Page 1 of 79
AINS 101 EXAM PREP|| ACTUAL EXAM WITH
ALL QUESTIONS AND 100% CORRECT
ANSWERS GRADED A+|| LATEST AND
COMPLETE UPDATE 2025 WITH VERIFIED
SOLUTIONS|| GUARANTEED PASS!!!
1. As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following exam- ples
best illustrates Mehmet's point?
A. Ciara needs her car to get to her job, and she needs her job to make car
payments and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600
cost of replacing it.
C. When her car's transmission goes out a month after the warranty expires,
Ciara is faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every
six months ANSWER- When her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
2. Which one of the following statements is correct regarding the benefits
provided by insurance?
A. Insurance reduces the financial consequences of loss exposures but not the
related uncertainty.
B. The primary role of insurance is to meet mandatory insurance require-
ments.
C. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
,Page 2 of 79
D. Insurance helps reduce the financial burden to society by compensating
accident victims ANSWER- Insurance helps reduce the financial burden to
society by com- pensating accident victims.
3. Shelton Industries experienced a fire in its manufacturing plant. Several
employees suffered burns and smoke inhalation injuries as they tried to escape the
building. Which one of Shelton Industries' commercial property-ca- sualty policies
would pay for the employees' injuries and illnesses ANSWER- Workers
compensation insurance
4. A homeowners policy is a type of: Personal property-casualty insurance
policy.
5. Which one of the following correctly describes a reason for government
involvement in property-casualty insurance?
A. Selling insurance provides the government with a non-tax source of rev-
enues and profits.
B. Government programs can meet legitimate public demands unmet by pri-
vate insurers.
C. Competition from government plans keeps private insurer's premiums
competitive.
D. Preventing high-risk individuals or activities from being insured is in the
public interest ANSWER- Government programs can meet legitimate public
demands unmet by private insurers.
6. Insurance Company wrote a commercial liability policy for a manufacturer
of off-road motorcycles. The potential costs of the insured's loss exposure exceed
Insurance Company's capacity. Insurance Company could consider which one of
the following types of contractual transferring agreement to meet its needs
ANSWER- Reinsurance
,Page 3 of 79
7. In an effort to reduce expenses, increase profitability, and reduce human
errors; ABC Insurance Company decided to automate most of its personal lines
underwriting function. The company now uses standardized application forms that
are submitted electronically to one of the company's regional offices. At each
regional office, a computer with a scanner reads the appli- cations. The computer
has been programmed with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who reviews
them. The use of this technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a policy. ABC Insurance
Company's use of computers to evaluate applications electronically is an
application of
A. Radiant sensors.
B. Artificial intelligence.
C. Risk management information systems.
D. Actuator technology ANSWER- Artificial intelligence.
8. Jimmy decided to buy a house in his neighborhood that had been foreclosed
on by the bank that held the mortgage. He is hoping to do some renovation and
repair work on the house, and then sell it for a quick profit. What type of risk is
this ANSWER- Speculative Risk
9. Which one of the following best describes the concept of pooling?
A. The financial consequences of unanticipated losses are transferred to an
insurer.
B. Risk management is concerned with positive and negative risks.
C. Insureds share the cost of each other's losses.
, Page 4 of 79
D. Insurance benefits society as a whole ANSWER- Insureds share the cost of
each other's losses.
10. Which one of the following represents uncertainty about outcomes that can
be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling: Risk
11. Coverage for money and other business property from various causes of loss
such as burglary, robbery, theft, and employee dishonesty typically is provided by:
Commercial crime insurance.
12. The insurance agent suggested that Sally's Snack Shop buy a policy
that combines property, crime, and liability coverages into one policy. This is
referred to as a(n): Commercial Package Policy (CCP)
13. Which one of the following describes the characteristics of a mutual insur-
ance company?
A. A corporation owned by policyholders that provides insurance to its poli-
cyholders.
B. An unincorporated association that provides reciprocal coverage to sub-
scribers.
