CRU Risk Assessment & Mitigation 2

Question 1

A residential property is located in a Flood Zone AE on a FIRM map. What does this designation indicate?

Accepted Answer

High-risk area with a base flood elevation established by FEMA

Answer

Flood Zone AE is a Special Flood Hazard Area where FEMA has established a specific base flood elevation (BFE), indicating a 1% annual chance of flooding.

Question 2

When evaluating a property with an in-ground swimming pool, which risk factor is MOST relevant to the underwriter?

Accepted Answer

Attractive nuisance liability exposure

Answer

An in-ground pool creates an attractive nuisance liability exposure, meaning the homeowner may be liable if uninvited children are injured while trespassing.

Question 3

Which of the following best describes a 'moral hazard' in residential underwriting?

Accepted Answer

The insured's tendency to behave recklessly because insurance exists

Answer

Moral hazard refers to the increased risk of loss that arises from an insured's change in behavior due to the presence of insurance coverage.

Question 4

A home built in 1965 has original knob-and-tube wiring still in use. How should an underwriter treat this condition?

Accepted Answer

Require replacement or impose an exclusion for fire losses

Answer

Knob-and-tube wiring presents a significant fire hazard and underwriters typically require replacement or apply a specific exclusion to manage this elevated risk.

Question 5

What is the primary purpose of requiring a four-point inspection for older residential properties?

Accepted Answer

To assess the condition of roof, HVAC, plumbing, and electrical systems

Answer

A four-point inspection evaluates the four major systems—roof, HVAC, plumbing, and electrical—that are most likely to cause significant losses in older homes.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Risk Assessment & Mitigation 2