AINS 101 EXAM STUDY GUIDE 2026 FULL
QUESTIONS AND CORRECT ANSWERS
● A fire destroys the kitchen in Rob and Laurie's home. Which insurance
policy would provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy Answer: b. Homeowners Policy (Property)
● Which insurance policy could protect Rob and Laurie's sandwich shop
against losses from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto Answer: b. Commercial Crime
● The best indication of an insurer's overall financial health is the
Answer: policyholders surplus (It shows how much cash an insurer has
on hand for emergencies, unexpected losses, and expansion of business)
,● Combined ratio = Answer: loss ratio + expense ratio
● expense ratio = Answer: incurred underwriting expenses / written
premiums
● loss ratio = Answer: incurred losses (including loss adjustment
expenses) / earned premiums
● Marco has been approved for a car insurance policy with a low
premium because on his application he gave an address in a low-crime
area. However, the actual address at which he lives and parks his car is
in a high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines Answer: b. Adverse selection
● Emily is the underwriter for Marco's account. What is one way she
could detect and minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or
losses
,d. Alter the underwriting guidelines Answer: c. Monitor the book of
business for unusual patterns of policy growth or losses
● These underwriters evaluate individual insurance applications and
policy renewals and manage their own books of business. In many ways,
they are the public face of the Underwriting Department Answer: field
underwriters
● These underwriters make large-scale decisions about coverage,
pricing, lines of business, and the overall risk selection process Answer:
corporate underwriters
● What do underwriters evaluate to determine the appropriate
classification for a commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus Answer: b. specific characteristics of the
insured's operation
● Exposure unit to the type of insurance it's typically used for:
Each vehicle Answer: auto
● Exposure unit to the type of insurance it's typically used for:
, Each $100 of insured value Answer: commercial property
● Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales Answer: general liability
● Exposure unit to the type of insurance it's typically used for:
Each $1,000 of insured value Answer: homeowners
● Exposure unit to the type of insurance it's typically used for:
Each $100 of payroll Answer: workers comp
● Maria accidentally rear-ended Kenneth at a stop light. After the two
made sure they were both uninjured, they exchanged insurance
information. Shortly afterward, Kenneth called Maria's insurer and
talked to Javier to report the damages to his car.
______ is the claim's representative. Answer: Javier
● Maria accidentally rear-ended Kenneth at a stop light. After the two
made sure they were both uninjured, they exchanged insurance
information. Shortly afterward, Kenneth called Maria's insurer and
talked to Javier to report the damages to his car.
_____ is the claimant. Answer: Kenneth
QUESTIONS AND CORRECT ANSWERS
● A fire destroys the kitchen in Rob and Laurie's home. Which insurance
policy would provide coverage for the damage?
a. Homeowners Policy (Personal Liability)
b. Homeowners Policy (Property)
c. Personal Umbrella Policy
d. Personal Auto Policy Answer: b. Homeowners Policy (Property)
● Which insurance policy could protect Rob and Laurie's sandwich shop
against losses from employee theft?
a. Workers Compensation
b. Commercial Crime
c. Commercial Property
d. Commercial General Liability
e. Commercial Auto Answer: b. Commercial Crime
● The best indication of an insurer's overall financial health is the
Answer: policyholders surplus (It shows how much cash an insurer has
on hand for emergencies, unexpected losses, and expansion of business)
,● Combined ratio = Answer: loss ratio + expense ratio
● expense ratio = Answer: incurred underwriting expenses / written
premiums
● loss ratio = Answer: incurred losses (including loss adjustment
expenses) / earned premiums
● Marco has been approved for a car insurance policy with a low
premium because on his application he gave an address in a low-crime
area. However, the actual address at which he lives and parks his car is
in a high-crime area. What is this an example of?
a. Growing capacity
b. Adverse selection
c. Creating surplus
d. Following underwriting guidelines Answer: b. Adverse selection
● Emily is the underwriter for Marco's account. What is one way she
could detect and minimize instances of adverse selection such as this?
a. Increase auto policy premiums
b. Ensure adequate policyholders' surplus
c. Monitor the book of business for unusual patterns of policy growth or
losses
,d. Alter the underwriting guidelines Answer: c. Monitor the book of
business for unusual patterns of policy growth or losses
● These underwriters evaluate individual insurance applications and
policy renewals and manage their own books of business. In many ways,
they are the public face of the Underwriting Department Answer: field
underwriters
● These underwriters make large-scale decisions about coverage,
pricing, lines of business, and the overall risk selection process Answer:
corporate underwriters
● What do underwriters evaluate to determine the appropriate
classification for a commercial operation?
a. the insurer's book of business
b. specific characteristics of the insured's operation
c. the producer's years of experience on the job
d. policy holders' surplus Answer: b. specific characteristics of the
insured's operation
● Exposure unit to the type of insurance it's typically used for:
Each vehicle Answer: auto
● Exposure unit to the type of insurance it's typically used for:
, Each $100 of insured value Answer: commercial property
● Exposure unit to the type of insurance it's typically used for:
Each $1,000 of gross sales Answer: general liability
● Exposure unit to the type of insurance it's typically used for:
Each $1,000 of insured value Answer: homeowners
● Exposure unit to the type of insurance it's typically used for:
Each $100 of payroll Answer: workers comp
● Maria accidentally rear-ended Kenneth at a stop light. After the two
made sure they were both uninjured, they exchanged insurance
information. Shortly afterward, Kenneth called Maria's insurer and
talked to Javier to report the damages to his car.
______ is the claim's representative. Answer: Javier
● Maria accidentally rear-ended Kenneth at a stop light. After the two
made sure they were both uninjured, they exchanged insurance
information. Shortly afterward, Kenneth called Maria's insurer and
talked to Javier to report the damages to his car.
_____ is the claimant. Answer: Kenneth