AINS 101 EXAM PREP|| ACTUAL EXAM WITH
ALL QUESTIONS AND 100% CORRECT
ANSWERS GRADED A+|| LATEST AND
COMPLETE UPDATE 2025 WITH VERIFIED
SOLUTIONS|| GUARANTEED PASS!!!
1. As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following exam- ples
best illustrates Mehmet's point?
A. Ciara needs her car to get to her job, and she needs her job to make car
payments and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600
cost of replacing it.
C. When her car's transmission goes out a month after the warranty expires,
Ciara is faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every
six months ANSWER- When her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
2. Which one of the following statements is correct regarding the benefits
provided by insurance?
A. Insurance reduces the financial consequences of loss exposures but not the
related uncertainty.
B. The primary role of insurance is to meet mandatory insurance require-
ments.
C. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
,Page 2 of 79
D. Insurance helps reduce the financial burden to society by compensating
accident victims ANSWER- Insurance helps reduce the financial burden to
society by com- pensating accident victims.
3. Shelton Industries experienced a fire in its manufacturing plant. Several
employees suffered burns and smoke inhalation injuries as they tried to escape the
building. Which one of Shelton Industries' commercial property-ca- sualty policies
would pay for the employees' injuries and illnesses ANSWER- Workers
compensation insurance
4. A homeowners policy is a type of: Personal property-casualty insurance
policy.
5. Which one of the following correctly describes a reason for government
involvement in property-casualty insurance?
A. Selling insurance provides the government with a non-tax source of rev-
enues and profits.
B. Government programs can meet legitimate public demands unmet by pri-
vate insurers.
C. Competition from government plans keeps private insurer's premiums
competitive.
D. Preventing high-risk individuals or activities from being insured is in the
public interest ANSWER- Government programs can meet legitimate public
demands unmet by private insurers.
6. Insurance Company wrote a commercial liability policy for a manufacturer
of off-road motorcycles. The potential costs of the insured's loss exposure exceed
Insurance Company's capacity. Insurance Company could consider which one of
the following types of contractual transferring agreement to meet its needs
ANSWER- Reinsurance
,Page 3 of 79
7. In an effort to reduce expenses, increase profitability, and reduce human
errors; ABC Insurance Company decided to automate most of its personal lines
underwriting function. The company now uses standardized application forms that
are submitted electronically to one of the company's regional offices. At each
regional office, a computer with a scanner reads the appli- cations. The computer
has been programmed with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically issued. Rejected
applications are automatically forwarded to a human underwriter who reviews
them. The use of this technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a policy. ABC Insurance
Company's use of computers to evaluate applications electronically is an
application of
A. Radiant sensors.
B. Artificial intelligence.
C. Risk management information systems.
D. Actuator technology ANSWER- Artificial intelligence.
8. Jimmy decided to buy a house in his neighborhood that had been foreclosed
on by the bank that held the mortgage. He is hoping to do some renovation and
repair work on the house, and then sell it for a quick profit. What type of risk is
this ANSWER- Speculative Risk
9. Which one of the following best describes the concept of pooling?
A. The financial consequences of unanticipated losses are transferred to an
insurer.
B. Risk management is concerned with positive and negative risks.
C. Insureds share the cost of each other's losses.
, Page 4 of 79
D. Insurance benefits society as a whole ANSWER- Insureds share the cost of
each other's losses.
10. Which one of the following represents uncertainty about outcomes that can
be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling: Risk
11. Coverage for money and other business property from various causes of loss
such as burglary, robbery, theft, and employee dishonesty typically is provided by:
Commercial crime insurance.
12. The insurance agent suggested that Sally's Snack Shop buy a policy
that combines property, crime, and liability coverages into one policy. This is
referred to as a(n): Commercial Package Policy (CCP)
13. Which one of the following describes the characteristics of a mutual insur-
ance company?
A. A corporation owned by policyholders that provides insurance to its poli-
cyholders.
B. An unincorporated association that provides reciprocal coverage to sub-
scribers.
