AINS 101 EXAM STUDY GUIDE 2026 COMPLETE
QUESTIONS AND ANSWERS
● Ling has noticed that her neighbor has recovered money for two
homeowners property claims and an auto damage claim he has filed in
recent years. Ling has been paying insurance premiums for many years
and has never suffered a loss or made a claim. She feels that her
insurance contracts over the years have been worthless to her. What Ling
does not understand is that she has been paying premiums in exchange
for Answer: Of unequal amount.
● Private insurers are reluctant to provide windstorm insurance on
coastal properties. This is because the loss exposures fail to meet the
criterion that ideally insurable exposures must be Answer: Independent
and not catastrophic.
Because many properties can be damaged in the same hurricane or
tropical storm, coastal properties are not independent, and potential
losses are catastrophic.
● Which of the following is the fundamental measure of loss exposure
used in insurance rating? Answer: Exposure Unit
,● Which one of the following best explains why producers should be
alert to changes in clients' loss exposures? Answer: Implemented risk
management techniques may prove to be ineffective or become obsolete
● Adhering to the characteristics of an ideally insurable loss exposure in
selling insurance help assure that Answer: The insurer is able to charge a
premium that the insured can afford to pay.
● An insurer has decided to take an extremely narrow interpretation of a
property insurance policy provision to limit the number of loss payments
it will need to make. It realizes that its interpretation is probably wrong,
but it knows that individual insured's loss amounts will be small, such
that most insureds will not take the trouble to file lawsuits against it. The
insurer may be violating the principle that an insurance policy is
Answer: A contract of the utmost good faith
● When preprinted forms do not provide the terms of coverage needed
by a particular insured or small group of insureds, the insurer may
Answer: draft a manuscript form to meet the customers needs.
● The big differences between property and liability policies are found
in their Answer: Insuring agreements
● which of the following most accurately describes one of the policy
provisions in an insurance policy? Answer: The exclusions are in place
to reduce duplicate coverage.
,● Which one of these is most directly associated with a satisfied
customer? Answer: Leads and referrals that can be used to generate new
business
● Because insurance contracts impose an obligation for ethical practices
and behaviors on the parties while dealing with one another, an
insurance contract is called a Answer: Contract of utmost good faith
● Margaret was severely injured and scarred due to a recent accident.
Which one of the following is an example of general damages Margaret
received? Answer: Compensation for disfigurement
● Jennie recently purchased a personal auto policy from Westcox
Insurers. Three weeks later, Jennie reported her car was stolen from her
driveway during the middle of the day. Upon further investigation,
claims representative Harry finds out the home address he has on file for
Jennie does not match the location where the theft occurred. In light of
this scenario, which one of the following would be particularly helpful
for Harry to pursue concerning Jenny's claim? Answer: Harry can verify
Jennie's address and other possible helpful information by reviewing her
policy which has her original application information attached.
● Joel is the underwriter for Stanton Industries. He received a notice
from the premium auditor on the account. After a recent visit to the
insured's location, the auditor wanted to make Joel aware of a decline in
the business and some questionable business practices. Which one of the
, following types of hazards is the auditor identifying? Answer: Moral
Hazards
● Earned premiums are the portion of written premiums that Answer:
Apply to the part of the policy period that has already occurred.
● Jessie is a new customer service representative (CSR) at the Winfield
Agency. Jessie usually engages in all the following activities, EXCEPT
Answer: Determining coverage quotes
● Which one of the following is the correct formula for calculating an
insurer's combined ratio? Answer: Loss ratio + expense ratio
● Alicia works for the Drewman Agency, Sandi at insurer Greenway
Insurance, and Rosa at Grossman Brokers, all as customer service
representatives. Which one of the following is true regarding their work?
Answer: Alicia can process policy endorsements and explain coverage to
her customers
● Rachel is a new employee of Westley Insurance, and has been asked to
review some existing policies to become familiar with the types of
policies she will be working with. Which one of the following will
Rachel find is true as she conducts her review? Answer: Rachel finds the
policy begins with a coverage overview and then goes into more
coverage details.
