CU Personal Lines Risk Evaluation 2

Question 1

An applicant's home is located in a coastal flood zone with a history of storm surge. Which factor most directly increases the underwriting risk for homeowners coverage?

Accepted Answer

FEMA Special Flood Hazard Area designation

Answer

Proximity to a fire station

Answer

Age of the roof

Answer

Credit score of the applicant

Question 2

When evaluating a personal auto application, a driver with three at-fault accidents in three years would most likely be classified as:

Accepted Answer

Non-standard or high-risk

Answer

Preferred risk

Answer

Standard risk

Answer

Uninsurable under any program

Question 3

A homeowner installs a monitored central-station burglar alarm. How does this typically affect the underwriting evaluation?

Accepted Answer

It is treated as a protective device credit reducing risk

Answer

It increases the premium due to added liability

Answer

It is irrelevant to property underwriting

Answer

It requires a separate inland marine policy

Question 4

Which of the following best describes the concept of 'moral hazard' in personal lines underwriting?

Accepted Answer

An insured's dishonest tendency to cause or exaggerate a loss for financial gain

Answer

The physical condition of the insured property

Answer

The likelihood of a natural disaster in a geographic region

Answer

The applicant's inability to afford the premium

Question 5

An underwriter reviewing a personal umbrella application notes the insured owns a swimming pool without a fence. This primarily raises concern about:

Accepted Answer

Liability exposure due to an attractive nuisance

Answer

Property replacement cost accuracy

Answer

Subrogation rights against neighbors

Answer

Workers compensation coverage gaps

Question 6

In personal lines underwriting, 'morale hazard' differs from moral hazard in that it refers to:

Accepted Answer

Carelessness or indifference to loss prevention due to having insurance

Answer

Intentional fraudulent acts by the insured

Answer

The geographic location of the insured property

Answer

The financial stability of the insurance carrier

Question 7

A personal auto applicant has a DUI conviction within the past two years. How does this typically affect insurability?

Accepted Answer

It may result in declination or placement in a non-standard market

Answer

It has no effect if the driver completed a safety course

Answer

It only affects commercial auto policies

Answer

It automatically disqualifies the applicant permanently