Casualty Actuarial Society (CAS) Practice Exam

Which vehicle characteristic is NOT typically considered in determining personal auto physical damage factors?

1. Vehicle age

2. Vehicle size

3. Vehicle model popularity

4. Vehicle equipment

The correct answer is: Vehicle model popularity

The correct choice indicates that vehicle model popularity is not typically considered in determining personal auto physical damage factors. When actuaries assess physical damage for personal auto insurance, they primarily focus on characteristics that directly influence the likelihood and severity of losses. Vehicle age is crucial because older vehicles may have different rates of depreciation and may be more prone to certain types of damages. Vehicle size plays an important role as larger vehicles may cause more significant damages in an accident or may require different repair considerations. Vehicle equipment, such as safety features or specialized accessories, also affects the cost and complexity of repairs, which is a key element in calculating insurance premiums. In contrast, vehicle model popularity does not have the same direct impact on the risk of physical damage. While popular models may be statistically numerous on the roads, their popularity does not inherently affect the frequency or severity of claims. Therefore, this characteristic is less relevant in the context of assessing physical damage factors for personal auto insurance.