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AINS 21 PRACTICE TESTS QUESTIONS & ANSWERS
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AINS 21 PRACTICE TESTS QUESTIONS & ANSWERS
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AINS 21 PRACTICE TESTS QUESTIONS & ANSWERSUnder a liability policy, the maximum amount an insurer will pay for both bodily injury
and property damage arising from a single occurrence is known as the - Answers-
Insurers' investment income helps keep premiums at a reasonable level.
Sometimes the existence of insurance encourages losses. The result of this
phenomenon is that it - Answers-Increases the total cost of insurance.
Harry has a new sports car that is insured with an Insurance Services Office, Inc. (ISO)
Personal Auto Policy sold through his neighborhood agent. Because this is the first new
car he's ever owned, Harry is interested in making sure he is fully covered and
knowledgeable about his insurance policy. Which one of the following is true for Harry? -
Answers-An insurance contract, like the ISO policy Harry purchased, has certain
additional characteristics other than those of typical valid contracts.
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through - Answers-Noninsurance transfer
techniques.
Some insurance rating laws allow rates to be put into use immediately but require
insurers to files the rates with the state within a specific period of time. These types of
laws are known as - Answers-Use-and-file laws.
The investment income ratio indicates the - Answers-Degree of success achieved by
the insurer in its investment activities.
The financial report for LMN Insurance contains the following information:
Earned premiums $8,000,000 Written premiums $10,000,000 Incurred losses
$6,000,000 Incurred underwriting expenses $4,000,000
What is LMN Insurance's expense ratio? - Answers-40%
A combined ratio of 1.05 indicates that an insurer is - Answers-Not profitable on an
underwriting basis.
Liability coverage for loss exposures arising from a business organization's premises
and operations, its products, or its completed work is typically provided by - Answers-
Commercial general liability insurance.
A homeowners insurance policy typically includes - Answers-Both property and liability
coverage.
Which one of the following describes the characteristics of a mutual insurance
company? - Answers-A corporation owned by policyholders that provides insurance to
its policyholders.
, Which one of the following statements is correct regarding government involvement in
insurance? - Answers-Federal and state government are involved in insurance to
facilitate compulsory insurance purchases.
The premium charged for an insurance policy should be - Answers-Commensurate with
the loss exposure.
Which one of the following is a key focus of states' insurance regulation? - Answers-
Insurer licensing.
An Ohio insurer that is licensed to sell insurance in Michigan is known as what in
Michigan? - Answers-A foreign insurer
Insurers carefully evaluate the interaction between premiums and loss ratio and how
changes in each affect profit. Which one of the following statements concerning the
relationship between premium and loss ratio is true? - Answers-If premiums increase by
a greater percentage than incurred losses increase, the loss ratio will decrease.
Because the agent represents the insurer, the law presumes that - Answers-Knowledge
acquired by the agent is knowledge acquired by the insurer.
Among other things, a binder provides - Answers-Applicable coverages and limits.
All of the following are similarities between agents and brokers, EXCEPT: - Answers-
Both are legal representatives of insurers.
In which one of the following types of insurance marketing systems does the agency or
agent usually own the expiration lists? - Answers-Independent agency system
Bill is an insurance producer for ABC Insurance Company (ABC). He represents only
ABC when marketing insurance products. ABC compensates Bill primarily through
salary, and he has no ownership rights to policy expirations. Bill is a producer in the -
Answers-Direct writer marketing system.
A northeastern state in the US has a mandatory rate law in effect. A southeastern state
has established a file-and-use law. A Pacific coast state requires insurers to follow a
prior-approval law, and a midwest state has enacted a flex rating law. Which one of the
states and its regulators asserts the greatest extent of control over insurer rates? -
Answers-Northeastern
Insurers are required to submit annual financial statements to - Answers-State
insurance departments.
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