AINS 101 FINAL EXAM STUDY GUIDE 2026
QUESTIONS AND SOLUTIONS REVIEW
◉ Risk.
Answer: Uncertainty about outcomes, that can be negative OR
positive
◉ Transfers.
Answer: Risk of loss in the form of a policy that is given to another
party
◉ Pooling.
Answer: Insurers combined all of premiums collected from
customers into a fund that is used to pay losses as they occur
◉ Benefits of Insurance.
Answer: 1. Pay for Losses
2. Manage Cash Flow Uncertainty
3. Comply with Legal Requirements
4. Promote Risk Control Activity
,◉ Pay for Losses.
Answer: Indemnifies, restores to pre-loss status, individuals and
organizations for covered losses
◉ Manage Cashflow Uncertainty.
Answer: As long as loss is covered by insurance, financial effect on
insured's cash flow will be reduced to deductible payments or less
amounts that exceed the policy limits
◉ Comply with Legal Requirements.
Answer: Ex: Workers compensation and personal auto insurance
meet state legal requirements
◉ Promote Risk Control Acitivity.
Answer: Policies may require or provide incentives to insureds who
undertake risk control activities. And collected data can be used to
prevent or limit losses
◉ Insured.
Answer: Person/organization covered by an insurance policy
◉ Property Insurance.
Answer: Protects an insured's assets by covering the cost of
repairing or replacing property that is damaged, lost, or destroyed
,◉ Liability Insurance.
Answer: Provides payments for injury to others or damage to others
property for which the insured is legally responsible
◉ Life Insurance.
Answer: Replaces income earning potential lost through death
◉ Health Insurance.
Answer: Protects individuals and families from financial losses
caused by sickness and accidents
◉ Personal Property - Casualty Insurance.
Answer: 1. Homeowners
2. Personal Auto
3. Personal Umbrella
◉ Homeowners Insurance.
Answer: Provides protection when people's homes and/or
belongings are damaged or stole and liability coverage situations
such as family dog biting a guest
◉ Personal Auto Insurance.
, Answer: If insured is at fault in an accident, provides coverage for
bodily injury to another person or damage to another person's auto
◉ Personal Umbrella Insurance.
Answer: Provides additional protection for people with a high
potential for large liability losses
◉ Commercial Property - Casualty Insurance.
Answer: 1. Commercial Property
2. Commercial Crime
3. Commercial General Liability
4. Commercial Auto
5. Workers Compensation
6. Commercial Umbrella
◉ Commercial Property Insurance.
Answer: Covers damage to buildings or their contents that results
from fire, vandalism, or other causes of loss
◉ Commercial Crime Insurance.
Answer: Protects against losses from theft of business property and
money, including employee theft
QUESTIONS AND SOLUTIONS REVIEW
◉ Risk.
Answer: Uncertainty about outcomes, that can be negative OR
positive
◉ Transfers.
Answer: Risk of loss in the form of a policy that is given to another
party
◉ Pooling.
Answer: Insurers combined all of premiums collected from
customers into a fund that is used to pay losses as they occur
◉ Benefits of Insurance.
Answer: 1. Pay for Losses
2. Manage Cash Flow Uncertainty
3. Comply with Legal Requirements
4. Promote Risk Control Activity
,◉ Pay for Losses.
Answer: Indemnifies, restores to pre-loss status, individuals and
organizations for covered losses
◉ Manage Cashflow Uncertainty.
Answer: As long as loss is covered by insurance, financial effect on
insured's cash flow will be reduced to deductible payments or less
amounts that exceed the policy limits
◉ Comply with Legal Requirements.
Answer: Ex: Workers compensation and personal auto insurance
meet state legal requirements
◉ Promote Risk Control Acitivity.
Answer: Policies may require or provide incentives to insureds who
undertake risk control activities. And collected data can be used to
prevent or limit losses
◉ Insured.
Answer: Person/organization covered by an insurance policy
◉ Property Insurance.
Answer: Protects an insured's assets by covering the cost of
repairing or replacing property that is damaged, lost, or destroyed
,◉ Liability Insurance.
Answer: Provides payments for injury to others or damage to others
property for which the insured is legally responsible
◉ Life Insurance.
Answer: Replaces income earning potential lost through death
◉ Health Insurance.
Answer: Protects individuals and families from financial losses
caused by sickness and accidents
◉ Personal Property - Casualty Insurance.
Answer: 1. Homeowners
2. Personal Auto
3. Personal Umbrella
◉ Homeowners Insurance.
Answer: Provides protection when people's homes and/or
belongings are damaged or stole and liability coverage situations
such as family dog biting a guest
◉ Personal Auto Insurance.
, Answer: If insured is at fault in an accident, provides coverage for
bodily injury to another person or damage to another person's auto
◉ Personal Umbrella Insurance.
Answer: Provides additional protection for people with a high
potential for large liability losses
◉ Commercial Property - Casualty Insurance.
Answer: 1. Commercial Property
2. Commercial Crime
3. Commercial General Liability
4. Commercial Auto
5. Workers Compensation
6. Commercial Umbrella
◉ Commercial Property Insurance.
Answer: Covers damage to buildings or their contents that results
from fire, vandalism, or other causes of loss
◉ Commercial Crime Insurance.
Answer: Protects against losses from theft of business property and
money, including employee theft
