AINS 101: Increasing Your Insurance IQ
Exam Questions with correct Answers
2025/2026 A+ Graded 100% Verified
Actual Cash Value (ACV) - ANS- The cost to replace property with new property of like
kind and quality less depreciation.
Adverse Selection - ANS- Insuring individuals with a high probability of loss at a cost
lower than the insurer would normally charge for that risk because it wasn't aware of the
actual risk involved.
Binder - ANS- A temporary written or oral agreement to provide insurance coverage until
a formal written policy is issued.
Book of Business - ANS- A group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency.
Broker - ANS- An independent producer who represents insurance customers.
Brokerage - ANS- Compensation in the form of a flat fee or a commission that is paid by
the reinsurer to the reinsurance intermediary for services provided.
Capacity - ANS- The amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholders' surplus.
Catastrophe Model - ANS- A type of computer program that estimates losses from future
potential catastrophic events.
Certificate of Insurance - ANS- A brief description of insurance coverage prepared by an
insurer or its agent and commonly used by policyholders to provide evidence of
insurance.
Claim - ANS- A demand by a person or business seeking to recover from an insurer for a
loss that may be covered by an insurance policy.
Claimant - ANS- A party that makes a claim and that can be either a first-party claimant
or a third-party claimant.
, Claims Representative - ANS- A person responsible for investigating, evaluating, and
settling claims.
Compensatory Damages - ANS- A payment awarded by a court to reimburse a victim for
actual harm.
Condition - ANS- Any provision in an insurance policy that qualifies an otherwise
enforceable promise of the insurer.
Conditional Contract - ANS- A contract that one or more parties must perform only under
certain conditions.
Contract of Adhesion - ANS- Any contract in which one party must either accept the
agreement as written by the other party or reject it.
Contract of Indemnity - ANS- A contract in which the insurer agrees, in the event of a
covered loss, to pay an amount directly related to the amount of the loss.
Damages - ANS- Money claimed by, or a monetary award to, a party who has suffered
loss or injury for which another party is legally responsible.
Declarations Page - ANS- An insurance policy information page or pages providing
specific details about the insured and the subject of the insurance.
Deductible - ANS- A portion of a covered loss that is not paid by an insurer.
Depreciation - ANS- The reduction in value caused by the physical wear and tear or
technological or economic obsolescence of property.
Exclusion - ANS- A policy provision that eliminates coverage for specified exposures.
Exposure Unit - ANS- The unit of measure (for example, area, gross receipts, payroll)
used to determine an insurance policy premium.
Fortuitous Loss - ANS- A loss that is accidental and unexpected.
General damages - ANS- A monetary award to compensate a victim for losses, such as
pain and suffering that does not involve specific, measurable expenses.
Indemnify - ANS- To restore a party who has sustained a loss to the same financial
position that party held before the loss occurred.
Exam Questions with correct Answers
2025/2026 A+ Graded 100% Verified
Actual Cash Value (ACV) - ANS- The cost to replace property with new property of like
kind and quality less depreciation.
Adverse Selection - ANS- Insuring individuals with a high probability of loss at a cost
lower than the insurer would normally charge for that risk because it wasn't aware of the
actual risk involved.
Binder - ANS- A temporary written or oral agreement to provide insurance coverage until
a formal written policy is issued.
Book of Business - ANS- A group of policies with a common characteristic, such as
territory or type of coverage, or all policies written by a particular insurer or agency.
Broker - ANS- An independent producer who represents insurance customers.
Brokerage - ANS- Compensation in the form of a flat fee or a commission that is paid by
the reinsurer to the reinsurance intermediary for services provided.
Capacity - ANS- The amount of business an insurer is able to write, usually based on a
comparison of the insurer's written premiums to its policyholders' surplus.
Catastrophe Model - ANS- A type of computer program that estimates losses from future
potential catastrophic events.
Certificate of Insurance - ANS- A brief description of insurance coverage prepared by an
insurer or its agent and commonly used by policyholders to provide evidence of
insurance.
Claim - ANS- A demand by a person or business seeking to recover from an insurer for a
loss that may be covered by an insurance policy.
Claimant - ANS- A party that makes a claim and that can be either a first-party claimant
or a third-party claimant.
, Claims Representative - ANS- A person responsible for investigating, evaluating, and
settling claims.
Compensatory Damages - ANS- A payment awarded by a court to reimburse a victim for
actual harm.
Condition - ANS- Any provision in an insurance policy that qualifies an otherwise
enforceable promise of the insurer.
Conditional Contract - ANS- A contract that one or more parties must perform only under
certain conditions.
Contract of Adhesion - ANS- Any contract in which one party must either accept the
agreement as written by the other party or reject it.
Contract of Indemnity - ANS- A contract in which the insurer agrees, in the event of a
covered loss, to pay an amount directly related to the amount of the loss.
Damages - ANS- Money claimed by, or a monetary award to, a party who has suffered
loss or injury for which another party is legally responsible.
Declarations Page - ANS- An insurance policy information page or pages providing
specific details about the insured and the subject of the insurance.
Deductible - ANS- A portion of a covered loss that is not paid by an insurer.
Depreciation - ANS- The reduction in value caused by the physical wear and tear or
technological or economic obsolescence of property.
Exclusion - ANS- A policy provision that eliminates coverage for specified exposures.
Exposure Unit - ANS- The unit of measure (for example, area, gross receipts, payroll)
used to determine an insurance policy premium.
Fortuitous Loss - ANS- A loss that is accidental and unexpected.
General damages - ANS- A monetary award to compensate a victim for losses, such as
pain and suffering that does not involve specific, measurable expenses.
Indemnify - ANS- To restore a party who has sustained a loss to the same financial
position that party held before the loss occurred.
