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

A FEMA Special Flood Hazard Area designation signals high probability of flooding, directly elevating the risk of catastrophic property loss.

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

Multiple at-fault accidents indicate a pattern of unsafe driving, placing the applicant in the non-standard or high-risk tier.

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

Monitored central-station alarms reduce theft loss probability and are recognized as protective device credits in personal lines underwriting.

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

Moral hazard refers to the increased risk of intentional or dishonest behavior by the insured to collect insurance proceeds.

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

An unfenced pool is an attractive nuisance that significantly increases the insured's liability exposure, especially to children.

(CU) Certified Underwriter Practice Test

(CU) Certified Underwriter Practice Test

CU Personal Lines Risk Evaluation 2