CII Insurance law (IL) Sample Questions:

1. Which of the following is true regarding the "principle of subrogation"?

A) It prevents the insurer from recovering any costs from a third party
B) It allows the insurer to pursue third parties responsible for the loss
C) It allows the insured to be compensated twice for the same loss
D) It means the insurer is entitled to the premium even if the claim is not paid

2. A proposer for household insurance completes and submits an online application. When the insurer's website responds with a quotation based on the application, the quotation is most likely to be legally regarded as:

A) an offer
B) an invitation to treat
C) an acceptance of an offer
D) a counter offer

3. Which of the following is a typical remedy for an insurer when the insured breaches a warranty?

A) The insurer may cancel the contract or refuse to pay a claim
B) The insurer can sue the insured for breach of contract
C) The insurer is obligated to reduce the payout amount based on the breach
D) The insurer must continue to provide coverage, but with an increased premium

4. Which of the following is true about insurable interest?

A) Insurable interest must always be proven at the time the policy is issued
B) The policyholder must have a financial stake in the property or event insured at the time of loss
C) The policyholder must have an interest in the property at the time of policy purchase but not at thetime of loss
D) Insurable interest is only required for life insurance policies

5. Why may an insurer insert a continuing warranty into an insurance policy?

A) To ensure that underinsurance is avoided at all times.
B) To enable an insurer to charge an additional premium if the warranty is continually breached.
C) To encourage good risk management by the insured throughout the policy period.
D) To maintain the annual aggregate limit of liability throughout the policy period.

Solutions: