AIC 30 EXAM QUESTIONS AND
ANSWERS RATED 100% CORRECT
Producer answer - term "producer" includes agents, brokers, sales representatives, and
intermediaries who place insurance with insurers
Public Adjuster answer - An outside organization or person hired by an insured to represent the
insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) answer - The expense that an insurer incurs to investigate,
defend, and settle claims according to the terms specified in the insurance policy.
Which one of the following involves making a choice between what is lawful and what is
unlawful? answer - legality
For insurers, ethical and professional conduct can help answer - retain customers and attract
investors
Ethics and professionalism are important for insurance professionals because answer -
Consumer regulations may define the minimum expected ethical and professional standards.
Three ways good faith is established: answer - By satisfying contractual duties and other
promises
By maintaining insurers' credibility
By complying with legal duty
,If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include answer - support for credit
Most states require the licensing of answer - public adjusters
Some jurisdictions have found certain practices in claim handling to be the unauthorized
practice of law. An typical example is answer - Providing direction on legal strategies
Ethical and professional conduct of claim representatives can benefit consumers by answer -
Encouraging fair treatment and prompt payment.
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include answer - the benefits of insurance include peace of mind,
support for credit, efficient use of resources, and reduction of social burdens.
Ethical and professional conduct of claim representatives can benefit consumers by answer -
Encouraging fair treatment and prompt payment.
Ethics and professionalism are important for insurance professionals because answer -
Consumer regulations may define the minimum expected ethical and professional standards.
Information gathered by claims representatives in handling claims answer - May be protected
by privacy laws.
All of the following represent instances of federal laws having an effect on claim handling,
EXCEPT: answer - Unfair claims settlement practices acts
Most states require the licensing of answer - Public adjusters.
,Some jurisdictions have found certain practices in claim handling to be the unauthorized
practice of law. An typical example is answer - Providing direction on legal strategies.
A claim representative who believes in high quality claim practices should answer - Keep in
mind the perspectives of the claimants and insureds.
When a severe hurricane comes ashore in the southeast, the wind and water damage are
extensive. Best Insurance Company's regional claim office is overwhelmed and cannot keep up
with the volume of claims. The company's home office temporarily assigns claim
representatives from across the country to the southeast region to assist. Which one of the
following is correct concerning potential ethical or professional dilemmas associated with this
situation? answer - States often grant temporary licenses to out-of-state claim representatives
for catastrophe claim handling
Identify which one of the following activities is not part of the claims handling process. answer -
Refer the lawsuit to counsel; Although referring a lawsuit to the insurer's counsel is one of the
first things a claims representative should do when notified of a lawsuit, it is not part of the
claims handling process.
An example of a record-only claim would be answer - A hospital patient slips on a wet floor in
her room but is not injured.
A representative investigating a third-party claim is very concerned about waiving any rights
under the policy. She decides to send a reservation of rights letter to the third-party claimant.
This action is answer - Not advisable because a third-party claimant has no obligations under
the policy.
Which one of the following describes a tool that claim representatives commonly use to avoid
waiver and estoppel? answer - Reservation of rights letter
Dan lives in an old home that always seems to need repair. He has known for months that
several of the boards on his front porch are rotten, but he has not replaced them. He and his
, family avoid the porch and use the back door instead. One day the rotten boards collapse under
the weight of the letter carrier who is delivering Dan's mail. The letter carrier suffers a broken
leg, a sprained wrist, and contusions. Comparative negligence is followed in Dan's state, and the
ordinary standard of care for liability based on negligence applies as to mail carriers delivering
to residences. Which one of the following best describes liability in this situation? answer -
Because a reasonably prudent person would repair the porch, and because Dan's failure to do
so was the proximate cause of the letter carrier's injuries, Dan would be considered negligent
and therefore liable for those injuries in accordance with his degree of fault. His insurer would
provide coverage under the liability portion of Dan's homeowners policy.
Johnson has a PAP through Peaceful River Insurance Company for his 2007 Ford. He also has
coverage with Aim Straight Insurance Company for his 2007 Ford. Both policies have the same
effective dates. Johnson hits a tree and totals his Ford. Which one of the following alternative
dispute resolution methods should the companies use to determine who should pay and how
much? answer - Arbitration
Mediation is an ADR method used to help resolve disputes without going to court. Which one of
the following statements is true with respect to this form of ADR? answer - Plaintiff and
defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses
in each argument and help reach a compromise.
Lanny, a claim representative with Babbling Brook Insurance Company, is ready to settle a
serious bodily injury claim with Freda. He notices that Medicare is listed as payer on her
hospital bill of $75,000. He and Freda have agreed to settle her claim for $255,000. Since Freda
has been enrolled in Medicare for four years, which one of the following entities must approve
the settlement? answer - Center for Medicare and Medicaid Services
Which one of the following databases should a claim representative review prior to issuing a
claim payment? answer - State databases for delinquent child support payments
Which one of the following alternative dispute resolution methods enables parties to test the
validity of their positions and continue negotiations? answer - mini-trial
ANSWERS RATED 100% CORRECT
Producer answer - term "producer" includes agents, brokers, sales representatives, and
intermediaries who place insurance with insurers
Public Adjuster answer - An outside organization or person hired by an insured to represent the
insured in a claim in exchange for a fee.
