CU Cheat Sheet 2026

The 30 highest-yield CU facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. A legitimate fraud mitigation strategy that reduces moral hazard by ensuring the insured retains some financial stake in a loss is: → Coinsurance and deductible provisions
2. The 'retention line' in a reinsurance treaty refers to: → The portion of each risk the primary insurer keeps for its own account
3. A prospective insured submits a completed application containing material misrepresentations. What remedy is typically available to the underwriter? → Void the policy from inception if the misrepresentation was material and relied upon
4. Which document summarizes the underwriting decision? → Underwriting report
5. Which entity is responsible for overseeing the financial solvency of insurance companies in the United States? → Individual state insurance departments
6. When a liability policy contains a 'defense outside limits' provision, defense costs: → Are paid by the insurer in addition to and separately from the policy's liability limit
7. A personal lines underwriter uses credit-based insurance scores primarily because research has shown they correlate with: → The frequency and severity of insurance losses
8. A general contractor's liability claim involves a subcontractor's negligent work. Under most CGL policies, the contractor's coverage for such claims depends on: → Whether the 'your work' exclusion applies and if a subcontractor exception exists
9. The principle of 'utmost good faith' (uberrimae fidei) in insurance requires that: → Both parties disclose all material facts fully and honestly
10. Which reinsurance arrangement requires the cedent to offer and the reinsurer to accept every risk within defined parameters? → Obligatory treaty
11. Which regulatory framework governs how insurance companies must handle personal information of California residents specifically? → California Consumer Privacy Act (CCPA) supplemented by state insurance regulations
12. Which type of rating plan adjusts the final premium based on the insured's actual loss experience during the policy period? → Retrospective rating
13. Under the 'insuring agreement' section of a CGL policy, Coverage B — Personal and Advertising Injury covers claims arising from: → Offenses such as libel, slander, copyright infringement, or false arrest
14. What is subrogation in insurance claims? → Recovering claim costs from a responsible third party
15. An insurer uses a 'case reserve' for a reported claim. This reserve is set based on: → Individual adjuster evaluation of the specific claim's probable cost
16. Which provision requires an insurer that pays a property claim to 'step into the shoes' of the insured to pursue recovery against a negligent third party? → Subrogation clause
17. Which type of health insurance plan requires members to select a primary care physician (PCP) and obtain referrals to see specialists? → Health Maintenance Organization (HMO)
18. When a commercial property suffers a total loss, the insurer pays actual cash value (ACV). ACV is calculated as: → Replacement cost minus physical depreciation
19. What is 'adverse selection' in insurance? → High-risk individuals seeking more coverage
20. Under a 'valued' policy law (in states that have enacted it), in the event of a total loss to insured property, the insurer must pay: → The face amount stated in the policy regardless of the property's actual value at loss
21. A property claim involves both structural damage and business interruption. Which valuation approach applies to the business interruption portion? → Net profit plus continuing fixed expenses
22. What is a 'proof of loss' document? → Formal statement documenting the loss and claim
23. An underwriter applying 'adverse selection' controls in commercial lines is MOST concerned about: → Insuring risks that other carriers have rejected or non-renewed for poor performance
24. What is a 'fronting arrangement' in the context of reinsurance and portfolio management? → A licensed insurer issues a policy but cedes nearly all risk to a captive or reinsurer
25. The 'other insurance' provision in most liability policies addresses situations where: → Multiple policies cover the same loss, defining how each insurer shares the payment
26. An underwriter discovers mid-term that an insured has materially misrepresented facts on the application. The insurer's most appropriate remedy is typically: → Voiding the policy ab initio
27. The 'care, custody, or control' exclusion in a general liability policy is designed to exclude coverage for property damage to property that: → The insured is currently in possession of, responsible for, or working on
28. What is a deductible in an insurance policy? → Out-of-pocket amount before insurance coverage starts
29. A homeowner's policy written on an 'open peril' (all-risk) basis covers losses from: → All causes of loss except those explicitly excluded
30. What is the main underwriting concern with using third-party data aggregators for risk scoring? → Data accuracy, completeness, and potential regulatory compliance issues with data use