AINS 102 EXAM QUESTIONS WITH COMPLETE SOLUTIONS

1. umbrella policies - ANSWER provide an extra layer of security for an insured will cover the extraneous damages to the extent of its own limit of insurance 2. peer to peer insurance - ANSWER use web enabled platforms to facilitate the formation of self selected risk pools whose members pool premiums and collectively pay for members' insured losses use reinsurance 3. reinsurance - ANSWER the transfer of insurance risk from one insurer to another through a contractual agreement 4. on demand insurance - ANSWER use web enabled customer interfaces and sensor technology to offer coverage that allows near total customer customization 5. microinsurance - ANSWER provides property coverage for low income households and other segments of the population that have been underserved in the past premiums charged remain low as well as accessible 6. Transportation Network Driver Endorsements for TNC drivers - ANSWER 1. transportation network driver coverage no passenger: provides PAP coverage after an insured has logged into a transportation network platform but before a passenger is occupying the vehicle 2. limited transportation network driver coverage: coverage ends once the driver accepts a passengers request, before they get into the car 7. telematics - ANSWER uses devices in vehicles with wireless communication and GPS tracking to transmit data, such as average speed driven, breaking habits, etc. so the driver can be analyzed 8. what does UBI stand for? - ANSWER usage based insurance 9. Endorsements for Home - ANSWER host activities amendatory broadened home sharing host activities coverage damage to property of others - increased limits 10. two situations that can create loss exposures that are not covered by a homeowners policy are... - ANSWER when the insured rents out all or part of their home through a home sharing service when the insured works or operates a business from their homes 11. fair access to insurance requirements (FAIR plans) - ANSWER makes insurance coverage available when insurers in the voluntary market cannot profitable provide it at a rate that is reasonable for policyholders 12. to be eligible for FAIR plan coverage.... - ANSWER a property must be ineligible for coverage in the voluntary market AND the policyholder must have the property inspected by the FAIR plan administrator to make sure the property meets basic safety levels 13. role of underwriters - ANSWER must be able to predict the likelihood that a claim will be made, assess the cost of the claims, and identify gaps in coverage this helps determine what applicants to accept, whether the coverage is appropriate, and how much to charge 14. Auto Coverage Underwriting Considerations - ANSWER the driver vehicle type age, mileage, and condition driver records loss history financial data of driver 15. when evaluating applications and renewals for property insurance policies (such as homeowners policies) insurers look at these underwriting factors - ANSWER loss history construction, age, and location property values financial data or owner risk control reports 16. Liability Coverage Underwriting Considerations - ANSWER business activities poor maintenance insufficient lighting hazardous equipment animals farming operations 17. key goal for sales and service professionals - ANSWER improving customer retention long term customers are more profitable than new ones 18. how to increase retention - ANSWER communicate with customer make them feel important focus on their needs convey the value of an insurance policy 19. ways to keep in touch with customers - ANSWER call or send a letter to thank them for their business and ask if they have any questions send e-newsletters explaining loss exposures, coverages, and ways to reduce premiums offer to quote other lines of business and explain the premium savings that can result from placing multiple coverages with one insurer send seasonal greeting cards, birthday cards, or congratulatory cards complete an annual policy review with them to make sure their coverage is adequate send out "getting to know you" surveys to learn about customers interests and needs 20. What Initial Contact With a Claimant Should Look Like - ANSWER listen to the claimants full story show empathy verify coverage explain how details of the policy relate to the loss, including any exclusions or limitations that could affect coverage outline what will happen next in the investigation, what forms must be completed, and how long the claims process will take tell them what is required to protect property from further damage supply the insured with any necessary paperwork, such as forms for recording personal property losses when necessary, make emergency advance payments to the insured for clothing, living expenses, or food 21. mistakes to avoid - ANSWER viewing claim as another file not speaking up when you don't know something failing to review the whole policy avoid giving the impression that a claim will be made can include compensation for pain and suffering; future effect of disfigurement, loss of a limb, sight, or hearing; as well as emotional distress 22. punitive or exemplary damages - ANSWER can also be imposed, but its more common for them to be levied against companies these damages are meant to punish a defendant for reckless, malicious, or deceitful acts and need not bear any relation to a party's actual damages 23. civil law - ANSWER classification of law that protects rights and provides remedies for breaches of duties owed to others separate from criminal law, which deals with conduct that endangers the public welfare, such as the crimes of murder, rape, and fraud provides the legal foundation of insurance 24. tort - ANSWER wrongful act or omission other than a crime or breach of contract that invades a legally protected right 25. tort of negligence - ANSWER when someone fails to act in a sensible manner 26. intentional tort - ANSWER deliberate act of causing harm to someone 27. strict liability - ANSWER inherently dangerous activities 28. compulsory auto insurance laws - ANSWER to insure that at fault victims have a way to compensate other victims law that requires the owners or operators of automobiles to carry automobile liability insurance at least equal to certain minimum limits before the vehicle can be licensed or registered 29. financial responsibility laws - ANSWER require motorists to provide proof that they have some means to pay for any property damage or bodily injury they might cause as a result or owning an auto 30. differences in the way auto insurance functions based on... - ANSWER where its purchased if you are a high risk driver how its regulated what technology insurers have adopted 31. types of insurance laws by state - ANSWER most are at fault states, the others are no fault states 32. at