Risk Assessment & Mitigation Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Assessment & Mitigation flashcards as text
An underwriter reviews a home with a wood-burning fireplace and no documentation of chimney maintenance. This is best classified as which type of hazard?
Answer: Physical hazard
An unmaintained chimney is a physical hazard—a tangible condition of the property that increases the probability of loss through fire or carbon monoxide exposure.
Under the concept of 'adverse selection,' an insurer that offers rates below market average should expect:
Answer: A disproportionate influx of higher-risk applicants seeking the low price
Adverse selection occurs when below-market pricing attracts a higher concentration of bad risks, as better-risk applicants find adequate coverage elsewhere at similar prices.
A property in a coastal area has a hip roof rather than a gable roof. From a wind risk perspective, this is:
Answer: A positive factor because hip roofs have superior wind resistance
Hip roofs have four sloping sides that deflect wind more aerodynamically than gable roofs, making them significantly more resistant to high-wind events.
A homeowner has a trampoline on the property but has erected a six-foot fence around it with a locked gate. The underwriter should:
Answer: Consider the fencing as a partial mitigation but still note the elevated liability
While fencing reduces access, trampolines remain a significant liability exposure; underwriters should acknowledge the mitigation while still noting the residual risk.
Which of the following is an example of risk transfer in residential property risk management?
Answer: Purchasing a homeowners insurance policy
Purchasing insurance is the classic example of risk transfer, shifting the financial consequences of a potential loss from the homeowner to the insurer.
A property located within 1,000 feet of a fire station but served by only a private well and no fire hydrants would receive what rating consideration?
Answer: A charge or surcharge for inadequate water supply despite station proximity
Public Protection Class ratings consider both fire station proximity and water supply; inadequate water supply (no hydrants) significantly limits firefighting effectiveness even near a station.
What does 'law and ordinance coverage' protect against in a residential policy?
Answer: The added cost of rebuilding to current codes after a covered loss
Law and ordinance coverage pays the additional rebuilding costs required to comply with current building codes when a covered loss triggers reconstruction.