Exam (elaborations)
AINS 101 Exam Questions and answers | Latest 2024/25 RATED A+
- Course
- Institution
AINS 101 Exam Questions and answers | Latest 2024/25 RATED A+
[Show more]
Content preview
AINS 101 Exam Questions and answers |Latest 2024/25 RATED A+
As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance.
II II II II II II II II II II II II II II II II
However, her friend Mehmet tells her not to skimp on insurance, because it will help
II II II II II II II II II II II II II II II
manage her cash flows. Which one of the following examples best illustrates Mehmet's
II II II II II II II II II II II II II
point?
II
A. Ciara needs her car to get to her job, and she needs her job to make car payments and
II II II II II II II II II II II II II II II II II II II
pay for her car insurance.
II II II II II
B. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
II II II II II II II II II II II II II II II II
replacing it.
II II
C. When her car's transmission goes out a month after the warranty expires, Ciara is
II II II II II II II II II II II II II II
faced with a $1,100 repair bill.
II II II II II II
D. Ciara finds it difficult to come up with a $787 auto insurance premium every six months.
II II II II II II II II II II II II II II II II
- When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
II II II II II II II II II II II II II II II II II II II
replacing it.
II II
Which one of the following statements is correct regarding the benefits provided by
II II II II II II II II II II II II II
insurance?
II
A. Insurance reduces the financial consequences of loss exposures but not the related
II II II II II II II II II II II II
uncertainty.
II
B. The primary role of insurance is to meet mandatory insurance requirements.
II II II II II II II II II II II
C. The reduction in losses paid by insurers due to risk control measures benefits individual
II II II II II II II II II II II II II II
insureds but not society as a whole.
II II II II II II II
D. Insurance helps reduce the financial burden to society by compensating accident
II II II II II II II II II II II
victims. - Insurance helps reduce the financial burden to society by compensating
II II II II II II II II II II II II II II
accident victims.
II II
Shelton Industries experienced a fire in its manufacturing plant. Several employees
II II II II II II II II II II II
suffered burns and smoke inhalation injuries as they tried to escape the building. Which
II II II II II II II II II II II II II II
one of Shelton Industries' commercial property-casualty policies would pay for the
II II II II II II II II II II II
employees' injuries and illnesses? - Workers compensation insurance
II II II II II II II II II II
II A homeowners policy is a type of - Personal property-casualty insurance policy.
II II II II II II II II II II II II II
Which one of the following correctly describes a reason for government involvement in
II II II II II II II II II II II II II
property-casualty insurance?
II II
A. Selling insurance provides the government with a non-tax source of revenues and
II II II II II II II II II II II II
profits.
II
B. Government programs can meet legitimate public demands unmet by private insurers.
II II II II II II II II II II II
,C. Competition from government plans keeps private insurer's premiums competitive.
II II II II II II II II II
D. Preventing high-risk individuals or activities from being insured is in the public interest. -
II II II II II II II II II II II II II II
Government programs can meet legitimate public demands unmet by private insurers.
II II II II II II II II II II II II II
Insurance Company wrote a commercial liability policy for a manufacturer of off-road
II II II II II II II II II II II II
motorcycles. The potential costs of the insured's loss exposure exceed Insurance
II II II II II II II II II II II
Company's capacity. Insurance Company could consider which one of the following types
II II II II II II II II II II II II
of contractual transferring agreement to meet its needs? - Reinsurance
II II II II II II II II II II II II
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC
II II II II II II II II II II II II II
Insurance Company decided to automate most of its personal lines underwriting function.
II II II II II II II II II II II II
The company now uses standardized application forms that are submitted electronically
II II II II II II II II II II II
to one of the company's regional offices. At each regional office, a computer with a
II II II II II II II II II II II II II II II
scanner reads the applications. The computer has been programmed with acceptable
II II II II II II II II II II II
answers to the questions. If the answers on the application are all acceptable, the policy is
II II II II II II II II II II II II II II II II
automatically issued. Rejected applications are automatically forwarded to a human
II II II II II II II II II II
underwriter who reviews them. The use of this technology has reduced the company's
II II II II II II II II II II II II II
expense ratio by two and a half percent, and reduced the time it takes to issue a policy.
II II II II II II II II II II II II II II II II II II
ABC Insurance Company's use of computers to evaluate applications electronically is an
II II II II II II II II II II II II
application of
II II
A. Radiant sensors.
II II
B. Artificial intelligence.
II II
C. - Artificial intelligence.
II II II II II
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by the
II II II II II II II II II II II II II II II II
bank that held the mortgage. He is hoping to do some renovation and repair work on the
II II II II II II II II II II II II II II II II II
house, and then sell it for a quick profit. What type of risk is this? - Speculative Risk
II II II II II II II II II II II II II II II II II II II II
II Which one of the following best describes the concept of pooling?
II II II II II II II II II II
A. The financial consequences of unanticipated losses are transferred to an insurer.
II II II II II II II II II II II
B. Risk management is concerned with positive and negative risks.
II II II II II II II II II
C. Insureds share the cost of each other's losses.
II II II II II II II II
D. Insurance benefits society as a whole. - Insureds share the cost of each other's
II II II II II II II II II II II II II II II II
losses.
II
Which one of the following represents uncertainty about outcomes that can be negative or
II II II II II II II II II II II II II II
positive?
II
A. Loss exposure
II II
B. TransferII
C. Risk II
D. Pooling - Risk
II II II II II
, Coverage for money and other business property from various causes of loss such as
II II II II II II II II II II II II II II
burglary, robbery, theft, and employee dishonesty typically is provided by - Commercial
II II II II II II II II II II II II II II
crime insurance.
