AINS 102 Review Questions and Correct Answers
1. Heather and Jeff had the roof blown off their home during a recent storm.
Which one of the following best expresses the financial outcome they are
currently experiencing?
A. No change in their financial outcome
B. Lost income
C. Increased expenses
D. Reduction in property value ANSWER -D. Reduction in property value
2. All of the following are considered personal property, EXCEPT:
A. Revolver
B. Patent
C. Cherry tree
D. Antique piano ANSWER -C. Cherry tree
3. Sophie was involved in an auto accident with another vehicle. The driver of the
other vehicle was seriously injured. The individual spent 10 days in the hospital,
missed 2 months of work, and continues to experience mental distress. The
other vehicle was also damaged, with repair costs of $5,000. It was determined
that Sophie was liable for the damages because she ran a red light and caused
the accident. Which one of the following damages would be considered general
damages?
Select one:
A. Damages to the vehicle
B. Two months of lost wages
C. Mental distress compensation
D. Hospital and medical bills ANSWER -A. Mental distress compensation
4. Springton Grocery was a experiencing a frequency of liability claims from
customers slipping and falling near the store entrance on rainy days. The
owners decided to purchase nonslip mats for the areas near the store entrance
and exit doors. The mats significantly reduced the frequency of slip and fall
claims. This is an example of which one of the following risk management
techniques?
Select one:
A. Avoidance
, AINS 102 Review Questions and Correct Answers
B. Transfer
C. Loss prevention
D. Loss reduction ANSWER -C. Loss prevention
5. Which one of the following is used by the majority of states to compensate
auto accident victims?
Select one:
A. Personal injury protection coverage
B. Tort liability system
C. Uninsured motorist coverage
D. Unsatisfied judgment funds ANSWER -B. Tort liability system
6. States A, B, C, and D have addressed the problem of compensating auto acci-
dent victims differently. Which one of the following most accurately describes
the way that states are handling this issue?
Select one:
A. State D, a no-fault state, has enacted auto insurance covering accident vic-
tims on a first-party basis, usually applying to bodily injury and not to property
damage.
B. State B has enacted a financial responsibility law that requires auto owners
to carry auto liability insurance at least equal to certain minimum limits.
C. State C, a no-fault state, has enacted auto insurance covering accident
victims on a first-party basis, usually applying both to bodily injury and to
property damage.
D. State A, unlike most states, has enacted a compulsory auto insurance law,
requiring motorists to provide proof they have some means to pay for auto
accident damages. ANSWER -A. State D, a no-fault state, has enacted auto insurance covering accident
victims on a first-party basis, usually applying to bodily injury and not to property damage.
7. All of the following are true of the HO-3 Special Form, EXCEPT
ANSWER -Select one:
A. The HO-3 meets the property and liability coverage needs of most families.
B. The HO-3 is typically used as a basis for understanding other HO coverage
forms.
C. The HO-3 is designed for owners who occupy their dwelling or choose to rent
, AINS 102 Review Questions and Correct Answers
it.
D. The HO-3 can be modified for special needs through available endorse-
ments. ANSWER -C. The HO-3 is designed for owners who occupy their dwelling or choose to rent it.
8. Estelle and Richie are very conservative and want to purchase insurance to
"cover everything" in order to lessen the worries of home ownership. Which one
of the following ISO forms will provide them dwelling and personal property
insurance with the broadest possible coverage?
Select one:
A. HO-2 Broad Form
B. HO-3 Special Form
C. HO-5 Comprehensive Form
D. HO-8 Modified Form ANSWER -C. HO-5 Comprehensive Form
9. The Davis family suffered extensive fire damage to its home and was tem-
porarily unable to inhabit it. The family was forced to rent a hotel room while
its home was under repair. The cost incurred to rent the hotel room is referred
to as which one of the following outcomes of loss?
