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
A personal lines underwriter discovers an applicant's home is located in a brush fire zone in California. The most appropriate underwriting response is to:
Answer: Evaluate the property's brush clearance, construction materials, and defensible space before deciding
Brush fire zone properties require evaluation of mitigation factors like defensible space and fire-resistant construction before an underwriting decision is made.
Which rating factor in personal auto insurance directly accounts for the statistical relationship between a driver's age and accident frequency?
Answer: Driver classification by age and experience
Driver classification groups operators by age and driving experience to reflect actuarially supported differences in loss frequency across demographic groups.
An underwriter is evaluating a homeowners application where the insured operates a home-based business selling crafts online. The main underwriting concern is that:
Answer: The business activities may create unendorsed liability and property exposures
Standard homeowners policies contain business exclusions, meaning the home-based business creates uninsured liability and property gaps unless endorsed.
Under personal auto underwriting, a newly licensed 17-year-old driver added to a parent's policy would most commonly result in:
Answer: A significant premium surcharge due to the youthful driver's higher loss exposure
Youthful drivers have statistically higher accident frequency, resulting in a surcharge when added to a personal auto policy.
When an underwriter applies 'adverse selection' to personal lines, they are most concerned about:
Answer: High-risk applicants disproportionately seeking insurance while low-risk individuals opt out
Adverse selection occurs when those most likely to have losses are most motivated to buy insurance, skewing the risk pool toward higher-than-average losses.
A homeowner's policy with a $1,000 all-peril deductible means the insured:
Answer: Pays the first $1,000 of every covered loss before insurance responds
A deductible requires the insured to absorb the first portion of any covered loss, reducing small claims and encouraging loss prevention.
An underwriter reviewing a personal lines account notes that the insured has submitted three water damage claims in two years. The underwriter's best action is to:
Answer: Investigate the root cause, consider a water damage exclusion or surcharge, or non-renew if warranted
Repeated water damage claims may indicate an underlying maintenance problem or attitudinal issue, warranting investigation and possible underwriting action.