AU 61 EXAM
Insured’s sometimes purchase package policies to meet their insurance needs. The
underwriting approach can be affected by the type of package policies offered. Which
one of the following types of package policies is used to reduce adverse selection and
often results in a premium discount for the insured?
***Minimum combination requirement policies are used to reduce adverse selection
and often results in a premium discount for the insured. - answer Minimum combination
requirement
property ownership is available only to a husband and wife - answer Tenancy by the
entirety
A. Combining coverages into a single policy enhances the spread of risk.
B. Combining coverages into a single policy reduces adverse selection.
C. Combining coverages into a single policy may result in a discount factor that makes
account profitable. - answerThe primary benefits of package policies include all of the
following:
A. A peril
B. A means by which property is damaged or
destroyed
C. A cause of loss
But not An adverse financial consequence - answerIn the context of property loss
exposures, flood is considered to be all of the following:
Policy provisions usually specify a valuation method which states how the insurer will
determine the value of the insured's property in the event of a covered loss. Which one
of the following types of valuation methods reimburses the insured fully for any losses
sustained and eliminates uncertainty in loss adjustments? - answerReplacement Cost
Underwriters must sometimes underwrite package policies for applicants that have
differing loss exposure levels by line of business. Which one of the following can be
used to ensure that enough premiums are paid to cover the higher hazard risks? -
answerMinimum premium levels for low hazard risks
Sharon Petty has given her sister, Ellen, the right to use a property during Ellen's
lifetime. Upon Ellen's death, this right terminates and cannot be passed to her estate. At
Ellen's death, Sharon, if living, will retain outright ownership of the property. If Sharon
,dies before Ellen, the property will pass to Sharon's brother, Patrick.In this situation,
Ellen is a - answerLife Tenant
Mixed-use commercial buildings combine several types of occupancies in a single
structure. Because mixed-use occupancies are increasingly prevalent, underwriters
must be familiar with the hazards associated with a variety of occupancy types and
structures. Which one of the following statements is true regarding the underwriting
considerations related to a mixed-use commercial building? - answerA mixed-use fire-
resistive high rise building with standpipes and evacuation to fire divisions on the roof or
in the stairwells nevertheless presents more significant challenges to firefighting than
does a very large mixed-use single-story structure.
Careless handling of flammable liquids - answerWhat is the greatest single hazard in a
metal-working occupancy?
Furnaces - answerIn manufacturing occupancies, a heat treatment process is a
combination of heating and cooling operations applied to a metal or alloy in the solid
state to obtain desired conditions or properties. Which one of the following represents a
significant ignition source associated with heat treatment processes?
A standard solvent with a flash point comparable to that of kerosene. - answerTo reduce
the possibility of fire or explosion, most dry cleaning operations use
A. Common hazards
B. Special hazards of the class
C. Special hazards of the risk - answerPhysical hazards associated with structures can
be most thoroughly analyzed if they are divided into groups.
Susceptibility of contents. - answerJade, an underwriter, is reviewing a property
insurance submission for Miller's Furniture, a 70,000 square-foot area, privately-owned
retail furniture store. Miller's offers a large selection of area rugs; metal, wood, and
upholstered furniture; and decorative items for the home such as artwork, lamps, small
sculptures, artificial flower arrangements, and tapestry wall hangings. Much of the
upholstered furniture is made with flame-retardant fabric. Some of the wood items are
solid oak, cherry, or mahogany, while other, more modern pieces, are of painted and
varnished wood. Of the four ISO occupancy rating system factors, Jade's greatest
concern with regard to underwriting Miller's account is likely to be the
Welding - answerMany institutional occupancies present unique occupancy hazards, as
well as obstacles to fighting fires and controlling losses. Another prime underwriting
concern is that older buildings are common among institutional occupancies. When
analyzing the hazards associated with institutional occupancies, an underwriter should
evaluate whether operations conform to the requirements established by the National
Fire Protection Association's NFPA 51B with respect to
, Heating system - answerCertain institutional occupancies present unique property risks
due to the nature of their operations. Which one of the following is most likely to be a
unique property loss exposure with respect to a church?
