Personal Lines Risk Evaluation Flashcards
7 cards from real CU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Personal Lines Risk Evaluation flashcards as text
When underwriting a dwelling policy for an older home, which condition would most concern an underwriter evaluating physical hazards?
Answer: The home has knob-and-tube wiring that has not been updated
Knob-and-tube wiring is a serious fire hazard and a major physical hazard that underwriters weigh heavily when evaluating older homes.
An applicant for homeowners insurance reports owning an aggressive breed dog previously involved in a bite incident. The underwriter's primary concern is:
Answer: Elevated liability exposure from potential future bites
A dog with a prior bite history significantly increases the insured's liability exposure for future incidents, a key concern in personal lines risk evaluation.
The Insurance Services Office (ISO) territory rating factor in personal auto insurance is primarily based on:
Answer: Geographic location where the vehicle is principally garaged
ISO territory factors reflect loss experience for a geographic area where the vehicle is garaged, accounting for local accident and theft rates.
Which underwriting tool helps personal lines underwriters verify reported property characteristics and identify undisclosed risks?
Answer: Inspection reports and aerial imagery
Inspection reports and aerial imagery allow underwriters to verify property conditions, construction type, and identify unreported hazards like trampolines or pool additions.
A homeowner's property is insured for $150,000 but has a replacement cost of $250,000. This situation is known as:
Answer: Underinsurance or inadequate-to-value
When a property is insured for less than its replacement cost, it is underinsured, which can result in a coinsurance penalty in the event of a partial loss.
In personal auto underwriting, a vehicle with a high 'symbol' rating typically indicates:
Answer: Higher collision and comprehensive loss costs relative to similar vehicles
ISO vehicle symbols reflect expected physical damage loss costs, with higher symbols indicating more expensive or theft-prone vehicles.
When an underwriter discovers that an applicant failed to disclose a previous homeowners claim on the application, the underwriter should primarily be concerned about:
Answer: Material misrepresentation and its effect on policy validity
Concealing a prior claim constitutes material misrepresentation, which can void the policy or affect claim payments under most state insurance laws.