LM1 – CII ACTUAL 2025/2026
QUESTIONS AND 100%
CORRECT ANSWERS
By sharing information about their risk, the insured satisfies which
obligation? - 🧠 ANSWER ✔✔Good faith
The proximate cause of a loss will always be the - 🧠 ANSWER
✔✔Dominant cause
Which insurance principle gives an insurer the right to call upon other
insurers to share in the settling of a claim? - 🧠 ANSWER ✔✔Contribution
,A building valued at £250,000 is jointly owned by Karen and Terry, who
each individually arrange insurance on it. Karen insures the building for
£100,000, whilst Terry insures it for £150,000. If a valid claim of £55,000
occurs how much is each insurer liable to pay? - 🧠 ANSWER ✔✔Karen's
insurer is liable for £22,000 and Terry's for £33,000.
An insurer arranges for a policyholder's car to be repaired following
damage by a negligent third party motorist. Under which insurance principle
can the insurer recover the paid claim? - 🧠 ANSWER ✔✔Subrogation
Which insurance principle ensures that in the event of a loss the insured is
placed in the same financial position as he was immediately prior to the
loss? - 🧠 ANSWER ✔✔Indemnity
The protection of jobs is classed as which type of function of insurance? - 🧠
ANSWER ✔✔A secondary function of insurance only
Which type of risk arises from a cause outside the control of any one
individual and affects a large number of people? - 🧠 ANSWER
✔✔Fundamental risk
For an individual, which class of risk is always uninsurable? - 🧠 ANSWER
✔✔Speculative risk
, The subjective judgment that individuals or organisations make about the
characteristics and severity of a risk is known as - 🧠 ANSWER ✔✔Risk
perception
In relation to insurance, a peril is - 🧠 ANSWER ✔✔An event that may give
rise to a loss
The calculation of what involves the use of the law of large numbers? - 🧠
ANSWER ✔✔Equitable premiums
What is the most likely impact, if any, on a commercial insurer if it fails to
implement an effective claims-handling process? - 🧠 ANSWER ✔✔The
reputation of the insurer will be affected
A proposer for an insurance policy who has previously made fraudulent
insurance claims would be classed by an underwriter as a - 🧠 ANSWER
✔✔Poor moral hazard
Where the premiums of the many pay the losses of the few, this is known
as - 🧠 ANSWER ✔✔Pooling of risks
What is the basic purpose of insurance? - 🧠 ANSWER ✔✔To transfer risks
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2026. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
3
QUESTIONS AND 100%
CORRECT ANSWERS
By sharing information about their risk, the insured satisfies which
obligation? - 🧠 ANSWER ✔✔Good faith
The proximate cause of a loss will always be the - 🧠 ANSWER
✔✔Dominant cause
Which insurance principle gives an insurer the right to call upon other
insurers to share in the settling of a claim? - 🧠 ANSWER ✔✔Contribution
,A building valued at £250,000 is jointly owned by Karen and Terry, who
each individually arrange insurance on it. Karen insures the building for
£100,000, whilst Terry insures it for £150,000. If a valid claim of £55,000
occurs how much is each insurer liable to pay? - 🧠 ANSWER ✔✔Karen's
insurer is liable for £22,000 and Terry's for £33,000.
An insurer arranges for a policyholder's car to be repaired following
damage by a negligent third party motorist. Under which insurance principle
can the insurer recover the paid claim? - 🧠 ANSWER ✔✔Subrogation
Which insurance principle ensures that in the event of a loss the insured is
placed in the same financial position as he was immediately prior to the
loss? - 🧠 ANSWER ✔✔Indemnity
The protection of jobs is classed as which type of function of insurance? - 🧠
ANSWER ✔✔A secondary function of insurance only
Which type of risk arises from a cause outside the control of any one
individual and affects a large number of people? - 🧠 ANSWER
✔✔Fundamental risk
For an individual, which class of risk is always uninsurable? - 🧠 ANSWER
✔✔Speculative risk
, The subjective judgment that individuals or organisations make about the
characteristics and severity of a risk is known as - 🧠 ANSWER ✔✔Risk
perception
In relation to insurance, a peril is - 🧠 ANSWER ✔✔An event that may give
rise to a loss
The calculation of what involves the use of the law of large numbers? - 🧠
ANSWER ✔✔Equitable premiums
What is the most likely impact, if any, on a commercial insurer if it fails to
implement an effective claims-handling process? - 🧠 ANSWER ✔✔The
reputation of the insurer will be affected
A proposer for an insurance policy who has previously made fraudulent
insurance claims would be classed by an underwriter as a - 🧠 ANSWER
✔✔Poor moral hazard
Where the premiums of the many pay the losses of the few, this is known
as - 🧠 ANSWER ✔✔Pooling of risks
What is the basic purpose of insurance? - 🧠 ANSWER ✔✔To transfer risks
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2026. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
3
