AINS 101 - Increasing Your Insurance IQ Final Exam Questions and Verified Answers

AINS 101 - Increasing Your Insurance IQ Final Exam
Questions and Verified Answers

1. Which of the following represents uncertainty about outcomes that can be negative or
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positive?: Risk e


2. The primary role of insurance is to: Indemnify individuals and organizations for covered lo
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sses.
3. The insurance agent suggested that Sally's Snack Shop buy a policy that combines pr
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operty, crime, and liability coverage into one policy. This is re-
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eferred to as as a(n): Commercial package policy (CPP)
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4. Coverage for money and other business property from various causes of loss such
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as burglary, robbery, theft, and employee dishonesty typically provided by: Commercia
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l crime insruance
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5. Insurance Company wrote a commercial liability policy for a manufacturer of off-
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road motorcycles. The potential cost of the insured's loss exposure exceed Insurance Co
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mpany's capacity. Insurance Company could consider which one of the following types of
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contractual transferring agreement to meet its needs?: Reinsurance
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6. Which one of the following correctly describes a reason for government involvement i
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n property-
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casualty insruance?: Government programs can meet legitimate public demands unmet by
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private insurers. e


7. AVA is a start up company that develops safety technologies that can be sold to co
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mpanies that are producing autonomous vehicles. One Tech-
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enology AVA is developing allows an autonomous vehicle to detect, extract,
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and analyze images; and then to respond to those images. For example, the technology w
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ould detect a presence in a crosswalk, extract the image, and a computer would analyze t
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he image. When the image was determined to be a human being, the vehicle would slow d
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own or stop until the crosswalk was clear. This technology, which is designed to capture a
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nd analyze images, and to act on the recognition of the image id called: Computer vision
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,8. MFC offers a wide array of mutual fund options to investors. Each mutual fund has a di
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fferent fund objective and set of investment guidelines that apply to the fund. While MFC
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gives considerable freedom to its fund portfolio managers, they are required to abide by t
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he funds investment guidelines.
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To monitor compliance, MFC developed a computer algorithm. The computer algorithm c
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ontinuously monitors each fund's compliance with investment guidelines. If a fund manag
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er violates the investment guidelines, the computer immediately notifies MFC's internal c
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ontrol director, and corrective action is taken. MFC's use of the computer algorithm to mon
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itor investment compliance and to provide notification when corrective action is necessary
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illustrates use of: Artificial intelligence
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, 9. Which one of the following statements is correct regarding the benefits provided by i
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nsurance?: Insurance helps reduce the financial burden to society by compensating accid
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ent victims. e


10. As a single mother on a very tight budget, Ciara is tempted to skimp on her insuranc
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e. However, her friend Mehmet tells her not to skimp on insur-
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eance, because it will help manage her cash flow. Which one of the following examples b
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est illustrates Mehmet's point?: When her car's windshield breaks, Ciara has to pay only $
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100 of the $600 cost of replacing it.
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11. Shelton Industries experienced a fire in its manufacturing plant. Several employees
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suffered burns and smoke inhalation injuries as they tried to escape the building.Which o
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ne of Shelton Industries' commercial property-ca-
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esualty policies would pay for the employee's injuries and illnesses?: Workers compensati
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on insurance e


12. A homeowners policy is a type of: Personal property-casualty insurance policy.
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13. All of the following are types of private insurers, EXCEPT:: State workers compensati
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on funds e


14. An insurer that was formed for the purpose of earning a profit for its stockholde
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rs is a: Stock insurer
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15. ABC company experienced a dramatic ideological shift in corporate poli-
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ecies after a national election. This is an example of which one of the following quadrants o
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f risk?: Strategic Risk
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16. Jimmy decided to buy a house in his neighborhood that had been fore-
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eclosed on by the bank that held the mortgage. He is hoping to do some renovation and
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erepair work on the house, and then sell it for a quick profit. Which one of the following
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types of risk is this for Jimmy?: Speculative risk
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17. Which one of the following best describes that concept of pooling?: In-
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esureds share the cost of each other's losses. e e e e e e e


18. A reinsurance company: Assumes loss exposures from a primary insurer.
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19. The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
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Fund - e


eMAIF) that provides coverage for drivers who are unable to obtain coverage from priva
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