South Carolina Personal Lines Practice Exam

Which of the following is NOT commonly used by Underwriters to determine risk?

1. Application

2. Credit history

3. Inspection of Property

4. MVR

The correct answer is: Credit history

The answer identifies credit history as an option that is not commonly used by underwriters to determine risk, which might be misleading. In fact, underwriters frequently utilize various tools and information to assess the potential risk associated with providing insurance coverage, and credit history is one of those critical tools. It provides insight into an applicant's financial behavior and can be an indicator of their likelihood of filing claims. Underwriters typically rely on the application, which includes essential details about the applicant and the insurance needs. Inspection of property is another vital step, allowing underwriters to evaluate the physical condition and specific risk factors associated with the property being insured. The Motor Vehicle Record (MVR) is also pivotal, particularly for auto insurance, as it reveals the applicant's driving history, which directly influences their risk profile. In summary, credit history is indeed utilized in risk assessment by underwriters, along with the application, property inspections, and MVRs, making it an essential component of the determination process.