Associate in Insurance (AINS) 101 Practice Test

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• Hazard Risk is defined as?
• What does aggregate limit refer to?
• A mutual insurer's profits are typically returned to whom?
• Compare coinsurance and deductible.
• If a policy is canceled mid-term by the insurer, this action is called:
• Name three common personal lines policies.
• Which statement is true about how a policy is structured?
• Which statement accurately describes the special (open peril) property form?
• What does the insuring agreement describe?
• First-party coverage is best described as coverage for what?
• What characterizes a basic property form?
• A renter's or condo unit owner policy is typically designated as HO-4. Which of the following is HO-4?
• Which insurer provides coverages unavailable in the standard market?
• Loss ratio is used to measure insurer profitability by comparing which components?
• What is a stock insurer?
• What is an insurable event?
• Tail coverage in a claims-made policy refers to:
• Which term describes uncertainty about outcomes?
• Which statement best describes the purpose of minimum auto liability requirements?
• What best describes underwriting?
• What is an admitted asset?
• What is the difference between an occurrence form and a claims-made form?
• When conducting an advance audit, which task is performed to assist underwriting?
• Which term refers to property that is not easily converted to cash for an insurer?
• What are the four quadrants of risk?
• Which of the following is NOT one of the five main provisions in an insurance policy?
• Which statement best differentiates hazard from peril?
• Which of the following is not typically a duty of a field/line underwriter?
• During underwriting, processing a policy change request to add a new classification and exposures occurs during which step?
• Which role is most likely to arrange reinsurance and assist with complex accounts?
• In contract law, what does 'competent parties' mean?
• What is a physical hazard?
• Who typically determines policy wording?
• Why are regulators concerned about the effects of large catastrophes?
• A financial line item on the income statement represents the portion of the policy period that has already occurred.
• What is the primary purpose of risk management in an organization?
• Which statement is false about insurable risk?
• What is the purpose of exclusions in a policy?
• In personal property-casualty insurance, which type of policy form is more common?
• What is coinsurance in property insurance?
• What does a risk management review look like for a business?
• What is the role of ethics in insurance practice?
• Which of the following is NOT one of the three main hazard types?
• In the context of automation in production, which technology is used to perform repetitive tasks?
• What is a contract of adhesion?
• In property insurance, which statement describes open peril coverage?
• Which term describes the insured paying a portion of losses in addition to the deductible when the insured does not meet the coinsurance requirement?
• Which quadrant does risk from market forces affecting financial assets or liabilities belong to?
• What are treaty and facultative reinsurance?
• What is the correct sequence of steps in the underwriting process?
• Which combination of actions constitutes primary underwriting activities?
• What does an insurer's income statement show?
• Which role evaluates applicants submitted by producers, presents policy quotations, processes endorsements, and helps explain coverages?
• What is policyholder's surplus?
• What is material misrepresentation and its effect?
• Which quadrant concerns risks arising from trends in the economy and society?
• In the scenario where Sean injures Wilbur and Andrea handles the claim, which roles apply to Sean, Wilbur, and Andrea, respectively?
• What is the difference between policy cancellation and nonrenewal?
• What is an exposure unit?
• What is a premium?
• Which statement best describes a stock insurer's ownership and profit motive?
• Which statement accurately describes treaty reinsurance?
• Which term describes the ratio that measures underwriting expenses relative to written premiums?
• What does fortuitous mean?
• Which quadrant concerns risks arising from people or failures in processes, systems, or controls, including information technology?
• Agreed Value is used to insure property that is difficult to value, such as fine arts, antiques, or collections. Which term describes this valuation method?
• The processing of almost every claim involves which activity?
• Which statement about admitted versus non-admitted insurers is true?
• What is the correct expression for the combined ratio?
• Smart products used to perform repetitive tasks are best described as
• Which activity does the Department of Insurance typically perform regarding rates and forms?
• A premium auditor is tasked with identifying which hazards?
• Which statement best describes one of the six characteristics of an ideally insurable loss exposure?
• Which option is NOT a typical ethical obligation in insurance practice?
• What is a mutual insurance company?
• The duties of a premium auditor include?
• Special damages are damages for what?
• Which action would a state Department of Insurance typically perform?
• Which of the following best defines an insurable risk?
• Which document summarizes an insured's past losses (including a list of losses and their total cost)?
• Compensatory damages include which components?
• Which statement best describes an occurrence in liability insurance?
• Which hazard category includes construction and hazardous materials?
• What is tail coverage in a claims-made policy?
• Which activities are typically performed by producers?
• Because the insurer typically determines policy wording and the insured has little choice, an insurance contract is a
• In insurance, the concept of transfer refers to transferring the financial consequences of unanticipated events to an insurer.
• Which type of damages is designed to punish the defendant for reckless, malicious, or deceitful acts?
• The loss ratio is calculated as which of the following?
• Explain the concept of pooling.
• What is ACV (actual cash value)?
• Which statement accurately describes loss frequency and loss severity?
• Which type of insurance company shares its profits and may return a portion of the premium to policyholders?
• Third-party coverage is best described as protection for damages or injuries to whom?
