AINS Exam Questions and Answers
2025/2026 A+ Graded 100% Verified
Documents that can become part of an insurance policy include all of the following,
EXCEPT:
A. Summary of available coverage options
B. Relevant statutory terms and provisions
C. Completed application
D. Insurer's bylaws - ANS- A. Summary of available coverage options
All of the answer choices are documents that can become part of a policy, except for
summary of available coverage options, which generally does not become part of the
policy.
A company turnover rate well above company and industry averages could be a sign of
A. Employee slacking.
B. Financial problems that need to be addressed.
C. Claims-consciousness.
D. Personnel problems that need to be addressed. - ANS- D. Personnel problems that
need to be addressed.
A company turnover rate well above company and industry averages could be a sign of
personnel problems that need to be addressed.
Traditionally, the risk management professional's role has been associated with loss
exposures related to
A. Business risk.
B. Operational risk.
C. Pure risk.
D. Speculative risk. - ANS- C. Pure risk.
Traditionally, the risk management professional's role has been associated with loss
exposures related to pure risk.
The financial report for Hometown Insurer contains the following information:
Earned premiums $4,000,000
Written premiums $5,000,000
Net investment income $1,000,000
,Incurred losses $3,000,000
Incurred underwriting expenses $2,000,000
What is Hometown Insurer's loss ratio?
A. 20%
B. 30%
C. 50%
D. 75% - ANS- D. 75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned
premiums ($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that
A. Owners are not necessarily insureds.
B. It seeks to generate a profit.
C. It is governed by a board of directors.
D. Owners have voting rights. - ANS- A. Owners are not necessarily insureds.
A stock insurer is distinguished from a mutual insurer by the fact that owners are not
necessarily insureds.
A decrease in incurred losses will generally cause a decrease in all of the following,
EXCEPT:
A. Combined ratio
B. Expense ratio
C. Overall ratio
D. Loss ratio - ANS- B. Expense ratio
A decrease in incurred losses would decrease the loss ratio, which is included in the
combined ratio and the overall operating ratio. The expense ratio would not decrease.
A loss exposure is
A. The same thing as a peril.
B. Any condition that presents the possibility of a loss.
C. The same thing as a hazard.
D. Any condition that precludes the chance of loss. - ANS- B. Any condition that
presents the possibility of a loss.
A loss exposure is any condition or situation that presents the possibility of a loss.
, A group of policies with a common characteristic, such as a territory or type of coverage,
or all policies written by a particular insurer, producer, or agency is referred to as
A. A book of business.
B. A coverage pool.
C. A line of business.
D. A policy group. - ANS- A. A book of business.
A group of policies with a common characteristic, such as a territory or type of coverage,
or all policies written by a particular insurer, producer, or agency is referred to as a book
of business.
Which one of the following is an example of material misrepresentation by Albert, a
businessman applying for property insurance on a building he owns?
A. Albert does not tell the insurance agent he is about to file for bankruptcy.
B. Albert does not tell the insurance agent his building has a defective heating system
that could explode at any time.
C. Albert tells the insurance agent he has owned the building for seventeen years, but he
has actually owned it for eighteen years.
D. Albert tells the insurance agent the building is used to store steel, but it is actually
used to store steel drums containing flammable liquids. - ANS- D. Albert tells the
insurance agent the building is used to store steel, but it is actually used to store steel
drums containing flammable liquids.
Albert tells the insurance agent the building is used to store steel, but it is actually used
to store steel drums containing flammable liquids.
A policy provides coverage starting on April 1 with an annual premium of $800. How
much premium is earned as of June 30?