Select one:
A. Lost income
B. Increased expenses
C. Reduction in value of property
D. Special damages ANSWER -B. Increased expenses
10. Patrick's car is 12 years-old and has been driven for over 100,000 miles. He
has decided that instead of continuing to pay insurance premium for coverage
for property damage to his car, he will put the money aside to save for a new
car. Which one of the following risk management techniques is Patrick using?
Select one:
A. Diversification
B. Avoidance
C. Loss reduction
D. Retention ANSWER -D. Retention
11. All of the following could lead to a liability loss for a family, EXCEPT
ANSWER -Select one:
, AINS 102 Review Questions and Correct Answers
A. The daughter, who is 16 years old, sideswipes a neighbor's car and dents its
fender while driving her own car.
B. The father trips on a broom he left lying in the driveway and breaks his arm.
C. A guest slips on an icy sidewalk in front of the family's home and breaks his
leg.
D. The son, who is 13 years old, throws a rock at a classmate who requires
stitches for an injury to his head. ANSWER -B. The father trips on a broom he left lying in the
driveway and breaks his arm.
12. Which one of the following is a form of compensatory damages?
Select one:
A. Exemplary damages
B. Punitive damages
C. Special damages
D. Real damages ANSWER -C. Special damages
13. Leslie is insured with a personal auto policy (PIP) with Baines Insurance. She
lives in a state that has a type of no-fault plan in which she, if injured by an
auto accident that was the fault of another person, would be compensated
with no-fault benefits but she would not be restricted in her right to sue that
negligent person for damages. This type of no-fault plan is most specifically
a(n)
Select one:
A. Choice no-fault
B. PIP benefit
C. Add-on plan
D. Modified no-fault plan ANSWER -C. Add-on plan
14. Which one of the following is considered a high-risk driver?
Select one:
A. Cyndy cannot obtain insurance from a private insurer.
B. Stacey was involved in a deadly car accident.
C. Mark was caught and convicted of driving under the influence of alcohol.
D. Martin can only qualify for the most expensive auto insurance. ANSWER -C. Mark
was caught and convicted of driving under the influence of alcohol.
1. Heather and Jeff had the roof blown off their home during a recent storm.
Which one of the following best expresses the financial outcome they are
currently experiencing?
A. No change in their financial outcome
B. Lost income
C. Increased expenses
D. Reduction in property value ANSWER -D. Reduction in property value
2. All of the following are considered personal property, EXCEPT:
A. Revolver
B. Patent
C. Cherry tree
D. Antique piano ANSWER -C. Cherry tree
3. Sophie was involved in an auto accident with another vehicle. The driver of the
other vehicle was seriously injured. The individual spent 10 days in the hospital,
missed 2 months of work, and continues to experience mental distress. The
other vehicle was also damaged, with repair costs of $5,000. It was determined
that Sophie was liable for the damages because she ran a red light and caused
the accident. Which one of the following damages would be considered general
damages?
Select one:
A. Damages to the vehicle
B. Two months of lost wages
C. Mental distress compensation
D. Hospital and medical bills ANSWER -A. Mental distress compensation
4. Springton Grocery was a experiencing a frequency of liability claims from
customers slipping and falling near the store entrance on rainy days. The
owners decided to purchase nonslip mats for the areas near the store entrance
and exit doors. The mats significantly reduced the frequency of slip and fall
claims. This is an example of which one of the following risk management
techniques?
Select one:
A. Avoidance
, AINS 102 Review Questions and Correct Answers
B. Transfer
C. Loss prevention
D. Loss reduction ANSWER -C. Loss prevention
5. Which one of the following is used by the majority of states to compensate
auto accident victims?
Select one:
A. Personal injury protection coverage
B. Tort liability system
C. Uninsured motorist coverage
D. Unsatisfied judgment funds ANSWER -B. Tort liability system
6. States A, B, C, and D have addressed the problem of compensating auto acci-
dent victims differently. Which one of the following most accurately describes
the way that states are handling this issue?