• In an occurrence form, coverage is triggered by events that occur during the policy period, regardless of when the claim is filed. Which statement is correct?
• Which description best defines replacement cost valuation?
• What type of personal property-casualty policy gives coverage for someone with high potential for large liability losses?
• What is reinsurance?
• Replacement Cost Valuation does not consider depreciation; it reflects what?
• What is the difference between moral hazard and morale hazard?
• What is a deductible option in a first-party property policy?
• In which type of insurer is each member both an insured and insurer?
• A regulator emphasizes that an insurer must have enough reserves to pay future claims. This objective is called by which term?
• Which hazard describes indifference to property maintenance or poor financial recordkeeping?
• Punitive damages are intended to?
• What characterizes the special/open peril form?
• In the typical claims-handling process, which of the following is a valid first step?
• What financial statement provides a snapshot of the insurer's financial position at a specific point in time?
• Which are the four requirements of a legal contract?
• An insurance contract is called a contract of utmost good faith because of the obligation for ethical practices.
• Destructive competition in the insurance industry could result in
• Which statement about a personal umbrella policy is accurate?
• Why are endorsements used in auto policies?
• Which policy type typically includes liability coverage as part of its standard form?
• Bodily Injury liability refers to what?
• Explain subrogation.
• What is risk?
• Are two separate accidents during the policy period considered one occurrence?
• Which activity in the claims process is used to estimate future payments for reported claims?
• Financial risk is defined as?
• General damages refer to losses that
• Which is an example of general damages?
• Who owns a mutual insurance company?
• What is the standard that requires ethical handling of insurance contracts?
• Surplus lines insurers primarily serve which market?
• What is the difference between fraud and misrepresentation in applications?
• In insurance, the term transfer refers to transferring the financial consequences of unanticipated events to an insurer.
• Balance sheet is best described as?
• Define indemnity in insurance.
• First-party coverage provides protection for which of the following?
• Operational risk is defined as?
• What is adverse selection?
• What is the purpose of definitions in a policy?
• Which role is primarily responsible for developing coverage forms?
• Unearned premium is equal to?
• Special damages refer to which?
• What is insurable interest?
• What describes a nonadmitted asset?
• What is the cost of risk?
• What is the correct order for these steps in the claims process? Identifying the policy, calculating a loss reserve, determining the cause of loss, preparing a loss statement.
• What is a deductible?
• Which damage category includes pain and suffering?
• A higher loss ratio indicates what about an insurer's profitability?
• Earned premiums are defined as?
• What is a moral hazard?
• What are the two main sectors of the insurance industry?
• What is rate-making?
• In a policy with a deductible, if the loss is less than the deductible amount, which statement is true?
• Indemnity in insurance is defined as
• In liability coverage, bodily Injury refers to what?
• Strategic risk is defined as?
• What is a morale hazard?
• Which activity is not performed by a customer service representative?
• Which of the following best describes the activities of a staff underwriter?
• Which item is typically found in the Policy Conditions section?
• What is Pure Risk?
• What does a risk management review look like for an individual?
• Explain the concept of pooling.
• Which of the following is a characteristic of an ideally insurable loss exposure?
• During a business risk management review, producers analyze which areas to determine appropriate risk management strategies?
• Which of the following is most directly associated with a satisfied customer?
• Which term best describes assets that insurers can quickly convert to cash to meet obligations?
• The Declarations section of an insurance policy typically includes which of the following?
• What is a loss run?
• Which ratio represents underwriting expenses relative to written premiums?
• What is the meaning of utmost good faith in insurance?
• Which term describes a risk category with loss or no loss only and no opportunity for gain?
• What is an endorsement?
• What does an offer in contract formation mean?
• Surplus lines refer to coverage offered by which type of insurer?
• What are the three main hazard types?
• In the described claim scenario, Andrea’s role in the claims department is best described as a
• Pravalt Construction Company's lower premium due to fewer injuries illustrates which insurance benefit?
• Which underwriting activity is most appropriate to perform after risk classification changes are identified but before issuing the policy?
• Which scenario best describes Maria's ongoing work in the role of claims handler?
• Which statement about underwriting is true?
• What distinguishes a homeowners policy from a dwelling policy?
• What is meant by insurer solvency?
• Which statement best describes hazard risk?
• What is the primary role of underwriting?
• Oscar's vehicle lacks which insurability characteristic due to its unique design?
• Which description best captures the responsibilities of a field (line) underwriter?
• Riley Turner is evaluating Hardwick Enterprises’ risk management efforts. Which statement describes the approach that should be true?
• What is the difference between an independent agency and an exclusive agency?
• Per occurrence vs aggregate limit: which statement is correct?
• Earned Premium equals Written Premium minus Unearned Premium is an example of how earned and written premiums relate.
• If an insured wants new for old valuation for property loss, they would purchase
• What is another name for a field underwriter?
• In the Windsor Insurance scenario, which insurance-regulation objective is not being realized?
• Earned premiums are shown on an insurer's income statement because they are
• Under utmost good faith, misrepresentation of a material fact typically results in
• What is the capacity in insurance terms?
• Which type of risk has no change for gain or profit?
• The Law of Large Numbers allows insurers to do what?
• A binder is best described as what?