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
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?
Answer: FEMA Special Flood Hazard Area designation
A FEMA Special Flood Hazard Area designation signals high probability of flooding, directly elevating the risk of catastrophic property loss.
When evaluating a personal auto application, a driver with three at-fault accidents in three years would most likely be classified as:
Answer: Non-standard or high-risk
Multiple at-fault accidents indicate a pattern of unsafe driving, placing the applicant in the non-standard or high-risk tier.
A homeowner installs a monitored central-station burglar alarm. How does this typically affect the underwriting evaluation?
Answer: It is treated as a protective device credit reducing risk
Monitored central-station alarms reduce theft loss probability and are recognized as protective device credits in personal lines underwriting.
Which of the following best describes the concept of 'moral hazard' in personal lines underwriting?
Answer: An insured's dishonest tendency to cause or exaggerate a loss for financial gain
Moral hazard refers to the increased risk of intentional or dishonest behavior by the insured to collect insurance proceeds.
An underwriter reviewing a personal umbrella application notes the insured owns a swimming pool without a fence. This primarily raises concern about:
Answer: Liability exposure due to an attractive nuisance
An unfenced pool is an attractive nuisance that significantly increases the insured's liability exposure, especially to children.
In personal lines underwriting, 'morale hazard' differs from moral hazard in that it refers to:
Answer: Carelessness or indifference to loss prevention due to having insurance
Morale hazard is the increase in risk caused by an insured's careless attitude toward loss prevention because they know losses will be covered.
A personal auto applicant has a DUI conviction within the past two years. How does this typically affect insurability?
Answer: It may result in declination or placement in a non-standard market
A recent DUI conviction indicates impaired driving risk, typically resulting in higher premiums or placement in the non-standard or assigned risk market.