Select one:
A. State D, a no-fault state, has enacted auto insurance covering accident vic-
tims on a first-party basis, usually applying to bodily injury and not to property
damage.
B. State B has enacted a financial responsibility law that requires auto owners
to carry auto liability insurance at least equal to certain minimum limits.
C. State C, a no-fault state, has enacted auto insurance covering accident
victims on a first-party basis, usually applying both to bodily injury and to
property damage.
D. State A, unlike most states, has enacted a compulsory auto insurance law,
requiring motorists to provide proof they have some means to pay for auto
accident damages. ANSWER -A. State D, a no-fault state, has enacted auto insurance covering accident
victims on a first-party basis, usually applying to bodily injury and not to property damage.
7. All of the following are true of the HO-3 Special Form, EXCEPT
ANSWER -Select one:
A. The HO-3 meets the property and liability coverage needs of most families.
B. The HO-3 is typically used as a basis for understanding other HO coverage
forms.
C. The HO-3 is designed for owners who occupy their dwelling or choose to rent
, AINS 102 Review Questions and Correct Answers
it.
D. The HO-3 can be modified for special needs through available endorse-
ments. ANSWER -C. The HO-3 is designed for owners who occupy their dwelling or choose to rent it.
8. Estelle and Richie are very conservative and want to purchase insurance to
"cover everything" in order to lessen the worries of home ownership. Which one
of the following ISO forms will provide them dwelling and personal property
insurance with the broadest possible coverage?
Select one:
A. HO-2 Broad Form
B. HO-3 Special Form
C. HO-5 Comprehensive Form
D. HO-8 Modified Form ANSWER -C. HO-5 Comprehensive Form
9. The Davis family suffered extensive fire damage to its home and was tem-
porarily unable to inhabit it. The family was forced to rent a hotel room while
its home was under repair. The cost incurred to rent the hotel room is referred
to as which one of the following outcomes of loss?
Select one:
A. Lost income
B. Increased expenses
C. Reduction in value of property
D. Special damages ANSWER -B. Increased expenses
10. Patrick's car is 12 years-old and has been driven for over 100,000 miles. He
has decided that instead of continuing to pay insurance premium for coverage
for property damage to his car, he will put the money aside to save for a new
car. Which one of the following risk management techniques is Patrick using?
Select one:
A. Diversification
B. Avoidance
C. Loss reduction
D. Retention ANSWER -D. Retention
11. All of the following could lead to a liability loss for a family, EXCEPT
ANSWER -Select one:
, AINS 102 Review Questions and Correct Answers
A. The daughter, who is 16 years old, sideswipes a neighbor's car and dents its
fender while driving her own car.
B. The father trips on a broom he left lying in the driveway and breaks his arm.
C. A guest slips on an icy sidewalk in front of the family's home and breaks his
leg.
D. The son, who is 13 years old, throws a rock at a classmate who requires
stitches for an injury to his head. ANSWER -B. The father trips on a broom he left lying in the
driveway and breaks his arm.
12. Which one of the following is a form of compensatory damages?
Select one:
A. Exemplary damages
B. Punitive damages
C. Special damages
D. Real damages ANSWER -C. Special damages
13. Leslie is insured with a personal auto policy (PIP) with Baines Insurance. She
lives in a state that has a type of no-fault plan in which she, if injured by an
auto accident that was the fault of another person, would be compensated
with no-fault benefits but she would not be restricted in her right to sue that
negligent person for damages. This type of no-fault plan is most specifically
a(n)
Select one:
A. Choice no-fault
B. PIP benefit
C. Add-on plan
D. Modified no-fault plan ANSWER -C. Add-on plan
14. Which one of the following is considered a high-risk driver?
Select one:
A. Cyndy cannot obtain insurance from a private insurer.
B. Stacey was involved in a deadly car accident.
C. Mark was caught and convicted of driving under the influence of alcohol.
D. Martin can only qualify for the most expensive auto insurance. ANSWER -C. Mark
was caught and convicted of driving under the influence of alcohol.
