State Farm Auto Insurance Practice Test

To reduce the risk of policies being rejected, which of the following should be verified?

1. The prospect's financial status

2. The prospect's driving history

3. The prospect's employment details

4. The prospect's personal references

The correct answer is: The prospect's driving history

Verifying the prospect's driving history is crucial in the context of auto insurance because this information directly impacts underwriting decisions and risk assessments. The driving history includes details such as past accidents, traffic violations, and the number of claims made. Insurers rely heavily on this data to evaluate the likelihood of future claims, which consequently affects whether a policy will be accepted or denied. A clean driving record typically indicates a lower risk for the insurer, while a record with numerous infractions may suggest a higher likelihood of claims, leading to potential rejection of the policy application or higher premiums. Therefore, confirming the driving history is an important step in reducing the risk of policy rejection. While other factors like financial status, employment details, and personal references can also play a role in underwriting, they do not directly relate to the specific risks associated with auto insurance as profoundly as driving history does. Thus, focusing on driving history helps in more accurately assessing risk, ultimately leading to better policy acceptance rates.