QUESTIONS AND ANSWERS
● Ling has noticed that her neighbor has recovered money for two
homeowners property claims and an auto damage claim he has filed in
recent years. Ling has been paying insurance premiums for many years
and has never suffered a loss or made a claim. She feels that her
insurance contracts over the years have been worthless to her. What Ling
does not understand is that she has been paying premiums in exchange
for Answer: Of unequal amount.
● Private insurers are reluctant to provide windstorm insurance on
coastal properties. This is because the loss exposures fail to meet the
criterion that ideally insurable exposures must be Answer: Independent
and not catastrophic.
Because many properties can be damaged in the same hurricane or
tropical storm, coastal properties are not independent, and potential
losses are catastrophic.
● Which of the following is the fundamental measure of loss exposure
used in insurance rating? Answer: Exposure Unit
,● Which one of the following best explains why producers should be
alert to changes in clients' loss exposures? Answer: Implemented risk
management techniques may prove to be ineffective or become obsolete
● Adhering to the characteristics of an ideally insurable loss exposure in
selling insurance help assure that Answer: The insurer is able to charge a
premium that the insured can afford to pay.
● An insurer has decided to take an extremely narrow interpretation of a
property insurance policy provision to limit the number of loss payments
it will need to make. It realizes that its interpretation is probably wrong,
but it knows that individual insured's loss amounts will be small, such
that most insureds will not take the trouble to file lawsuits against it. The
insurer may be violating the principle that an insurance policy is
Answer: A contract of the utmost good faith
● When preprinted forms do not provide the terms of coverage needed
by a particular insured or small group of insureds, the insurer may
Answer: draft a manuscript form to meet the customers needs.
● The big differences between property and liability policies are found
in their Answer: Insuring agreements
● which of the following most accurately describes one of the policy
provisions in an insurance policy? Answer: The exclusions are in place
to reduce duplicate coverage.
,● Which one of these is most directly associated with a satisfied
customer? Answer: Leads and referrals that can be used to generate new
business
● Because insurance contracts impose an obligation for ethical practices
and behaviors on the parties while dealing with one another, an
insurance contract is called a Answer: Contract of utmost good faith
● Margaret was severely injured and scarred due to a recent accident.
Which one of the following is an example of general damages Margaret
received? Answer: Compensation for disfigurement
● Jennie recently purchased a personal auto policy from Westcox
Insurers. Three weeks later, Jennie reported her car was stolen from her
driveway during the middle of the day. Upon further investigation,
claims representative Harry finds out the home address he has on file for
Jennie does not match the location where the theft occurred. In light of
this scenario, which one of the following would be particularly helpful
for Harry to pursue concerning Jenny's claim? Answer: Harry can verify
Jennie's address and other possible helpful information by reviewing her
policy which has her original application information attached.
● Joel is the underwriter for Stanton Industries. He received a notice
from the premium auditor on the account. After a recent visit to the
insured's location, the auditor wanted to make Joel aware of a decline in
the business and some questionable business practices. Which one of the
, following types of hazards is the auditor identifying? Answer: Moral
Hazards
● Earned premiums are the portion of written premiums that Answer:
Apply to the part of the policy period that has already occurred.
● Jessie is a new customer service representative (CSR) at the Winfield
Agency. Jessie usually engages in all the following activities, EXCEPT
Answer: Determining coverage quotes
● Which one of the following is the correct formula for calculating an
insurer's combined ratio? Answer: Loss ratio + expense ratio
● Alicia works for the Drewman Agency, Sandi at insurer Greenway
Insurance, and Rosa at Grossman Brokers, all as customer service
representatives. Which one of the following is true regarding their work?
Answer: Alicia can process policy endorsements and explain coverage to
her customers
● Rachel is a new employee of Westley Insurance, and has been asked to
review some existing policies to become familiar with the types of
policies she will be working with. Which one of the following will
Rachel find is true as she conducts her review? Answer: Rachel finds the
policy begins with a coverage overview and then goes into more
coverage details.