fault states - ANSWER use the tort liability system to determine who is responsible for the financial consequences of an auto accident under this system, auto accident victims must prove that another party was at fault before they can collect damages from that party 33. no fault states - ANSWER an injured person does not need to establish fault and prove negligence to collect payment for bodily injuries automobile insurance covers accident victims on a first party basis, allowing them to collect damages from their own insurers regardless of who was at fault most of these laws apply only to bodily injury and not property damage 34. no fault laws authorize or mandate... - ANSWER the use of personal injury protection (PIP) coverage and describe the PIP benefits that insurers can or must provide in those states this tends to remove small bodily injury claims from the court system 35. what does PIP coverage do - ANSWER pays benefits, regardless of fault, for medical expense, income loss, and other benefits, resulting from bodily injury to occupants of a covered auto 36. no fault states have enacted no fault laws to differing degrees, = 3 types of plans: - ANSWER modified add on choice 37. modified no fault plans - ANSWER These allow injured motorists to collect economic losses from their plan's PIP benefits. They may then have the ability to sue at-fault drivers for any economic losses that exceed the no fault coverage limits and for some noneconomic losses. 38. add on plans - ANSWER These add no-fault benefits to auto insurance policies but place no restrictions on the injured person's right to sue a negligent party for damages. 39. choice no fault plans - ANSWER Under these plans, insureds can choose whether to be covered on a modified no-fault basis. In most states with these plans, insureds who choose not to be covered on a modified no-fault basis must purchase add-on coverages. who/what regulates auto insurance - ANSWER state regulators why does homeowners insurance exist - ANSWER to help shield individuals and families from the potentially devastating financial consequences of property loss, property damage, and injuries to others at that home types of homeowners insurance forms - ANSWER homeowners 2 - broad form (H)2) *homeowners 3 - special form (HO-3) homeowners 4 - contents broad form (HO-4) homeowners 5 - comprehensive form (HO-5) homeowners 6 - unit-owners form (HO-6) homeowners 8 - modified coverage form (HO-8) homeowners 3 - special form (HO-3) - ANSWER provides... open perils coverage for dwelling and other structures named perils coverage for personal property liability coverage for occupants designed to be broad enough to cover the property and liability insurance needs of most families open perils coverage - ANSWER insures against causes or loss unless the are specifically excluded or limited by the policy named perils coverage - ANSWER insures against causes of loss that are specifically listed in the policy HO-2 broad form - ANSWER provides named perils coverage for dwellings and personal property and liability coverage HO-3 special form - ANSWER provides open perils coverage for dwellings, named perils coverage for personal property, and liability coverage HO-4 contents broad form - ANSWER Often called renters insurance, it's designed for tenants and other occupants of dwellings or apartments. It provides no dwelling coverage, but it covers personal property on a named perils basis and provides liability coverage. apartment HO-5 comprehensive form - ANSWER Provides the broadest coverage of all HO forms. It covers dwellings and personal property on an open perils basis, and it provides liability coverage. HO-6 unit owners form - ANSWER Designed for owners of residential condominium units and provides limited dwelling coverage. Named perils personal property coverage is provided, as is liability coverage condo HO-8 modified coverage form - ANSWER Designed for older buildings with a high replacement cost compared to market value. Dwellings and personal property coverage is provided on a more limited named perils basis. Liability coverage is also provided. endorsements for HO policies - ANSWER Many endorsements are available to modify HO policies to further enable them to meet the specific needs of individuals and families. Endorsements can increase or decrease limits, add or remove coverages, change definitions, clarify policy intent, or recognize specific characteristics that require a premium increase or decrease. what is the PAP designed to insure - ANSWER cars minivans SUVs pickup trucks full sized vans what does a PAP consist of - ANSWER declarations page agreement and definitions page 6 separate sections that explain the policies coverages and provisions at least 1 endorsement PAP delarations - ANSWER personalizes the policy includes: named insured (pays the premium, requests cancelation, communicates) policy period vin number PAP agreement and definitions page - ANSWER includes a general agreement stating the insurer is providing the coverage subject to payment of premium and to the terms of the policy definitions section uses simple to understand language to define important words and phrases used in the policy clarifies to whom, when, under what circumstances coverage, exclusion insuring agreements, and other policy provisions apply 4 types of autos - ANSWER private passenger autos newly acquired auto trailers owned by the named insured temporary non owned auto (rental care) PAP coverages and provisions - ANSWER A-D explain coverages for the insured liability, medical payments for the insureds aftermath of an accident, protection from uninsured motorists, and damage to insured vehicle E explains duties after a loss F explains general information, changes, cancelations, descriptions, etc. two categories of damages under PAP - ANSWER compensatory damages (compensate for the damages) and punitive damages (punishing the insured) part A of PAP liability coverage applies to... - ANSWER liability coverage for family members living in the insureds household; anyone using the named insured's covered auto; any person or organization legally responsible for the acts of a covered person while using a covered auto; and any person or organization legally responsible for the named insured's or family members' use of any automobile or trailer Part A of the PAP also covers five types of supplementary payments - ANSWER Cost of bail bonds Premiums on appeal bonds and bonds to release attachments Interest accruing after a judgment Loss of earnings because of attendance at trials Other reasonable expenses incurred at the insurer's request PAP Medical Payments Coverage Insuring Agreement = Part B - ANSWER the insurer promises to pay reasonable and necessary medical expenses incurred by an insured because of bodily injury caused by an accident