Air conditioning systems. - answerHeating systems should be properly installed and
maintained, as they represent a common ignition source for habitational occupancies.
Also, air conditioning ducts that run throughout a building can quickly spread smoke and
fire. Automatic dampers installed in a habitational occupancy can help provide fire
protection with respect to
Incendiary fires - answerAccording to the National Fire Protection Association (NFPA),
cooking-related incidents are the leading cause of structure fires in stores or other
mercantile occupancies. Which one of the following hazards causes nearly as much
direct property damage as cooking equipment in mercantile occupancies?
Commercial Statistical Plan (CSP) code - answerInsurance Services Office (ISO) uses
an evaluation system to indicate the degree of hazard that an occupancy presents in a
particular classification. The type of code that ISO applies for specifically rated risks,
which becomes part of the rating information supplied by ISO, is known as the
Degree of hazard that an occupancy presents in a particular classification. - answerAs
they relate to occupancies, commercial fire rating systems, such as the method used by
ISO, indicate the
A. Only through coordinated efforts will convictions for arson be obtained.
B. Arson hotlines are used in many areas
C. Both urban and suburban communities have found that acts of arson cause declining
areas to deteriorate even further. - answerAll of the following statements regarding
arson are true
Fire detection - answerWhile traveling on an interstate highway, Julia Carson noticed a
large plume of smoke in what appeared to be an isolated area. Julia pulled off at the
next exit and called 911 to reach a single emergency response center that dispatched
local fire services to the area. Which one of the following elements did Julia use?
Windows - answerWhat construction features of an insureds building would increase the
required separation distance from the exposing building?
The equipment of the engine companies - answerThe fire service component of the ISO
Fire Suppression Rating Schedule considers
Private suppression equipment. - answerOne primary method of achieving early
suppression is
A. Clock and tape
B. Tour
Insured’s sometimes purchase package policies to meet their insurance needs. The
underwriting approach can be affected by the type of package policies offered. Which
one of the following types of package policies is used to reduce adverse selection and
often results in a premium discount for the insured?
***Minimum combination requirement policies are used to reduce adverse selection
and often results in a premium discount for the insured. - answer Minimum combination
requirement
property ownership is available only to a husband and wife - answer Tenancy by the
entirety
A. Combining coverages into a single policy enhances the spread of risk.
B. Combining coverages into a single policy reduces adverse selection.
C. Combining coverages into a single policy may result in a discount factor that makes
account profitable. - answerThe primary benefits of package policies include all of the
following:
A. A peril
B. A means by which property is damaged or
destroyed
C. A cause of loss
But not An adverse financial consequence - answerIn the context of property loss
exposures, flood is considered to be all of the following:
Policy provisions usually specify a valuation method which states how the insurer will
determine the value of the insured's property in the event of a covered loss. Which one
of the following types of valuation methods reimburses the insured fully for any losses
sustained and eliminates uncertainty in loss adjustments? - answerReplacement Cost
Underwriters must sometimes underwrite package policies for applicants that have
differing loss exposure levels by line of business. Which one of the following can be
used to ensure that enough premiums are paid to cover the higher hazard risks? -
answerMinimum premium levels for low hazard risks
Sharon Petty has given her sister, Ellen, the right to use a property during Ellen's
lifetime. Upon Ellen's death, this right terminates and cannot be passed to her estate. At
Ellen's death, Sharon, if living, will retain outright ownership of the property. If Sharon
,dies before Ellen, the property will pass to Sharon's brother, Patrick.In this situation,
Ellen is a - answerLife Tenant
Mixed-use commercial buildings combine several types of occupancies in a single
structure. Because mixed-use occupancies are increasingly prevalent, underwriters
must be familiar with the hazards associated with a variety of occupancy types and
structures. Which one of the following statements is true regarding the underwriting
considerations related to a mixed-use commercial building? - answerA mixed-use fire-
resistive high rise building with standpipes and evacuation to fire divisions on the roof or
in the stairwells nevertheless presents more significant challenges to firefighting than
does a very large mixed-use single-story structure.