A. $100
B. $200
C. $600
D. $800 - ANS- B. $200
The earned premium is $200 because three months of coverage have been provided. 3/12
X $800 = $200
All commercial package policies begin with two components, namely, common policy
conditions and common
A. Coverages.
2025/2026 A+ Graded 100% Verified
Documents that can become part of an insurance policy include all of the following,
EXCEPT:
A. Summary of available coverage options
B. Relevant statutory terms and provisions
C. Completed application
D. Insurer's bylaws - ANS- A. Summary of available coverage options
All of the answer choices are documents that can become part of a policy, except for
summary of available coverage options, which generally does not become part of the
policy.
A company turnover rate well above company and industry averages could be a sign of
A. Employee slacking.
B. Financial problems that need to be addressed.
C. Claims-consciousness.
D. Personnel problems that need to be addressed. - ANS- D. Personnel problems that
need to be addressed.
A company turnover rate well above company and industry averages could be a sign of
personnel problems that need to be addressed.
Traditionally, the risk management professional's role has been associated with loss
exposures related to
A. Business risk.
B. Operational risk.
C. Pure risk.
D. Speculative risk. - ANS- C. Pure risk.
Traditionally, the risk management professional's role has been associated with loss
exposures related to pure risk.
The financial report for Hometown Insurer contains the following information:
Earned premiums $4,000,000
Written premiums $5,000,000
Net investment income $1,000,000
,Incurred losses $3,000,000
Incurred underwriting expenses $2,000,000
What is Hometown Insurer's loss ratio?
A. 20%
B. 30%
C. 50%
D. 75% - ANS- D. 75%
Hometown Insurer's loss ratio is its incurred losses ($3,000,000) divided by its earned
premiums ($4,000,000), or 75 percent.
A stock insurer is distinguished from a mutual insurer by the fact that
A. Owners are not necessarily insureds.
B. It seeks to generate a profit.
C. It is governed by a board of directors.
D. Owners have voting rights. - ANS- A. Owners are not necessarily insureds.
A stock insurer is distinguished from a mutual insurer by the fact that owners are not
necessarily insureds.
A decrease in incurred losses will generally cause a decrease in all of the following,
EXCEPT:
A. Combined ratio
B. Expense ratio
C. Overall ratio
D. Loss ratio - ANS- B. Expense ratio
A decrease in incurred losses would decrease the loss ratio, which is included in the
combined ratio and the overall operating ratio. The expense ratio would not decrease.
A loss exposure is
A. The same thing as a peril.
B. Any condition that presents the possibility of a loss.
C. The same thing as a hazard.
D. Any condition that precludes the chance of loss. - ANS- B. Any condition that
presents the possibility of a loss.
A loss exposure is any condition or situation that presents the possibility of a loss.
, A group of policies with a common characteristic, such as a territory or type of coverage,
or all policies written by a particular insurer, producer, or agency is referred to as
A. A book of business.
B. A coverage pool.
C. A line of business.
D. A policy group. - ANS- A. A book of business.
A group of policies with a common characteristic, such as a territory or type of coverage,
or all policies written by a particular insurer, producer, or agency is referred to as a book
of business.
Which one of the following is an example of material misrepresentation by Albert, a
businessman applying for property insurance on a building he owns?
A. Albert does not tell the insurance agent he is about to file for bankruptcy.
B. Albert does not tell the insurance agent his building has a defective heating system
that could explode at any time.
C. Albert tells the insurance agent he has owned the building for seventeen years, but he
has actually owned it for eighteen years.
D. Albert tells the insurance agent the building is used to store steel, but it is actually
used to store steel drums containing flammable liquids. - ANS- D. Albert tells the
insurance agent the building is used to store steel, but it is actually used to store steel
drums containing flammable liquids.
Albert tells the insurance agent the building is used to store steel, but it is actually used
to store steel drums containing flammable liquids.
A policy provides coverage starting on April 1 with an annual premium of $800. How
much premium is earned as of June 30?
A. $100
B. $200
C. $600
D. $800 - ANS- B. $200
The earned premium is $200 because three months of coverage have been provided. 3/12
X $800 = $200
All commercial package policies begin with two components, namely, common policy
conditions and common
A. Coverages.
