AINS 101 EXAM CORRECTLY ANSWERED 2025/2026

AINS 101 EXAM CORRECTLY ANSWERED 2025/2026 Loss Exposure - Answer -Loss exposure is any condition or situation that presents a possibility of loss, whether or not an actual loss occurs Key Components of Insurance - Answer -Risk, Transfer, Pooling Risk - Answer -Uncertainty about outcomes; can be positive or negative; insurance alleviates the uncertainty with negative consequences Transfer - Answer -If someone has an insurance policy on their property they will have to budget for the premium but not for the full cost of potential damages Pooling - Answer -All insureds share the cost of each other's losses; insurers combine the total amount of premium people pay and use that money to pay off losses as they occur; this helps keep premiums affordable and helps the insurer cover large losses when they occur Benefits of Insurance - Answer -1. Pay for losses: insurance indemnifies (restores to pre-loss status) individuals and organizations for covered losses 2. Manage cash flow uncertainty: as long as a loss is covered by insurance, the financial effect on the insured's cash flow will be reduced to deductible payments or loss amounts that exceed the policy limits3. Comply with legal requirements: for example, workers compensation insurance and personal auto insurance meet state legal requirements 4. Promote risk control activity: insurance policies may require or provide incentives to insureds who undertake risk control activities; collected data can be used to prevent or limit losses 5. Insurance allows individuals and organizations to use their resources wisely. It also facilitates loans, is a source of investment funds, and reduces the burden of losses and injuries on society Property Insurance - Answer -Protects an insured's assets; covers the cost of repairing or replacing property that is damaged or destroyed Liability Insurance - Answer -Provides payments for injury to others or damage to others property for which the insured is legally responsible; covers cost to defend insured in related lawsuits Property-Casualty Insurance - Answer -Used to refer to property and liability coverage Types: Homeowners, Personal Auto, Personal Umbrella Homeowners Insurance - Answer -A type of property-casualty insurance; provides protection when people's homes and/or belongings are damaged or stolen and liability coverage for situations such as the family dog biting a guest Personal Auto Insurance - Answer -A type of property-casualty insurance; if the insured is at fault in an accident, provides coverage for bodily injury to another person or damage to another person's auto