AINS 101 PRACTICE EXAM 2 QUESTIONS WITH ANSWERS
GRADED A+
✔✔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. - ✔✔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. - ✔✔Kenneth
✔✔Belinda is a claims professional who works outside her organization's office. She
generally handles claims that require investigating the scene of a loss; resolving
complex investigative issues; and meeting with insureds, claimants, lawyers, and others
involved in a claim. What type of claims representative is she?
a. Telephone claims representative
b. Claims manager
c. Claims supervisor
d. Field claims representative - ✔✔d. Field claims representative
✔✔If Tania needed to consult an accident-scene reconstruction specialist, she would
have been engaged in which one of these claims hand
ling activities?
a. Investigating and documenting the claim.
b. Contacting the insured or the insured's representative
c. Identifying the policy that may cover the claim
d. Acknowledging a claim and assigning it to the claims representative - ✔✔a.
Investigating and documenting the claim.
✔✔Using the previous example, let's say the couch destroyed in the fire has a ten-year
lifespan and replacement value of $800. If it was four years old and insured for its actual
cash value, how much would the policyholder receive?
a. $480
b. $800
c. $380
d. $600 - ✔✔a. $480
✔✔reimburses the insured for the cost of replacing the property, minus depreciation -
✔✔actual cash value
,✔✔The maximum amount that will be paid in the event of a loss is set by the insured
and insurer at the time the policy is written. - ✔✔agreed value
✔✔reimburses the insured for the cost of replacing the property - ✔✔replacement value
✔✔_____ reimburse a victim for actual harm - ✔✔compensatory damages
✔✔are awarded to punish a defendant for reckless, malicious, or deceitful acts -
✔✔punitive damages
✔✔are awarded for specific, identifiable expenses associated with the injured person's
loss - ✔✔special damages
✔✔awarded to compensate a victim for losses such as pain and suffering - ✔✔general
damages
✔✔investing in the stock market is an example of _____ risk - ✔✔speculative
✔✔driving a car is an example of ____ risk - ✔✔pure
✔✔the principle that prevents an insured from profiting from owning an insurance policy
- ✔✔indemnity
✔✔a self-employed hairstylist wants to make sure she's covered in case a client sues
her. Her agent suggests a ____ policy. - ✔✔manuscript
✔✔unique information on the insured; list of forms included in policy - ✔✔declarations
✔✔Statements containing insurer's promise to make payment - ✔✔insuring agreement
✔✔provisions stating what the insurer will not cover - ✔✔exclusions
✔✔qualifications on promise to make payment - ✔✔conditions
✔✔words with special meanings in policy - ✔✔definitions
✔✔Which one of the following statements is correct regarding the benefits provided by
insurance?
Select one:
A. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
B. Insurance helps reduce the financial burden to society by compensating accident
victims.
,C. The primary role of insurance is to meet mandatory insurance requirements.
D. Insurance reduces the financial consequences of loss exposures but not the related
uncertainty. - ✔✔B. Insurance helps reduce the financial burden to society by
compensating accident victims.
✔✔Which one of the following represents uncertainty about outcomes that can be
negative or positive?
Select one:
A. Pooling
B. Loss exposure
C. Transfer
D. Risk - ✔✔D. Risk
✔✔A homeowners policy is a type of
Select one:
A. Commercial insurance policy.
B. Personal umbrella policy.
C. Personal property-casualty insurance policy.
D. Life insurance policy. - ✔✔C. Personal property-casualty insurance policy.
✔✔Coverage for money and other business property from various causes of loss such
as burglary, robbery, theft, and employee dishonesty typically is provided by
Select one:
A. Inland marine insurance.
B. Ocean marine insurance.
C. Commercial crime insurance.
D. Professional liability insurance. - ✔✔C. Commercial crime insurance.
✔✔All of the following are types of private insurers, EXCEPT:
Select one:
A. Reciprocal insurance exchanges
B. Stock insurers
C. State workers compensation funds
D. Mutual insurers - ✔✔C. State workers compensation funds
✔✔In an effort to reduce expenses, increase profitability, and reduce human errors;
ABC Insurance Company decided to automate most of its personal lines underwriting
function. The company now uses standardized application forms that are submitted
electronically to one of the company's regional offices. At each regional office, a
computer with a scanner reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on the application are all
acceptable, the policy is automatically issued. Rejected applications are automatically
forwarded to a human underwriter who reviews them. The use of this technology has
reduced the company's expense ratio by two and a half percent, and reduced the time it
, takes to issue a policy. ABC Insurance Company's use of computers to evaluate
applications electronically is an application of
Select one:
A. Artificial intelligence.
B. Risk mana - ✔✔A. Artificial intelligence
✔✔Mutual Fund Company (MFC) offers a wide array of mutual fund options to
investors. Each mutual fund has a different fund objective and set of investment
guidelines that apply to the fund. While MFC gives considerable freedom to its fund
portfolio managers, they are required to abide by the fund's investment guidelines. To
monitor compliance, MFC developed a computer algorithm. The computer algorithm
continuously monitors each fund's compliance with investment guidelines. If a fund
manager violates the investment guidelines, the computer immediately notifies MFC's
internal control director, and corrective action is taken. MFC's use of the computer
algorithm to monitor investment compliance and to provide notification when corrective
action is necessary illustrates use of
Select one:
A. Mechanical sensors.
B. Transducer technology.
C. Artificial intelligence.
D. Computer vision. - ✔✔C. Artificial intelligence.
✔✔As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance, because it
will help manage her cash flows. Which one of the following examples best illustrates
Mehmet's point?
Select one:
A. Ciara needs her car to get to her job, and she needs her job to make car payments
and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
replacing it.
C. When her car's transmission goes out a month after the warranty expires, Ciara is
faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every six
months. - ✔✔B. When her car's windshield breaks, Ciara has to pay only $100 of the
$600 cost of replacing it.
✔✔The primary role of insurance is to
Select one:
A. Indemnify individuals and organizations for covered losses.
B. Educate individuals and organizations about loss prevention.
C. Sell insurance policies to individuals and organizations.
D. Make a profit for the insurance company's shareholders. - ✔✔A. Indemnify
individuals and organizations for covered losses.
GRADED A+
✔✔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. - ✔✔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. - ✔✔Kenneth
✔✔Belinda is a claims professional who works outside her organization's office. She
generally handles claims that require investigating the scene of a loss; resolving
complex investigative issues; and meeting with insureds, claimants, lawyers, and others
involved in a claim. What type of claims representative is she?
a. Telephone claims representative
b. Claims manager
c. Claims supervisor
d. Field claims representative - ✔✔d. Field claims representative
✔✔If Tania needed to consult an accident-scene reconstruction specialist, she would
have been engaged in which one of these claims hand
ling activities?
a. Investigating and documenting the claim.
b. Contacting the insured or the insured's representative
c. Identifying the policy that may cover the claim
d. Acknowledging a claim and assigning it to the claims representative - ✔✔a.
Investigating and documenting the claim.
✔✔Using the previous example, let's say the couch destroyed in the fire has a ten-year
lifespan and replacement value of $800. If it was four years old and insured for its actual
cash value, how much would the policyholder receive?
a. $480
b. $800
c. $380
d. $600 - ✔✔a. $480
✔✔reimburses the insured for the cost of replacing the property, minus depreciation -
✔✔actual cash value
,✔✔The maximum amount that will be paid in the event of a loss is set by the insured
and insurer at the time the policy is written. - ✔✔agreed value
✔✔reimburses the insured for the cost of replacing the property - ✔✔replacement value
✔✔_____ reimburse a victim for actual harm - ✔✔compensatory damages
✔✔are awarded to punish a defendant for reckless, malicious, or deceitful acts -
✔✔punitive damages
✔✔are awarded for specific, identifiable expenses associated with the injured person's
loss - ✔✔special damages
✔✔awarded to compensate a victim for losses such as pain and suffering - ✔✔general
damages
✔✔investing in the stock market is an example of _____ risk - ✔✔speculative
✔✔driving a car is an example of ____ risk - ✔✔pure
✔✔the principle that prevents an insured from profiting from owning an insurance policy
- ✔✔indemnity
✔✔a self-employed hairstylist wants to make sure she's covered in case a client sues
her. Her agent suggests a ____ policy. - ✔✔manuscript
✔✔unique information on the insured; list of forms included in policy - ✔✔declarations
✔✔Statements containing insurer's promise to make payment - ✔✔insuring agreement
✔✔provisions stating what the insurer will not cover - ✔✔exclusions
✔✔qualifications on promise to make payment - ✔✔conditions
✔✔words with special meanings in policy - ✔✔definitions
✔✔Which one of the following statements is correct regarding the benefits provided by
insurance?