Loss adjustment expense (LAE) answer - The expense that an insurer incurs to investigate,
defend, and settle claims according to the terms specified in the insurance policy.
Which one of the following involves making a choice between what is lawful and what is
unlawful? answer - legality
For insurers, ethical and professional conduct can help answer - retain customers and attract
investors
Ethics and professionalism are important for insurance professionals because answer -
Consumer regulations may define the minimum expected ethical and professional standards.
Three ways good faith is established: answer - By satisfying contractual duties and other
promises
By maintaining insurers' credibility
By complying with legal duty
,If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include answer - support for credit
Most states require the licensing of answer - public adjusters
Some jurisdictions have found certain practices in claim handling to be the unauthorized
practice of law. An typical example is answer - Providing direction on legal strategies
Ethical and professional conduct of claim representatives can benefit consumers by answer -
Encouraging fair treatment and prompt payment.
If the business of insurance is conducted ethically and professionally, society can reap the
benefits of insurance, which include answer - the benefits of insurance include peace of mind,
support for credit, efficient use of resources, and reduction of social burdens.
Ethical and professional conduct of claim representatives can benefit consumers by answer -
Encouraging fair treatment and prompt payment.
Ethics and professionalism are important for insurance professionals because answer -
Consumer regulations may define the minimum expected ethical and professional standards.
Information gathered by claims representatives in handling claims answer - May be protected
by privacy laws.
All of the following represent instances of federal laws having an effect on claim handling,
EXCEPT: answer - Unfair claims settlement practices acts
Most states require the licensing of answer - Public adjusters.
,Some jurisdictions have found certain practices in claim handling to be the unauthorized
practice of law. An typical example is answer - Providing direction on legal strategies.
A claim representative who believes in high quality claim practices should answer - Keep in
mind the perspectives of the claimants and insureds.
When a severe hurricane comes ashore in the southeast, the wind and water damage are
extensive. Best Insurance Company's regional claim office is overwhelmed and cannot keep up
with the volume of claims. The company's home office temporarily assigns claim
representatives from across the country to the southeast region to assist. Which one of the
following is correct concerning potential ethical or professional dilemmas associated with this
situation? answer - States often grant temporary licenses to out-of-state claim representatives
for catastrophe claim handling
Identify which one of the following activities is not part of the claims handling process. answer -
Refer the lawsuit to counsel; Although referring a lawsuit to the insurer's counsel is one of the
first things a claims representative should do when notified of a lawsuit, it is not part of the
claims handling process.
An example of a record-only claim would be answer - A hospital patient slips on a wet floor in
her room but is not injured.
A representative investigating a third-party claim is very concerned about waiving any rights
under the policy. She decides to send a reservation of rights letter to the third-party claimant.
This action is answer - Not advisable because a third-party claimant has no obligations under
the policy.
Which one of the following describes a tool that claim representatives commonly use to avoid
waiver and estoppel? answer - Reservation of rights letter
Dan lives in an old home that always seems to need repair. He has known for months that
several of the boards on his front porch are rotten, but he has not replaced them. He and his
, family avoid the porch and use the back door instead. One day the rotten boards collapse under
the weight of the letter carrier who is delivering Dan's mail. The letter carrier suffers a broken
leg, a sprained wrist, and contusions. Comparative negligence is followed in Dan's state, and the
ordinary standard of care for liability based on negligence applies as to mail carriers delivering
to residences. Which one of the following best describes liability in this situation? answer -
Because a reasonably prudent person would repair the porch, and because Dan's failure to do
so was the proximate cause of the letter carrier's injuries, Dan would be considered negligent
and therefore liable for those injuries in accordance with his degree of fault. His insurer would
provide coverage under the liability portion of Dan's homeowners policy.
Johnson has a PAP through Peaceful River Insurance Company for his 2007 Ford. He also has
coverage with Aim Straight Insurance Company for his 2007 Ford. Both policies have the same
effective dates. Johnson hits a tree and totals his Ford. Which one of the following alternative
dispute resolution methods should the companies use to determine who should pay and how
much? answer - Arbitration
Mediation is an ADR method used to help resolve disputes without going to court. Which one of
the following statements is true with respect to this form of ADR? answer - Plaintiff and
defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses
in each argument and help reach a compromise.
Lanny, a claim representative with Babbling Brook Insurance Company, is ready to settle a
serious bodily injury claim with Freda. He notices that Medicare is listed as payer on her
hospital bill of $75,000. He and Freda have agreed to settle her claim for $255,000. Since Freda
has been enrolled in Medicare for four years, which one of the following entities must approve
the settlement? answer - Center for Medicare and Medicaid Services
Which one of the following databases should a claim representative review prior to issuing a
claim payment? answer - State databases for delinquent child support payments
Which one of the following alternative dispute resolution methods enables parties to test the
validity of their positions and continue negotiations? answer - mini-trial
