Assignment 9 - Underwriting Personal and Commercial Auto Insurance

Matheson Construction is a residential construction company that specializes in building subdivisions. The company owns four late-model private passenger vans that it uses to transport workers to and from job sites each day. The distance one-way is generally less than 30 miles. During the day, the vans generally sit idle at the job site, unless there are supplies to pick up or other errands to run. Only the job superintendents are allowed to drive the vans, and only if they keep their driving records clean. The company carefully monitors the job superintendents' driving records and requires them to participate in driver safety training programs annually. The company has a stringent inspection and maintenance program for the vehicles as well. In the seven years since the company began transporting workers in this way, there have been no automobile accidents. Which one of the following ratings would an automobile underwriter in a standard market likely give to this risk? Select one: A. Highly Desirable B. Desirable C. Average D. Undesirable

A. Highly Desirable

Vera is a forty-five year old, married dental hygienist who lives and works in a small town. She owns a late-model, compact car, which she drives three miles to work each day. Her husband drives a new pick-up truck that he has insured elsewhere. Neither Vera nor her husband has ever had a traffic accident, and both have clean driving records. The couple has no children, and there are no other residents in the household. Which one of the following ratings would an automobile underwriter in a standard market likely give to this risk? Select one: A. Highly Desirable B. Desirable C. Average D. Undesirable

A. Highly Desirable

Which one of the following statements is correct with respect to factors considered in underwriting personal automobile insurance? Select one: A. Underwriters often use consumer investigation reports to determine the personal characteristics of drivers. B. Insurers typically do not allow rate discounts for vehicles with safety features such as antilock braking or side air bags. C. All insurers' underwriting guides distinguish drivers on the basis of their occupations. D. Auto modifications made to accommodate a driver with physical impairments usually make a risk undesirable.

A. Underwriters often use consumer investigation reports to determine the personal characteristics of drivers.

The federal Commercial Motor Vehicle Safety Act (CMVSA) of 1986 requires that Select one: A. Commercial vehicles be classified according to the ISO Commercial Lines Manual (CLM) rules. B. Drivers of specific large vehicles hold a commercial driver's license (CDL). C. Vehicles be rated according to the individual weight and size of each unit. D. Truckers develop and implement a fleet safety program.

B. Drivers of specific large vehicles hold a commercial driver's license (CDL).

Which one of the following statements is correct with respect to personal automobile underwriting considerations? Select one: A. Auto theft and vandalism occur more frequently in remote areas. B. Underwriters evaluate a driver's prior accidents and prior moving violations. C. All states prohibit the use of gender or marital status as underwriting or rating factors. D. Drivers are more likely to be involved in fatal auto accidents in urban areas.

B. Underwriters evaluate a driver's prior accidents and prior moving violations.

Which one of the following is an essential element of a fleet safety program? Select one: A. Driver logs B. Proper vehicle classification C. Driver selection D. Radius of vehicle operation

C. Driver selection

A commercial automobile classified for retail use may be rated higher than a similar commercial automobile classified for service use because Select one: A. Service vehicles require the operator to hold a commercial driver's license (CDL). B. Vehicles classified as retail use are subject to the requirements of the Commercial Motor Vehicle Safety Act (CMVSA). C. Service vehicles are generally regarded as traveling in a smaller radius of operation. D. Retail use involves delivery vehicles that may travel on unfamiliar routes and have tight schedules.

D. Retail use involves delivery vehicles that may travel on unfamiliar routes and have tight schedules.

Jake is a single twenty-year-old. He drives an older sports car that he fixed up himself. He works as a outside sales representative and uses his car to visit current and prospective customers. Jake has had two at-fault auto accidents in the past three years. He also has five speeding tickets. He lives and works in a large city. Which one of the following ratings would an automobile underwriter in a standard market likely give to this risk? Select one: A. Highly Desirable B. Desirable C. Average D. Undesirable

D. Undesirable

Vince is an independent owner-operator of a tractor-trailer rig. His truck is brand new and he has large monthly payments to make, so he hauls as many loads as he can get. He prefers long-distance driving to short trips and is willing to haul anything from livestock to toxic waste. Vince has had two accidents in the past five years. In one, he badly damaged a receiver's loading bay while backing in. In the second, his trailer rolled while going around a highway off-ramp, dumping a load of fruit. He currently has five speeding violations. Which one of the following ratings would an automobile underwriter in a standard market likely give to this risk? Select one: A. Highly Desirable B. Desirable C. Average D. Undesirable

D. Undesirable