AIC 301 FINAL EXAM PREP PRACTICE
QUESTIONS WITH CORRECT ANSWERS
TESTED AND APPROVED 2026 NEW UPDATE!!!
Fatima owns a cafe that is open to the public. Kaito enters the cafe
and orders a coffee. Kaito is a(n)
Select one:
A. Public invitee.
B. Business invitee.
C. Express licensee.
D. Trespasser. - CORRECT ANSWER B. Business invitee.
James wants to pursue a legal claim against his neighbor, but he does
not know what kind of dispute resolution procedure is the best choice
for his situation. The dispute is over a relatively small amount of
money, so James does not want to spend a lot in pursuit of his claim.
James wants to be able to present his side of the story and his
witnesses before a neutral third party. James would be pleased if he
and his neighbor could reach a compromise, but, ideally, James wants
to be able to walk away with a binding decision. Assuming that
Page 1 of 33
,James' neighbor will agree to participate in whatever procedure James
suggests, which one of the following dispute resolution procedures is
the best choice for James?
Select one:
A. Mediation
B. Negotiation
C. Arbitration
D. Litigation - CORRECT ANSWER C. Arbitration
Chloe is investigating Thomas' claim for damage to his automobile.
Thomas is not cooperating with Chloe's attempts to schedule an
adjuster to inspect the vehicle. Chloe should
Select one:
A. Issue a unilateral waiver of rights letter.
B. Issue a unilateral reservation of rights letter.
C. Issue denial for failure to cooperate.
D. Ask Thomas to sign a reservation of rights letter. - CORRECT
ANSWER B. Issue a unilateral reservation of rights letter.
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,Cathy left a bracelet at a jeweler for repair and was given a receipt
with the statement, "This establishment is not responsible for loss or
damage to any item left in its possession." Which one of the following
does the statement on the receipt represent?
Select one:
A. Assumption of risk
B. Comparative negligence
C. A hold harmless agreement
D. An exculpatory clause - CORRECT ANSWER D. An
exculpatory clause
Blithe Insurance wanted to enter the Jeweler's Block insurance market
and began drafting a new Jeweler's Block policy and insurance
application form. Blithe believed it was critical that all insureds under
this policy must have a silent alarm system. Because Blithe would not
want to write Jeweler's Block insurance for any customer that did not
have a silent alarm, Blithe should draft its application and policy so
that the customer's application statement about whether it has a silent
alarm would be
Select one:
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, A. A warranty because an untrue statement would render the policy
voidable, even if not material.
B. An incontestable clause because the insured could not dispute
the truth of the statement.
C. A designation because designated matters must be satisfied as a
condition of coverage.
D. A representation because strict compliance with representations
is required. - CORRECT ANSWER A. A warranty because an untrue
statement would render the policy voidable, even if not material. If
the statement is a warranty, if it is untrue, the insurer may deny
coverage even if it doesn't involve a material matter. Warranties
require strict compliance but representations only require substantial
truth.
Tommy agreed to mow Heidi's lawn on Wednesday for $35. Tommy
then remembered that he had a baseball game on Wednesday. He
asked Heidi if it would be okay for his friend, Jeremy, to mow her
lawn, and Heidi could just pay the $35 directly to Jeremy. Heidi
expressly released Tommy from his obligation. This agreement is
known as
Select one:
A. Contract reformation.
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QUESTIONS WITH CORRECT ANSWERS
TESTED AND APPROVED 2026 NEW UPDATE!!!
Fatima owns a cafe that is open to the public. Kaito enters the cafe
and orders a coffee. Kaito is a(n)
Select one:
A. Public invitee.
B. Business invitee.
C. Express licensee.
D. Trespasser. - CORRECT ANSWER B. Business invitee.
James wants to pursue a legal claim against his neighbor, but he does
not know what kind of dispute resolution procedure is the best choice
for his situation. The dispute is over a relatively small amount of
money, so James does not want to spend a lot in pursuit of his claim.
James wants to be able to present his side of the story and his
witnesses before a neutral third party. James would be pleased if he
and his neighbor could reach a compromise, but, ideally, James wants
to be able to walk away with a binding decision. Assuming that
Page 1 of 33
,James' neighbor will agree to participate in whatever procedure James
suggests, which one of the following dispute resolution procedures is
the best choice for James?
Select one:
A. Mediation
B. Negotiation
C. Arbitration
D. Litigation - CORRECT ANSWER C. Arbitration
Chloe is investigating Thomas' claim for damage to his automobile.
Thomas is not cooperating with Chloe's attempts to schedule an
adjuster to inspect the vehicle. Chloe should
Select one:
A. Issue a unilateral waiver of rights letter.
B. Issue a unilateral reservation of rights letter.
C. Issue denial for failure to cooperate.
D. Ask Thomas to sign a reservation of rights letter. - CORRECT
ANSWER B. Issue a unilateral reservation of rights letter.
Page 2 of 33
,Cathy left a bracelet at a jeweler for repair and was given a receipt
with the statement, "This establishment is not responsible for loss or
damage to any item left in its possession." Which one of the following
does the statement on the receipt represent?
Select one:
A. Assumption of risk
B. Comparative negligence
C. A hold harmless agreement
D. An exculpatory clause - CORRECT ANSWER D. An
exculpatory clause
Blithe Insurance wanted to enter the Jeweler's Block insurance market
and began drafting a new Jeweler's Block policy and insurance
application form. Blithe believed it was critical that all insureds under
this policy must have a silent alarm system. Because Blithe would not
want to write Jeweler's Block insurance for any customer that did not
have a silent alarm, Blithe should draft its application and policy so
that the customer's application statement about whether it has a silent
alarm would be
Select one:
Page 3 of 33
, A. A warranty because an untrue statement would render the policy
voidable, even if not material.
B. An incontestable clause because the insured could not dispute
the truth of the statement.
C. A designation because designated matters must be satisfied as a
condition of coverage.
D. A representation because strict compliance with representations
is required. - CORRECT ANSWER A. A warranty because an untrue
statement would render the policy voidable, even if not material. If
the statement is a warranty, if it is untrue, the insurer may deny
coverage even if it doesn't involve a material matter. Warranties
require strict compliance but representations only require substantial
truth.
Tommy agreed to mow Heidi's lawn on Wednesday for $35. Tommy
then remembered that he had a baseball game on Wednesday. He
asked Heidi if it would be okay for his friend, Jeremy, to mow her
lawn, and Heidi could just pay the $35 directly to Jeremy. Heidi
expressly released Tommy from his obligation. This agreement is
known as
Select one:
A. Contract reformation.
Page 4 of 33
