LM1 – CII CERTIFICATION SCRIPT
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Fortuitous Event.
Answer: To be insurable - must be an accident or unexpected
◍ Fundamental risk.
Answer: Large amounts of people effected
◍ How does English Law, Smith and Keenan define Contract Law?.
Answer: 'an agreement, enforceable by law, between two or more persons to
do, or abstain from doing, some act or acts, their intention being to create
legal relations and not merely to exchange mutual promises'
◍ Speculative risk.
Answer: Non-insurance - gambling
◍ What are the 8 criteria of a valid contract?.
Answer: Offer and acceptanceConsiderationIntention to create a legal
agreementPossibility of performanceCapacity to enter into legal
relationsConsensus ad idem (meeting of minds)LegalityCertainty
◍ What makes a contract 'void ab initio' and what does this mean?.
Answer: If any of the 8 criteria are missing from a contract, it is 'void from
the beginning'
◍ Particular Risk.
Answer: Doesn't happen to everyone
◍ Pure Risk.
Answer: The possibility exists- example travelling on a plane
◍ Risk is assessed in two ways.
, Answer: Frequency and severity
◍ Who must act in good faith in an insurance contract?.
Answer: Both insured and insurer
◍ Why does a policy not have to have been issued for cover to exist?.
Answer: Insurance is a simple contract
◍ What is Contract Certainty?.
Answer: It requires all parties involved in the contract to know exactly what
the terms are before its inception and some sort of evidence of the contract
is issued to the insured a short time after its inception
◍ What are the forms of evidence of an insurance contract that can be issued
to the insure?.
Answer: Market Reform ContractBroker Insurance Document
◍ What is unconditional acceptance of a contract?.
Answer: Complete acceptance of the terms presented without any alterations
◍ What is conditional acceptance of a contract?.
Answer: Essentially a counter-offer
◍ What does Hyde v. Wrench (1840) say about counter offers?.
Answer: A counter-offer operates as a rejection of the original offer
◍ When is postal acceptance of an offer effective from?.
Answer: At the point when the letter is posted
◍ What happened in Household Fire Insurance Co. v. Grant (1879)?.
Answer: Grant applied for shares in the company and the insurance
company's letter of acceptance was posted but never arrived. The court
decided the contract was a valid contract as the letter had been posted
◍ How does Currie v. Misa (1875) define consideration?.
Answer: 'some right, interest, profit or benefit accruing to one party, or some
forbearance, detriment, loss or responsibility given, suffered or undertaken
by the other'
, ◍ What is the consideration in insurance contracts?.
Answer: From the insured, generally the payment of the premium and from
the insurer, the promise to pay valid claims
◍ Subject matter of insurance.
Answer: The thing insured
◍ How can insurable interest be defined?.
Answer: 'the legal right to insure arising out of a financial relationship
recognised at law, between the insured and the subject-matter of insurance'
◍ Peril.
Answer: An event like a fire or break- in. what gives rise to a loss
◍ What are the features of insurable interest?.
Answer: Subject-matterLegal relationshipFinancial value
◍ What is the subject-matter of insurance?.
Answer: The physical thing or liability being insured
◍ What is insurance.
Answer: A risk transfer mechanism
◍ What is the subject-matter of the contract?.
Answer: The relationship that the insured has with the subject-matter of
insurance- could be ownership, responsibility or liability
◍ Facultative insurance.
Answer: Reinsurance purchased by an insurer for a single risk or a defined
package of risks
◍ Primary and secondary insurance.
Answer: Primary pays first = your medical bills Secondary pays some or all
costs left after the primary
◍ When must insurable interest exist in life insurance contracts?.
Answer: At inception, but not needed at the time of loss
◍ Cedent.
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Fortuitous Event.
Answer: To be insurable - must be an accident or unexpected
◍ Fundamental risk.
Answer: Large amounts of people effected
◍ How does English Law, Smith and Keenan define Contract Law?.
Answer: 'an agreement, enforceable by law, between two or more persons to
do, or abstain from doing, some act or acts, their intention being to create
legal relations and not merely to exchange mutual promises'
◍ Speculative risk.
Answer: Non-insurance - gambling
◍ What are the 8 criteria of a valid contract?.
Answer: Offer and acceptanceConsiderationIntention to create a legal
agreementPossibility of performanceCapacity to enter into legal
relationsConsensus ad idem (meeting of minds)LegalityCertainty
◍ What makes a contract 'void ab initio' and what does this mean?.
Answer: If any of the 8 criteria are missing from a contract, it is 'void from
the beginning'
◍ Particular Risk.
Answer: Doesn't happen to everyone
◍ Pure Risk.
Answer: The possibility exists- example travelling on a plane
◍ Risk is assessed in two ways.
, Answer: Frequency and severity
◍ Who must act in good faith in an insurance contract?.
Answer: Both insured and insurer
◍ Why does a policy not have to have been issued for cover to exist?.
Answer: Insurance is a simple contract
◍ What is Contract Certainty?.
Answer: It requires all parties involved in the contract to know exactly what
the terms are before its inception and some sort of evidence of the contract
is issued to the insured a short time after its inception
◍ What are the forms of evidence of an insurance contract that can be issued
to the insure?.
Answer: Market Reform ContractBroker Insurance Document
◍ What is unconditional acceptance of a contract?.
Answer: Complete acceptance of the terms presented without any alterations
◍ What is conditional acceptance of a contract?.
Answer: Essentially a counter-offer
◍ What does Hyde v. Wrench (1840) say about counter offers?.
Answer: A counter-offer operates as a rejection of the original offer
◍ When is postal acceptance of an offer effective from?.
Answer: At the point when the letter is posted
◍ What happened in Household Fire Insurance Co. v. Grant (1879)?.
Answer: Grant applied for shares in the company and the insurance
company's letter of acceptance was posted but never arrived. The court
decided the contract was a valid contract as the letter had been posted
◍ How does Currie v. Misa (1875) define consideration?.
Answer: 'some right, interest, profit or benefit accruing to one party, or some
forbearance, detriment, loss or responsibility given, suffered or undertaken
by the other'
, ◍ What is the consideration in insurance contracts?.
Answer: From the insured, generally the payment of the premium and from
the insurer, the promise to pay valid claims
◍ Subject matter of insurance.
Answer: The thing insured
◍ How can insurable interest be defined?.
Answer: 'the legal right to insure arising out of a financial relationship
recognised at law, between the insured and the subject-matter of insurance'
◍ Peril.
Answer: An event like a fire or break- in. what gives rise to a loss
◍ What are the features of insurable interest?.
Answer: Subject-matterLegal relationshipFinancial value
◍ What is the subject-matter of insurance?.
Answer: The physical thing or liability being insured
◍ What is insurance.
Answer: A risk transfer mechanism
◍ What is the subject-matter of the contract?.
Answer: The relationship that the insured has with the subject-matter of
insurance- could be ownership, responsibility or liability
◍ Facultative insurance.
Answer: Reinsurance purchased by an insurer for a single risk or a defined
package of risks
◍ Primary and secondary insurance.
Answer: Primary pays first = your medical bills Secondary pays some or all
costs left after the primary
◍ When must insurable interest exist in life insurance contracts?.
Answer: At inception, but not needed at the time of loss
◍ Cedent.