II II
The insurance agent suggested that Sally's Snack Shop buy a policy that combines
II II II II II II II II II II II II II
property, crime, and liability coverages into one policy. This is referred to as a(n) -
II II II II II II II II II II II II II II II II II
Commercial Package Policy (CCP)
II II II II
II Which one of the following describes the characteristics of a mutual insurance company?
II II II II II II II II II II II II
A. A corporation owned by policyholders that provides insurance to its policyholders.
II II II II II II II II II II II
B. An unincorporated association that provides reciprocal coverage to subscribers.
II II II II II II II II II
C. An unincorporated association that earns profits for its individual investors.
II II II II II II II II II II
D. A corporation owned by stockholders that earns profits for the stockholders. - A
II II II II II II II II II II II II II II II
corporation owned by policyholders that provides insurance to its policyholders.
II II II II II II II II II II
II A reinsurance company
II II
A. Assumes loss exposures from a primary insurer.
II II II II II II II
B. Provides primary insurance for loss exposures that private insurers are unwilling to
II II II II II II II II II II II II
provide.
II
C. Is formed to write all or part of the insurance for a parent company.
II II II II II II II II II II II II II II
D. Transfers losses to a primary insurer. - Assumes loss exposures from a primary
II II II II II II II II II II II II II II II
insurer.
II
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety
II II II II II II II II II II II
technologies that can be sold to companies that are producing autonomous vehicles. One
II II II II II II II II II II II II II
technology AVA is developing allows an autonomous vehicle to detect, extract, and
II II II II II II II II II II II II
analyze images; and then to respond to the images. For example, the technology would
II II II II II II II II II II II II II II
detect a presence in a crosswalk, extract the image, and a computer would analyze the
II II II II II II II II II II II II II II II
image. When the image was determined to be a human being, the vehicle would slow
II II II II II II II II II II II II II II II
down or stop until the crosswalk was clear. This technology, which is designed to capture
II II II II II II II II II II II II II II II
and analyze images, and to act on the recognition of the image; is called - Computer
II II II II II II II II II II II II II II II II II II
Vision
II
Mutual Fund Company (MFC) offers a wide array of mutual fund options to investors.
II II II II II II II II II II II II II II
Each mutual fund has a different fund objective and set of investment guidelines that
II II II II II II II II II II II II II II
apply to the fund. While MFC gives considerable freedom to its fund portfolio managers,
II II II II II II II II II II II II II II
they are required to abide by the fund's investment guidelines. To monitor compliance,
II II II II II II II II II II II II II
MFC developed a computer algorithm. The computer algorithm continuously monitors
II II II II II II II II II II
each fund's compliance with investment guidelines. If a fund manager violates the
II II II II II II II II II II II II
investment guidelines, the computer immediately notifies MFC's internal control director,
II II II II II II II II II II
and corrective action is taken. MFC's use of the computer algorithm to monitor investment
II II II II II II II II II II II II II II
compliance and to provide notification when corrective action is necessary illustrates use
II II II II II II II II II II II II
of - Artificial Intelligence
II II II II II II
, The primary role of insurance is to - Indemnify individuals and organizations for covered
II II II II II II II II II II II II II II II II
losses
II
II Which one of the following best describes the concept of pooling?
II II II II II II II II II II
A. Insureds share the cost of each other's losses.
II II II II II II II II
B. Risk management is concerned with positive and negative risks.
II II II II II II II II II
C. The financial consequences of unanticipated losses are transferred to an insurer.
II II II II II II II II II II II
D. Insurance benefits society as a whole. - Insureds share the cost of each other's
II II II II II II II II II II II II II II II II
losses.
II
A type of insurer that is owned by policyholders and may pay dividends to policyholders
II II II II II II II II II II II II II II II
as a return of a portion of premiums paid is a - Mutual insurer.
II II II II II II II II II II II II II II II II
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
II II II II II II II II II II II II II
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage from
II II II II II II II II II II II II II
private insurers. Which one of the following is the best rationale for the MAIF program?
II II II II II II II II II II II II II II II
A. Private insurers face limited competition, and the state increases competitive
II II II II II II II II II II
pressures by operating this type of plan.
II II II II II II II
B. Auto insurance is compulsory, and the program makes it possible for all drivers to have
II II II II II II II II II II II II II II II
reasonably priced insurance.
II II II
C. Private insurers overcharge for auto insurance, and the state provides a low-cost
II II II II II II II II II II II II
alternative.
II
D. Auto insurance for high-risk drivers is profitable, and the program enables the state to
II II II II II II II II II II II II II II
share in the profits. - Auto insurance is compulsory, and the program makes it possible
II II II II II II II II II II II II II II II II II
for all drivers to have reasonably priced insurance.
II II II II II II II II
ABC Company experienced a dramatic ideological shift in corporate policies after a
II II II II II II II II II II II II
national election. This is an example of which one of the following quadrants of risk?
II II II II II II II II II II II II II II II
A. Operational risk
II II
B. Financial risk
II II
C. Strategic risk
II II
D. Hazard risk - Strategic Risk
II II II II II II II
Renegade Insurance prides itself on its upstanding reputation through its commitment to
II II II II II II II II II II II II
small communities' homeowners coverage needs over the past twenty years. Which one
II II II II II II II II II II II II
of Renegade's actions over this time would best illustrate its continued commitment to
II II II II II II II II II II II II II
maintaining its solvency?
II II II
A. Renegade emphasizes that its insurance is readily available and accessible to
II II II II II II II II II II II
customers in its service area that need it.
II II II II II II II II
B. Renegade's producers know policy language well so that they can easily and
II II II II II II II II II II II II
understandably answer policyholders' questions.
II II II II
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ScholarSuccess. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77333 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now