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AINS 101 Course Quiz: Insurance Fundamentals, Exams of Business Economics

Lassen Community CollegeBusiness Economics

A comprehensive overview of fundamental insurance concepts, covering topics such as the role of insurance, types of insurance policies, insurance company structures, regulation, and underwriting. It includes multiple-choice questions and answers, offering a valuable resource for students studying insurance principles.

Typology: Exams

2024/2025

Available from 03/03/2025

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AINS 101 - Course Quiz | 100% Correct
Answers | Verified | Latest 2024 Version
The primary role of insurance is to - ✔✔Indemnify individuals and organizations for covered losses.
As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance. However, her
friend Mehmet tells her not to skimp on insurance, because it will help manage her cash flows. Which
one of the following examples best illustrates Mehmet's point? - ✔✔When her car's windshield breaks,
Ciara has to pay only $100 of the $600 cost of replacing it.
A homeowners policy is a type of - ✔✔Personal property-casualty insurance policy.
Coverage for money and other business property from various causes of loss such as burglary, robbery,
theft, and employee dishonesty typically is provided by - ✔✔Commercial crime insurance.
Which one of the following describes the characteristics of a mutual insurance company? - ✔✔A
corporation owned by policyholders that provides insurance to its policyholders.
An insurer that was formed for the purpose of earning a profit for its stockholders is a - ✔✔Stock insurer
Autonomous Vehicle Applications (AVA) is a start-up company that develops safety technologies that can
be sold to companies that are producing autonomous vehicles. One technology AVA is developing allows
an autonomous vehicle to detect, extract, and analyze images; and then to respond to the images. For
example, the technology would detect a presence in a crosswalk, extract the image, and a computer
would analyze the image. When the image was determined to be a human being, the vehicle would slow
down or stop until the crosswalk was clear. This technology, which is designed to capture and analyze
images, and to act on the recognition of the image; is called - ✔✔Computer vision
In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance Company
decided to automate most of its personal lines underwriting function. The company now uses
standardized application forms that are submitted electronically to one of the company's regional
offices. At each regional office, a computer with a scanner reads the applications. The computer has
been programmed with acceptable answers to the questions. If the answers on the application are all
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Download AINS 101 Course Quiz: Insurance Fundamentals and more Exams Business Economics in PDF only on Docsity!

AINS 101 - Course Quiz | 100% Correct

Answers | Verified | Latest 2024 Version

The primary role of insurance is to - ✔✔Indemnify individuals and organizations for covered losses. As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance. However, her friend Mehmet tells her not to skimp on insurance, because it will help manage her cash flows. Which one of the following examples best illustrates Mehmet's point? - ✔✔When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it. A homeowners policy is a type of - ✔✔Personal property-casualty insurance policy. Coverage for money and other business property from various causes of loss such as burglary, robbery, theft, and employee dishonesty typically is provided by - ✔✔Commercial crime insurance. Which one of the following describes the characteristics of a mutual insurance company? - ✔✔A corporation owned by policyholders that provides insurance to its policyholders. An insurer that was formed for the purpose of earning a profit for its stockholders is a - ✔✔Stock insurer Autonomous Vehicle Applications (AVA) is a start-up company that develops safety technologies that can be sold to companies that are producing autonomous vehicles. One technology AVA is developing allows an autonomous vehicle to detect, extract, and analyze images; and then to respond to the images. For example, the technology would detect a presence in a crosswalk, extract the image, and a computer would analyze the image. When the image was determined to be a human being, the vehicle would slow down or stop until the crosswalk was clear. This technology, which is designed to capture and analyze images, and to act on the recognition of the image; is called - ✔✔Computer vision In an effort to reduce expenses, increase profitability, and reduce human errors; ABC Insurance Company decided to automate most of its personal lines underwriting function. The company now uses standardized application forms that are submitted electronically to one of the company's regional offices. At each regional office, a computer with a scanner reads the applications. The computer has been programmed with acceptable answers to the questions. If the answers on the application are all

