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AINS 21 EXAM QUESTIONS AND ANSWERS
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AINS 21 EXAM QUESTIONS AND ANSWERS
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AINS 21 EXAM QUESTIONS AND ANSWERSA couple meets with a financial adviser to review their insurance needs and investment
choices. In the course of the discussion, a variety of topics are covered, including the
impact of a long-term illness of the primary wage earner. In this context, the long-term
illness is best described as
A. An uninsurable risk.
B. An asset exposed to loss.
C. A cause of loss.
D. A financial consequence of loss. - Answers-C
Which one of the following best defines premature death?
A. A death that occurs before a person reaches his or her life expectancy
B. A death that occurs before a person retires
C. A death due to illness
D. A death due to accident - Answers-A
Which one of the following is a disadvantage of uninsured motorists coverage?
Select one:
A. The victim must prove that he or she has no other source of compensation before
coverage applies.
B. Uninsured motorists coverage does not cover damages resulting from a hit-and-run
accident.
C. Uninsured motorists coverage is not mandatory in any states.
D. Property damage is excluded in many states. - Answers-D
A personal injury protection (PIP) endorsement is an endorsement added to an auto
insurance policy to provide
Select one:
A. No-fault benefits.
B. Excess benefits beyond medical expense coverage limits.
C. Coverage for noneconomic losses.
D. Liability benefits in states with pure no-fault plans. - Answers-A
A state's no-fault automobile insurance law permits an injured party to sue the
responsible party for noneconomic loss if the victim's medical and lost-wage expenses
exceed $5,000. This feature of the no-fault law illustrates
Select one:
A. A deductible.
B. An unsatisfied judgment fund.
C. A monetary threshold.
D. A verbal threshold - Answers-C
,In a state with a reinsurance facility for high-risk drivers, a private insurer that does not
want to bear the risk of a high-risk applicant may
Select one:
A. Assign the application to the reinsurance facility to be underwritten and serviced.
B. Accept and service the policy, but collect excess losses from the reinsurance facility.
C. Assign the premium and losses to the reinsurance facility, and continue to service the
policy.
D. Accept the application, but assign servicing and losses to members of the
reinsurance facility pool on a proportional basis. - Answers-C
A multiple-policy discount on personal auto insurance is justified because
Select one:
A. Loss costs are reduced.
B. Regulatory costs are reduced.
C. Administrative costs are reduced.
D. Destructive competition is reduced. - Answers-C
All of the following could lead to a liability loss for a family, EXCEPT:
A. A guest slips on an icy sidewalk in front of the family's home and breaks his leg.
B. The father trips on a broom he left lying in the driveway and breaks his arm.
C. The daughter, who is 16 years old, sideswipes a neighbor's car and dents its fender
while driving her own car.
D. The son, who is 13 years old, throws a rock at a classmate who requires stitches for
an injury to his head. - Answers-B
Hedging is a noninsurance risk transfer technique in which
Select one:
A. A family uses duplication to treat loss exposures.
B. One of the parties to the contract assumes the legal liability of another party.
C. A family uses separation to treat loss exposures.
D. Money is paid to offset the risk associated with another asset. - Answers-D
Homeowners insurance protects against
Select one:
A. Property loss exposures only.
B. Property and premature death loss exposures.
C. Liability loss exposures only.
D. Property and liability loss exposures. - Answers-D
Examining policy conditions can help the insurance professional clarify which one of the
following points?
Select one:
A. Whether the cause of loss is covered
B. Whether coverage exists if an insured party breaches the insuring agreement
C. Whether the post-loss duties of the insured and the insurer affect coverage
, D. Whether the property is covered - Answers-C
Which one of the following is a potential disadvantage of auto financial responsibility
laws?
Select one:
A. There are significant legal costs related to pursuing a case to judgment.
B. They create substantial time delays in reaching settlements.
C. Injured persons might not be fully indemnified for their injuries.
D. They guarantee payment to all accident victims. - Answers-C
The Schedule of Coverages indicates the coverage and limits that apply to each listed
auto, along with
Select one:
A. The premium for each coverage.
B. Each auto and trailer specifically listed.
C. Each auto and trailer's rating class.
D. The primary location of an insured auto. - Answers-A
A temporary substitute auto under the Personal Auto Policy (PAP)
Select one:
A. Is treated the same as other nonowned autos for physical damage coverage.
B. Is used as a long-term substitute for another covered auto.
C. Cannot be covered for medical payments coverage.
D. Cannot be covered for uninsured motorists coverage. - Answers-A
Rosa's sedan is covered by a Personal Auto Policy (PAP) with split limits for liability
coverage of $100/$300/$50. Rosa's friend, Lamont, owns a sports car that is covered by
a PAP with split limits for liability coverage of $25/$50/$10. Rosa borrowed Lamont's
sports car and caused an accident with another vehicle driven by James. James and his
passenger, Fred, were injured and they filed suit against Rosa. A court awarded
$35,000 to James for his bodily injuries and $110,000 to Fred for his bodily injuries.
Which one of the following will be paid under each policy?
Select one:
A. $29,000 under Lamont's policy and $116,000 under Rosa's policy
B. $35,000 under Lamont's policy and $110,00 under Rosa's policy
C. $50,000 under Lamont's policy and $95,000 under Rosa's policy
D. $95,000 under Lamont's policy and $50,000 under Rosa's policy - Answers-C
Which one of the following statements is true regarding public or livery conveyances
and the liability coverage provided under the Personal Auto Policy (PAP)?
Select one:
A. Liability insurance applies to an insured's ownership or operation of the vehicle while
it is being used as a public or livery conveyance.
B. The public or livery conveyance exclusion eliminates coverage for ordinary business
use of a car.
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