to meet?
Capacity ( correct answers ) 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?
Mutual insurer ( correct answers ) Joe is the owner of JG Auto Repair. He is
always frustrated with the amount of commercial insurance premium he
pays every year, even though he has not had a single claim in over 10 years.
Joe is looking to partner with an insurance company that will share its profits
and maybe return a portion of his premium if the results are good. Which
one of the following types of insurer is the right fit for Joe?
Transfer ( correct answers ) When the Smiths purchased their first home,
they were required to purchase a homeowners insurance policy in order to
get a mortgage.
Because they did not have a lot of extra money in their budget, they
wanted to buy as little insurance coverage as possible. The Smiths'
insurance agent advised them that if
they purchase an insurance policy that adequately covers damage to their
home and personal property, they only have to budget for the insurance
premium, rather than the
full cost of rebuilding the house and replacing its contents. Which one of
the following key components of insurance is the insurance agent
explaining to the Smiths?
Providing laboratory analyses ( correct answers ) Risk
control can assist the claims department by
Loss ratio + expense ratio ( correct answers )
Which one of the following is the correct formula for calculating an
insurer's combined ratio?
Property-casualty insurance and life-health insurance
( correct answers ) The two main sectors of
the insurance industry are
Moral hazards ( correct answers ) 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?
Risk management review ( correct answers ) 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
CORRECT ANSWERS 2025
Exclusive agency is contracted to sell insurance for one insurer or group of
insurers ( correct answers )
The difference between an independent agency and an exclusive agency is
that an
Insurance shortages ( correct answers ) Destructive competition in the
insurance industry could result in
Veronica directly contacts Maria for guidance on how to report a stolen car,
Maria provides that, and claims rep Sean takes over after an introduction
from Maria ( correct answers ) Maria
is a new producer who wears many hats when forming relationships and
then serving her established customers. In this capacity, which one of the
following scenarios most accurately describes her ongoing work wearing the
hat of "claims handler"?
$350 Replacement cost - Depreciation ( correct answers )
John's two-year-old bicycle was stolen.
The bicycle's purchase price was $700, its current replacement cost is $800,
and depreciation was estimated at $450. What was the bicycle's actual cash
value?
Underwriting authority reports ( correct answers ) All of the
following are sources of underwriting information to evaluate an insurance
submission, EXCEPT:
Implemented risk management techniques may prove to be ineffective or
become obsolete ( correct answers ) Which one of the following
best explains why producers should be alert to changes in clients' loss
exposures?
Field Underwriter ( correct answers ) James works very closely with
producers on a daily basis. In addition to evaluating the applicants that the
producers submit, James is involved in presenting policy quotations,
processing policy endorsements, helping to explain coverages, and making
coverage recommendations. James works as a
Balance sheet ( correct answers ) 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?
Support producers and insureds ( correct answers ) 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:
, Large number of similar exposure units ( correct answers ) Oscar's
custom-built vehicle looks like a sausage sandwich on wheels. He plans to
drive it to special events at schools around the country where it will serve
as a mobile billboard to promote his product. Oscar is surprised to learn
that insurers are reluctant to insure his vehicle because it fails to meet one
of the ideal characteristics of an insurable risk. Which characteristic is
Oscar's vehicle least likely to meet?
Capacity ( correct answers ) 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?
Mutual insurer ( correct answers ) Joe is the owner of JG Auto Repair. He is
always frustrated with the amount of commercial insurance premium he
pays every year, even though he has not had a single claim in over 10 years.
Joe is looking to partner with an insurance company that will share its profits
and maybe return a portion of his premium if the results are good. Which
one of the following types of insurer is the right fit for Joe?
Transfer ( correct answers ) When the Smiths purchased their first home,
they were required to purchase a homeowners insurance policy in order to
get a mortgage.
Because they did not have a lot of extra money in their budget, they
wanted to buy as little insurance coverage as possible. The Smiths'
insurance agent advised them that if
they purchase an insurance policy that adequately covers damage to their
home and personal property, they only have to budget for the insurance
premium, rather than the
full cost of rebuilding the house and replacing its contents. Which one of
the following key components of insurance is the insurance agent
explaining to the Smiths?
Providing laboratory analyses ( correct answers ) Risk
control can assist the claims department by
Loss ratio + expense ratio ( correct answers )
Which one of the following is the correct formula for calculating an
insurer's combined ratio?
Property-casualty insurance and life-health insurance
( correct answers ) The two main sectors of
the insurance industry are
Moral hazards ( correct answers ) 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?
Risk management review ( correct answers ) 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
