AINS 103 Exam Review Questions With Complete Solutions

1. Instrumentalities of transportation and communication - ANSWER Equipment and structures used to transmit communications and transport property, such as bridges, tunnels, piers, wharves, pipelines, cranes and other equipment for loading and unloading, transmission lines, and radio and television equipment. 2. Businessowners policy (BOP) - ANSWER A package policy that combines most of the property and liability coverages needed by small and medium-size businesses. 3. Non owned auto - ANSWER An auto defined by the Business Auto Coverage Form as not owned, leased, hired, rented, or borrowed by the named insured. 4. Adverse selection - ANSWER The tendency of those most likely to experience loss to be the most likely to purchase insurance. 5. Building - ANSWER As defined in the BPP, the building described in the policy; the building's completed additions; fixtures, including outdoor fixtures; permanently installed machinery and equipment; and personal property owned by the insured that is used to maintain or service the building or its premises. 6. Business income coverage - ANSWER Insurance that covers the reduction in an organization's income when operations are interrupted by damage to property caused by a covered peril. 7. Prejudgment interest - ANSWER Interest that may accrue on damages before a judgment has been rendered. 8. Supplementary payment - ANSWER Various expenses the insurer agrees to pay under a liability insurance policy (in addition to the liability limits) for items such as premiums on bail bonds and appeal bonds, loss of the insured's earnings because of attendance at trials, and other reasonable expenses incurred by the insured at the insurer's request. 9. Insured - ANSWER Any person or organization who is insured under an insurance policy. 10. Big data - ANSWER Sets of data that are too large to be gathered and analyzed by traditional methods. 11. Smart product - ANSWER An innovative item that uses sensors; wireless sensor networks; and data collection, transmission, and analysis to further enable the item to be faster, more useful, or otherwise improved. 12. Internet of Things (IoT) - ANSWER A network of objects that transmit data to each other and to central hubs through the internet. 13. Telematics - ANSWER The use of technological devices to transmit data via wireless communication and GPS tracking. 14. Artificial intelligence (AI) - ANSWER Computer processing or output that simulates human reasoning or knowledge. 15. Predictive modeling - ANSWER A process in which historical data based on behaviors and events is blended with multiple variables and used to construct models of anticipated future outcomes. 16. Data mining - ANSWER The analysis of large amounts of data to find new relationships and patterns that will assist in developing business solutions 17. Catastrophe model - ANSWER A type of computer program that estimates losses from future potential catastrophic events. 18. Enterprise risk management - ANSWER An approach to managing all of an organization's key business risks and opportunities with the intent of maximizing shareholder value. Also known as enterprise-wide risk management. 19. Risk management - ANSWER The process of making and implementing decisions that enable an organization to optimize its level of risk. 20. Process mining - ANSWER The use of exploratory data analysis to provide insights about a business process and identify potential improvements. 21. Subrogation - ANSWER The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss. 22. Fraud - ANSWER An intentional misrepresentation resulting in harm to a person or an organization. 23. Social network analysis - ANSWER The study of the connections and relationships among people in a network. 24. Bailee - ANSWER The party temporarily possessing the personal property in a bailment. 25. Marine insurance - ANSWER Insurance that, in the U.S., includes both ocean and inland marine coverage and, in the rest of the world, is limited to insurance for vessels and cargo. 26. Inland marine insurance - ANSWER Insurance that covers many different classes of property that typically involve an element of transportation on land. 27. Ocean marine insurance - ANSWER Insurance that covers vessels and their cargoes, including various vessel related liability exposures. 28. Workers compensation - ANSWER A system that pays lost wages, medical and vocational rehabilitation expenses, and death benefits to injured workers or their dependents for employment-related injuries and diseases. 29. Workers compensation statute - ANSWER A statute that obligates employers, regardless of fault, to pay specified medical, disability, rehabilitation, and death benefits for their employees' job-related injuries and diseases. 30. Workers compensation insurance - ANSWER Insurance that provides coverage for benefits an employer is obligated to pay under workers compensation laws. 31. Occupational disease - ANSWER Disease thought to be caused by work or the work environment. 32. Employee - ANSWER A person who is (1) currently employed by the insured or an ex-employee terminated within the past 30 days; (2) compensated by the insured by salary, wages, or commissions; and (3) subject to the control and direction of the insured. 33. Independent contractor - ANSWER A person (or organization) hired to perform services without being subject to the hirer's direction and control regarding work details. 34. Employee leasing - ANSWER An arrangement in which a third party provides a firm with employees for a fee. 35. Leased workers - ANSWER Workers provided by a business, whose primary job is to provide such workers, to another business. 36. Cyber risk - ANSWER The possibility that data will end up in the possession of a party who is not authorized to have that data and who can use it in a manner that is harmful to the individual or organization that is the subject of the data and/or the party that collected and stored the data. 37. Cyber risk loss exposure - ANSWER Any condition that presents the possibility of financial loss to an organization from property, net income, or liability losses as a consequence of advanced technology transmissions, operations, maintenance, development, or support. 38. Reputation - ANSWER An intangible asset, a key determinant of future business prospects, resulting from a collection of perceptions and opinions, past and present, about an organization that resides in the consciousness of its stakeholders. 