Careless handling of flammable liquids - answerWhat is the greatest single hazard in a
metal-working occupancy?
Furnaces - answerIn manufacturing occupancies, a heat treatment process is a
combination of heating and cooling operations applied to a metal or alloy in the solid
state to obtain desired conditions or properties. Which one of the following represents a
significant ignition source associated with heat treatment processes?
A standard solvent with a flash point comparable to that of kerosene. - answerTo reduce
the possibility of fire or explosion, most dry cleaning operations use
A. Common hazards
B. Special hazards of the class
C. Special hazards of the risk - answerPhysical hazards associated with structures can
be most thoroughly analyzed if they are divided into groups.
Susceptibility of contents. - answerJade, an underwriter, is reviewing a property
insurance submission for Miller's Furniture, a 70,000 square-foot area, privately-owned
retail furniture store. Miller's offers a large selection of area rugs; metal, wood, and
upholstered furniture; and decorative items for the home such as artwork, lamps, small
sculptures, artificial flower arrangements, and tapestry wall hangings. Much of the
upholstered furniture is made with flame-retardant fabric. Some of the wood items are
solid oak, cherry, or mahogany, while other, more modern pieces, are of painted and
varnished wood. Of the four ISO occupancy rating system factors, Jade's greatest
concern with regard to underwriting Miller's account is likely to be the
Welding - answerMany institutional occupancies present unique occupancy hazards, as
well as obstacles to fighting fires and controlling losses. Another prime underwriting
concern is that older buildings are common among institutional occupancies. When
analyzing the hazards associated with institutional occupancies, an underwriter should
evaluate whether operations conform to the requirements established by the National
Fire Protection Association's NFPA 51B with respect to
, Heating system - answerCertain institutional occupancies present unique property risks
due to the nature of their operations. Which one of the following is most likely to be a
unique property loss exposure with respect to a church?
Air conditioning systems. - answerHeating systems should be properly installed and
maintained, as they represent a common ignition source for habitational occupancies.
Also, air conditioning ducts that run throughout a building can quickly spread smoke and
fire. Automatic dampers installed in a habitational occupancy can help provide fire
protection with respect to
Incendiary fires - answerAccording to the National Fire Protection Association (NFPA),
cooking-related incidents are the leading cause of structure fires in stores or other
mercantile occupancies. Which one of the following hazards causes nearly as much
direct property damage as cooking equipment in mercantile occupancies?
Commercial Statistical Plan (CSP) code - answerInsurance Services Office (ISO) uses
an evaluation system to indicate the degree of hazard that an occupancy presents in a
particular classification. The type of code that ISO applies for specifically rated risks,
which becomes part of the rating information supplied by ISO, is known as the
Degree of hazard that an occupancy presents in a particular classification. - answerAs
they relate to occupancies, commercial fire rating systems, such as the method used by
ISO, indicate the
A. Only through coordinated efforts will convictions for arson be obtained.
B. Arson hotlines are used in many areas
C. Both urban and suburban communities have found that acts of arson cause declining
areas to deteriorate even further. - answerAll of the following statements regarding
arson are true
Fire detection - answerWhile traveling on an interstate highway, Julia Carson noticed a
large plume of smoke in what appeared to be an isolated area. Julia pulled off at the
next exit and called 911 to reach a single emergency response center that dispatched
local fire services to the area. Which one of the following elements did Julia use?
Windows - answerWhat construction features of an insureds building would increase the
required separation distance from the exposing building?
The equipment of the engine companies - answerThe fire service component of the ISO
Fire Suppression Rating Schedule considers
Private suppression equipment. - answerOne primary method of achieving early
suppression is
A. Clock and tape
B. Tour
