CU Personal Lines Risk Evaluation 3

Question 1

When underwriting a dwelling policy for an older home, which condition would most concern an underwriter evaluating physical hazards?

Accepted Answer

The home has knob-and-tube wiring that has not been updated

Answer

Knob-and-tube wiring is a serious fire hazard and a major physical hazard that underwriters weigh heavily when evaluating older homes.

Question 2

An applicant for homeowners insurance reports owning an aggressive breed dog previously involved in a bite incident. The underwriter's primary concern is:

Accepted Answer

Elevated liability exposure from potential future bites

Answer

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.

Question 3

The Insurance Services Office (ISO) territory rating factor in personal auto insurance is primarily based on:

Accepted Answer

Geographic location where the vehicle is principally garaged

Answer

ISO territory factors reflect loss experience for a geographic area where the vehicle is garaged, accounting for local accident and theft rates.

Question 4

Which underwriting tool helps personal lines underwriters verify reported property characteristics and identify undisclosed risks?

Accepted Answer

Inspection reports and aerial imagery

Answer

Inspection reports and aerial imagery allow underwriters to verify property conditions, construction type, and identify unreported hazards like trampolines or pool additions.

Question 5

A homeowner's property is insured for $150,000 but has a replacement cost of $250,000. This situation is known as:

Accepted Answer

Underinsurance or inadequate-to-value

Answer

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.

(CU) Certified Underwriter Practice Test

(CU) Certified Underwriter Practice Test

CU Personal Lines Risk Evaluation 3