AINS PRACTICE EXAM REVIEW
QUESTIONS & ANSWERS|| 2025
LATEST UPDATE
One distinguishing feature between independent agency systems and other marketing
systems is the... - ANSWER agency expiration list
Foreign Insurer - ANSWER An insurer licensed to operate in a state but incorporated in
another state
Domestic Insurer - ANSWER An insurer doing business in the jurisdiction in which it
was incorporated
Alien Insurer - ANSWER An insurer domiciled in a country other than the US
Direct Response Marketing System - ANSWER Greatly reduces compensation costs
but has higher advertising costs
Agency Expiration List - ANSWER An agency's most valuable asset (does not belong to
insurer)
Important consideration when selecting distribution channels - ANSWER Does the
channel capitalize on its core capabilities?
Knowledge acquired by the agent is presumed to be.. - ANSWER knowledge acquired
by the insurer
Premium collection method used for personal insurance and small commercial accounts
- ANSWER Direct Bill
What specifies scope of authority of an agent? - ANSWER Agency contract
Agency Bill - ANSWER Payment procedure in which a producer sends premium bills to
the insured, collects the premium, and sends the premium to the insurer, less any
commission
Item Basis - ANSWER Premium (less commission) is forwarded to the insurer when the
producer collects it or when it comes due. Least complex method
Statement Basis - ANSWER Insurer sends statement to the producer showing the
premiums due. Producer is obligated to pay the premiums as due.
, Account Current Basis - ANSWER Producer periodically prepares a statement showing
the premiums due to the insurer, after deducting appropriate commissions, and
transmits the amount to the insurer. The agency contract will indicate how often the
producer must submit the account current statement (usually monthly). Producer must
pay when premium is due, even if policyholder hasn't paid.
Constructive Total Loss - ANSWER A loss that occurs when the cost to repair the
damaged property plus its remaining salvage value equals or exceeds the pre-loss
value
General Damages - ANSWER A monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific measurable expenses
Enterprise-wide risk management program (ERM) - ANSWER Implemented at the
corporate level and manages all of an organization's key risks and opportunities with the
intent of maximizing the organization's value.
Elements of a Contract - ANSWER Legal purpose, consideration and agreement
Distinguishing Characteristics of Insurance Policies - ANSWER Contract of Indemnity
Contract of utmost good faith
Contract involving fortuitous events
Contract of adhesion
Conditional Contract
Nontransferable Contract
Modular Policy - ANSWER Combines many different forms under one policy (ex.
commercial property package)
"Other Structure" - ANSWER Covered by policy but under separate policy limits
Broad statement of insurer's promises in a policy - ANSWER Insuring Agreement
Coinsurance - ANSWER Reduces amount of recovery if a property is underinsured
Medical Payments under Auto Policy - ANSWER Cover only occupants of covered auto
A fair approach to liability claims is to... - ANSWER evaluate claims as though no
coverage limit existed
ACV - Salvage Value - ANSWER Constructive Total Loss or not
Judgment Rating - ANSWER Used when there is no established premium-determination
system
QUESTIONS & ANSWERS|| 2025
LATEST UPDATE
One distinguishing feature between independent agency systems and other marketing
systems is the... - ANSWER agency expiration list
Foreign Insurer - ANSWER An insurer licensed to operate in a state but incorporated in
another state
Domestic Insurer - ANSWER An insurer doing business in the jurisdiction in which it
was incorporated
Alien Insurer - ANSWER An insurer domiciled in a country other than the US
Direct Response Marketing System - ANSWER Greatly reduces compensation costs
but has higher advertising costs
Agency Expiration List - ANSWER An agency's most valuable asset (does not belong to
insurer)
Important consideration when selecting distribution channels - ANSWER Does the
channel capitalize on its core capabilities?
Knowledge acquired by the agent is presumed to be.. - ANSWER knowledge acquired
by the insurer
Premium collection method used for personal insurance and small commercial accounts
- ANSWER Direct Bill
What specifies scope of authority of an agent? - ANSWER Agency contract
Agency Bill - ANSWER Payment procedure in which a producer sends premium bills to
the insured, collects the premium, and sends the premium to the insurer, less any
commission
Item Basis - ANSWER Premium (less commission) is forwarded to the insurer when the
producer collects it or when it comes due. Least complex method
Statement Basis - ANSWER Insurer sends statement to the producer showing the
premiums due. Producer is obligated to pay the premiums as due.
, Account Current Basis - ANSWER Producer periodically prepares a statement showing
the premiums due to the insurer, after deducting appropriate commissions, and
transmits the amount to the insurer. The agency contract will indicate how often the
producer must submit the account current statement (usually monthly). Producer must
pay when premium is due, even if policyholder hasn't paid.
Constructive Total Loss - ANSWER A loss that occurs when the cost to repair the
damaged property plus its remaining salvage value equals or exceeds the pre-loss
value
General Damages - ANSWER A monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific measurable expenses
Enterprise-wide risk management program (ERM) - ANSWER Implemented at the
corporate level and manages all of an organization's key risks and opportunities with the
intent of maximizing the organization's value.
Elements of a Contract - ANSWER Legal purpose, consideration and agreement
Distinguishing Characteristics of Insurance Policies - ANSWER Contract of Indemnity
Contract of utmost good faith
Contract involving fortuitous events
Contract of adhesion
Conditional Contract
Nontransferable Contract
Modular Policy - ANSWER Combines many different forms under one policy (ex.
commercial property package)
"Other Structure" - ANSWER Covered by policy but under separate policy limits
Broad statement of insurer's promises in a policy - ANSWER Insuring Agreement
Coinsurance - ANSWER Reduces amount of recovery if a property is underinsured
Medical Payments under Auto Policy - ANSWER Cover only occupants of covered auto
A fair approach to liability claims is to... - ANSWER evaluate claims as though no
coverage limit existed
ACV - Salvage Value - ANSWER Constructive Total Loss or not
Judgment Rating - ANSWER Used when there is no established premium-determination
system