acceptable, the policy is automatically issued. Rejected applications are automatically forwarded to a human underwriter who reviews them. The use of this technology has reduced the company's expense ratio by two and a half percent, and reduced the time it takes to issue a policy. ABC Insurance Company's use of computers to evaluate applications electronically is an application of - ✔✔Artificial intelligence Carlos is new to the insurance business and is learning about insurance regulation and what he, now working with Grady Insurance, will need to be aware of regarding the subject of compliance. Which one of the following will Carlos find is accurate as he better understands why insurance is regulated? - ✔✔Insurance regulation protects customers by guaranteeing insurance is available and accessible to everyone who needs it One of the reasons for insurance regulation is to prevent destructive competition. In which one of the following scenarios would destructive competition be exhibited? - ✔✔East Insurance comes up with a new rate structure allowing "preferred customers" discounted policies when they continually renew year after year; East eventually loses needed revenue but is rewarded by its competitors leaving the market. What term refers to the ability of an insurer to meet its obligations as they become due? - ✔✔Solvency An insurer's financial statement shows a loss reserve and an unearned premium reserve. These reserves are part of the insurer's - ✔✔Total liabilities. Admitted assets are types of property that regulators allow insurers to show as assets on their financial statements because they are - ✔✔Easily converted to cash Which one of the following is a nonadmitted asset? - ✔✔Office equipment The financial report for LMN Insurance contains the following information: Earned premiums $8,000,000Written premiums $10,000,000Incurred losses $6,000,000Incurred underwriting expenses $4,000, What is LMN Insurance's expense ratio? - ✔✔40% The financial report for Hometown Insurer contains the following information: Earned premiums $4,000,

Jill works in the field for Goshen Mutual as a line underwriter. Which one of the following is primarily a responsibility of line underwriters? - ✔✔Select insureds Which one of the following is the first step in the underwriting process? - ✔✔Evaluate the submission As an experienced underwriter, Rick has learned to make every effort to avoid a mistake that can produce insufficient premium to cover losses, or pricing that isn't competitive. Which one of the following underwriting mistakes can often cause these issues? - ✔✔Misclassifying exposures Which one of the following is the fundamental measure of loss exposure used in insurance rating? - ✔✔Exposure unit Bob is shopping for auto insurance. Insurance Company A's rating system determines that Bob should be charged $800 per auto. If Bob is looking to insure four autos, what premium will he be charged by Insurance Company A? - ✔✔$3, Johann is an insurance company employee who investigates the scene of a loss and meets with insureds, claimants, lawyers, Johann is most accurately called - ✔✔A field claims representative Stephanie works for Waynesgood Insurance. She appreciates the help she receives from Clem in the company's claims department who provides her with recent statistics and comments on Waynesgood's customer satisfaction levels. Stephanie works in which one of the following departments? - ✔✔Marketing Understanding the steps in the claims handling process is important to new claims reps. Which one of the following steps generally comes after investigating and documenting the claim and before concluding the claim? - ✔✔Determining cause of loss and loss amount Work on a new claim begins for claim representative Anita upon receipt of a claim notice. Anita gathers initial information and verifies coverage. From the list of activities below, the next step Anita would take in the process is - ✔✔Set a loss reserve

After Marvin's car was stolen, and he was reimbursed for the loss by Greatson Insurance, the police found and returned the vehicle, which was dented and spray-painted, but still had parts that could be usable. Greatson's rights to recover and sell or otherwise dispose of insured property on which it has paid a total loss are called - ✔✔Salvage rights Wayne, an insured, submits a claim for a seven-year-old refrigerator that was damaged due to lightning. Claims representative Guillaume will probably factor in an allowance for wear and tear. This is called - ✔✔Depreciation Compensatory damages represent - ✔✔Actual harm suffered Adjuster Toni is evaluating damages in a bodily injury liability claim where she has determined that the insured is completely at fault for the accident. The claimant suffered a sprain and strain injury to his neck. His special damages total $1,500. He was out of work for a week, was disabled and prevented from performing some regular activities for a month, and attended physical therapy for six weeks. In assessing general damages, Toni should - ✔✔Use past cases which are similar as a guide Tony is a producer working with several different insurers. Which one of the following most accurately describes Tony's activities for reaching and serving customers? - ✔✔Tony will generally need to spend less time insuring a family's activities than a business' services and liabilities Producer Gerald Hilker is one of the most successful producers at the Westfield Agency, which represents several different insurers. Because of this, which one of the following is most likely true? - ✔✔Gerald makes most of his income from commissions from customer sales Alicia works for the Drewman Agency, Sandi at insurer Greenway Insurance, and Rosa at Grossman Brokers, all as customer service representatives. Which one of the following is true regarding their work?

  • ✔✔Alicia can process policy endorsements and explain coverage to her customers Which one of the following accurately describes activities related to customer service representatives? - ✔✔Profitability in the insurance business is directly linked to customer retention Waycroft Industries is working with their insurance producer Graydon Murphy. Graydon and the risk managers at Waycroft have already completed the first step of the risk consultation process. The second step of the process is - ✔✔Comparing an organization's results with established performance standards