AINS 101 Exam – With All Correct Answers 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. 1 / 2
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.
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