Select one:
A. The reduction in losses paid by insurers due to risk control measures benefits
individual insureds but not society as a whole.
B. Insurance helps reduce the financial burden to society by compensating accident
victims.
,C. The primary role of insurance is to meet mandatory insurance requirements.
D. Insurance reduces the financial consequences of loss exposures but not the related
uncertainty. - ✔✔B. Insurance helps reduce the financial burden to society by
compensating accident victims.
✔✔Which one of the following represents uncertainty about outcomes that can be
negative or positive?
Select one:
A. Pooling
B. Loss exposure
C. Transfer
D. Risk - ✔✔D. Risk
✔✔A homeowners policy is a type of
Select one:
A. Commercial insurance policy.
B. Personal umbrella policy.
C. Personal property-casualty insurance policy.
D. Life insurance policy. - ✔✔C. Personal property-casualty insurance policy.
✔✔Coverage for money and other business property from various causes of loss such
as burglary, robbery, theft, and employee dishonesty typically is provided by
Select one:
A. Inland marine insurance.
B. Ocean marine insurance.
C. Commercial crime insurance.
D. Professional liability insurance. - ✔✔C. Commercial crime insurance.
✔✔All of the following are types of private insurers, EXCEPT:
Select one:
A. Reciprocal insurance exchanges
B. Stock insurers
C. State workers compensation funds
D. Mutual insurers - ✔✔C. State workers compensation funds
✔✔In an effort to reduce expenses, increase profitability, and reduce human errors;
ABC Insurance Company decided to automate most of its personal lines underwriting
function. The company now uses standardized application forms that are submitted
electronically to one of the company's regional offices. At each regional office, a
computer with a scanner reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on the application are all
acceptable, the policy is automatically issued. Rejected applications are automatically
forwarded to a human underwriter who reviews them. The use of this technology has
reduced the company's expense ratio by two and a half percent, and reduced the time it
, takes to issue a policy. ABC Insurance Company's use of computers to evaluate
applications electronically is an application of
Select one:
A. Artificial intelligence.
B. Risk mana - ✔✔A. Artificial intelligence
✔✔Mutual Fund Company (MFC) offers a wide array of mutual fund options to
investors. Each mutual fund has a different fund objective and set of investment
guidelines that apply to the fund. While MFC gives considerable freedom to its fund
portfolio managers, they are required to abide by the fund's investment guidelines. To
monitor compliance, MFC developed a computer algorithm. The computer algorithm
continuously monitors each fund's compliance with investment guidelines. If a fund
manager violates the investment guidelines, the computer immediately notifies MFC's
internal control director, and corrective action is taken. MFC's use of the computer
algorithm to monitor investment compliance and to provide notification when corrective
action is necessary illustrates use of
Select one:
A. Mechanical sensors.
B. Transducer technology.
C. Artificial intelligence.
D. Computer vision. - ✔✔C. Artificial intelligence.
✔✔As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance, because it
will help manage her cash flows. Which one of the following examples best illustrates
Mehmet's point?
Select one:
A. Ciara needs her car to get to her job, and she needs her job to make car payments
and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
replacing it.
C. When her car's transmission goes out a month after the warranty expires, Ciara is
faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance premium every six
months. - ✔✔B. When her car's windshield breaks, Ciara has to pay only $100 of the
$600 cost of replacing it.
✔✔The primary role of insurance is to
Select one:
A. Indemnify individuals and organizations for covered losses.
B. Educate individuals and organizations about loss prevention.
C. Sell insurance policies to individuals and organizations.
D. Make a profit for the insurance company's shareholders. - ✔✔A. Indemnify
individuals and organizations for covered losses.