39. Reputational risk - ANSWER The risk that negative publicity, whether true or not, will damage a company's reputation and its ability to operate its business. 40. Supply chain - ANSWER The network of external stakeholders on which an organization relies for goods and services. 41. Intellectual property - ANSWER The product of human intelligence that has economic value. 42. Commercial property coverage part - ANSWER Commercial package policy (CPP) coverage component that provides a broad range of coverages to "middle market" or larger firms to insure buildings and business personal property. 43. Commercial package policy (CPP) - ANSWER Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts. 44. Monoline policy - ANSWER Policy that covers only one line of business. 45. Coinsurance - ANSWER An insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount that an insurer will pay for a covered loss is reduced. 46. Occurrence coverage trigger - ANSWER The event that triggers coverage under an occurrence coverage form: injury or damage that occurs during the policy period. 47. Claims-made coverage trigger - ANSWER The event that triggers coverage under a claims-made coverage form; the first making of a claim against any insured during either the policy period or an extended reporting period. 48. Occurrence - ANSWER An accident, including continuous or repeated exposure to substantially the same general harmful conditions. 49. Bodily injury - ANSWER Physical injury to a person, including sickness, disease, and death. 50. Property damage - ANSWER Physical injury to, destruction of, or loss of use of tangible property. 51. Modular policy - ANSWER An insurance policy that consists of several different documents, none of which by itself forms a complete policy. 52. Business Auto Coverage Form - ANSWER A coverage form, filed by ISO, that covers liability arising out of the ownership, maintenance, or use of autos and physical damage to autos owned, leased, or hired by the named insured. 53. Personal injury protection - ANSWER Coverage that pays benefits, regardless of fault, for medical expense, income loss, and other benefits, resulting from bodily injury to occupants of a covered auto. Medical payments - ANSWER Reasonable expenses incurred for necessary medical and funeral services because of bodily injury. Uninsured motorist (UM) coverage - ANSWER Coverage that provides a source of recovery for occupants of a covered auto or for qualifying pedestrians who are injured in an accident caused by an at-fault motorist who does not have the state minimum liability insurance or by a hit-and-run driver. Underinsured motorists (UIM) coverage - ANSWER Coverage that applies when a negligent driver has liability insurance at the time of the accident but has limits lower than those of the injured person's coverage. Employers liability insurance - ANSWER Insurance that protects an employer against employee injury claims that are not covered by workers compensation laws Workers Compensation and Employers Liability Insurance Policy (WCEL policy) - ANSWER The policy used in most states to provide workers compensation and employers liability insurance. Dual capacity - ANSWER A legal doctrine giving the employee the right to sue the employer when the employer acts in a capacity other than that of employer. Aggregate limit - ANSWER The maximum amount an insurer will pay for all covered losses during the covered policy period. Umbrella policy - ANSWER A liability policy that provides excess coverage above underlying policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention. Excess liability policy - ANSWER A policy that covers liability claims in excess of the limits of an underlying policy or a stated retention amount. Boiler - ANSWER A fired pressure vessel constructed of cast iron or steel in which water is heated to produce steam or hot water. Fired pressure vessel - ANSWER A closed container that is heated by the direct fire of burning fuel and can withstand internal pressure. Discovery Form - ANSWER Form that covers losses discovered during the policy period even though they may have occurred before the policy period. Loss-Sustained Form - ANSWER Form that covers losses actually sustained during the policy period and discovered no later than one year after policy expiration. Annual transit policy - ANSWER Policy that covers all shipments made or received by the insured throughout a one year policy period. Trip transit policy - ANSWER Policy that covers a particular shipment of goods specified in the policy. Motor truck cargo liability policy - ANSWER Policy that covers a trucker's liability for damage to cargo of others being transported by the trucker. Contractors equipment floater - ANSWER A policy that covers mobile equipment or tools while located anywhere in the coverage territory. Dealers policy - ANSWER A policy that covers the inventory and other property of any of the types of dealers that qualify for inland marine coverage (such as jewelers, equipment dealers, fine arts dealers, and furriers). Loss exposure - ANSWER Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs. Property loss exposure - ANSWER A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest. Real property (realty) - ANSWER Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land. Personal property - ANSWER All tangible or intangible property that is not real property. Business personal property - ANSWER Stock, furniture, fixtures, equipment and machinery, tenant's improvements and betterments, and other personal property owned by the insured. Fixture - ANSWER Any personal property affixed to real property in such a way as to become part of the real property. Money - ANSWER Currency, coins, bank notes, and sometimes traveler's checks, credit card slips, and money orders held for sale to the public. Securities - ANSWER Written instruments representing either money or other property, such as stocks and bonds. Peril - ANSWER The cause of a loss. Business income insurance - ANSWER Insurance that covers the reduction in an organization's income when operations are interrupted by damage to property caused by a covered peril. Business interruption - ANSWER Loss of revenue that a business or another organization sustains because its operations are suspended as a result of physical injury to its property. Profit - ANSWER Net income that results when revenues exceed expenses. Continuing expenses - ANSWER Expenses that continue to be incurred during a business interruption.