Page 1 of 259
LM1 – CII EXAM Q. BANK*** QUESTIONS AND
ANSWERS | VERIFIED AND WELL DETAILED
ANSWERS |DOWNLOAD AND PASS | LATEST
EXAM UPDATE 2026/2027
A shipowner wants protection for collision damage to the
ship itself. Which class is required? | A. Marine hull
insurance |
B. Marine cargo insurance |
C. Freight insurance |
D. Protection and indemnity insurance
❖Marine hull insurance — The facts describe marine
hull insurance: cover for physical loss of or damage to
a vessel and often its machinery and equipment
[Syllabus 3.1.1]
,Page 2 of 259
A managing agent wants a body to coordinate market
views and technical work within Lloyd's. Which
association is most relevant? |
A. Association of British Insurers |
B. British Insurance Brokers' Association |
C. International Underwriting Association |
D. Lloyd's Market Association
❖D. Lloyd's Market Association — The facts describe
lloyd's market association: the association
representing Lloyd's managing agents and members'
agents [Syllabus 6.3.1-6.3.4]
Which class is most likely to cover legal expenses incurred
in pursuing or defending specified disputes? |
A. Cargo insurance |
B. Legal expenses insurance |
C. Trade credit insurance |
D. Aviation hull insurance
,Page 3 of 259
❖B. Legal expenses insurance — Legal expenses
insurance funds specified legal costs rather than the
underlying property or liability loss itself. [Syllabus
3.1.2]
Why is the principle of indemnity closely associated with
the prevention of moral hazard? |
A. It guarantees that every loss will be paid |
B. It removes the prospect of making a financial gain from
a loss |
C. It replaces the need for policy conditions |
D. It prevents insurers from charging premiums
❖B. It removes the prospect of making a financial gain
from a loss — If an insured cannot profit from a loss,
there is less incentive to cause or exaggerate one.
[Syllabus 1.3.1]
, Page 4 of 259
A company is not named on a sanctions list but is owned
and controlled by a designated person. What should the
insurer do? |
A. Pay all claims before checking ownership |
B. Assume no restriction can apply because the company
is unnamed |
C. Assess whether sanctions restrictions extend to the
company and do not proceed unless lawful |
D. Ask the broker to remove the owner's name from the
presentation
❖C. Assess whether sanctions restrictions extend to the
company and do not proceed unless lawful —
Ownership and control rules can extend restrictions
beyond entities expressly listed. [Syllabus 8.1.1]
Shipowners collectively insure liabilities such as crew
injury and pollution through member calls. What
organisation is this? |
A. Coverholder |
LM1 – CII EXAM Q. BANK*** QUESTIONS AND
ANSWERS | VERIFIED AND WELL DETAILED
ANSWERS |DOWNLOAD AND PASS | LATEST
EXAM UPDATE 2026/2027
A shipowner wants protection for collision damage to the
ship itself. Which class is required? | A. Marine hull
insurance |
B. Marine cargo insurance |
C. Freight insurance |
D. Protection and indemnity insurance
❖Marine hull insurance — The facts describe marine
hull insurance: cover for physical loss of or damage to
a vessel and often its machinery and equipment
[Syllabus 3.1.1]
,Page 2 of 259
A managing agent wants a body to coordinate market
views and technical work within Lloyd's. Which
association is most relevant? |
A. Association of British Insurers |
B. British Insurance Brokers' Association |
C. International Underwriting Association |
D. Lloyd's Market Association
❖D. Lloyd's Market Association — The facts describe
lloyd's market association: the association
representing Lloyd's managing agents and members'
agents [Syllabus 6.3.1-6.3.4]
Which class is most likely to cover legal expenses incurred
in pursuing or defending specified disputes? |
A. Cargo insurance |
B. Legal expenses insurance |
C. Trade credit insurance |
D. Aviation hull insurance
,Page 3 of 259
❖B. Legal expenses insurance — Legal expenses
insurance funds specified legal costs rather than the
underlying property or liability loss itself. [Syllabus
3.1.2]
Why is the principle of indemnity closely associated with
the prevention of moral hazard? |
A. It guarantees that every loss will be paid |
B. It removes the prospect of making a financial gain from
a loss |
C. It replaces the need for policy conditions |
D. It prevents insurers from charging premiums
❖B. It removes the prospect of making a financial gain
from a loss — If an insured cannot profit from a loss,
there is less incentive to cause or exaggerate one.
[Syllabus 1.3.1]
, Page 4 of 259
A company is not named on a sanctions list but is owned
and controlled by a designated person. What should the
insurer do? |
A. Pay all claims before checking ownership |
B. Assume no restriction can apply because the company
is unnamed |
C. Assess whether sanctions restrictions extend to the
company and do not proceed unless lawful |
D. Ask the broker to remove the owner's name from the
presentation
❖C. Assess whether sanctions restrictions extend to the
company and do not proceed unless lawful —
Ownership and control rules can extend restrictions
beyond entities expressly listed. [Syllabus 8.1.1]
Shipowners collectively insure liabilities such as crew
injury and pollution through member calls. What
organisation is this? |
A. Coverholder |
