Free CII General Insurance Business (IF2) Practice Questions

Sample Practice Questions

Try these 10 sample questions from the CII General Insurance Business (IF2) practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1What is the principal protection provided by third-party-only motor insurance?

   1. A.Compensation for damage to the insured car in a collision.
   2. B.Liability for injury or damage caused to other road users.Correct answer: B
   3. C.Replacement of the insured car after theft from its garage.
   4. D.Repair of the insured car following an accidental fire.

   Explanation: The source states: "Third party insurance covers damage or injury you cause to other people, vehicles or property, but not your own." This is liability protection for others. Own collision, theft and fire losses are distinct first-party risks.

   Reference: MIB: Am I insured? — FAQ: third-party versus comprehensive cover

2. 2For a non-consumer risk, what makes a circumstance material under the Insurance Act 2015?

   1. A.It appears in a customer's preferred policy wording.
   2. B.It relates to a loss that has already been paid.
   3. C.It influences a prudent insurer's decision on the risk or terms.Correct answer: C
   4. D.It increases the policyholder's preferred level of cover.

   Explanation: The source states: "A circumstance or representation is material if it would influence the judgement of a prudent insurer in determining whether to take the risk and, if so, on what terms." Materiality depends on underwriting influence, not merely a preferred wording, an already paid claim or the customer's desired limit.

   Reference: Insurance Act 2015 — s. 7(3)

3. 3An insurer cancels a policy after exactly one quarter of its annual cover has elapsed. The £800 premium is returnable pro rata for the unused period, with no fees or other adjustments. What premium is returned?

   1. A.£600.Correct answer: A
   2. B.£200.
   3. C.£800.
   4. D.£1,000.

   Explanation: The source states: "a pro rata return premium is sent to the insured, representing the unexpired portion of the risk." Three quarters remains unused: £800 × 3/4 = £600. £200 is the used quarter; £800 ignores elapsed cover; £1,000 incorrectly adds the used portion.

   Reference: CII Insurance, legal and regulatory reference text — Chapter 3, cancellation condition

4. 4Why must a property claimant show that an item claimed as lost actually existed?

   1. A.To establish the item's current replacement value.
   2. B.To establish a genuine subject of the loss being claimed.Correct answer: B
   3. C.To establish that an insured peril caused the loss.
   4. D.To establish exactly when the item was taken.

   Explanation: The source states: "Insurers ask Policyholders to demonstrate the existence of the item(s) being claimed for." Establishing that the claimed property existed supports the reality of the claimed loss. Existence alone does not establish its current replacement value, an insured cause or the precise date of theft.

   Reference: CILA: Introduction to Claims Handling — 4.1, Validation that the item existed

5. 5A commercial property policy applies pro rata average. The sum insured is £90,000, value at risk £150,000, and agreed partial loss £20,000. No other adjustment applies. What is payable?

   1. A.£8,000.
   2. B.£18,000.
   3. C.£12,000.Correct answer: C
   4. D.£20,000.

   Explanation: The source states: "the Policyholder bears the loss in direct proportion to the extent of underinsurance." Insurer share = £90,000/£150,000 = 0.6. Payment = 0.6 × £20,000 = £12,000. £8,000 is the uninsured 40%; £18,000 applies an incorrect 90%; £20,000 ignores average.

   Reference: CILA: Introduction to Claims Handling — 9.3, Commercial policies: principle of average

6. 6How does telematics enable an insurer to assess motor risk differently from relying only on a proposal form?

   1. A.It assesses risk solely from the vehicle's declared market value.
   2. B.It uses only convictions disclosed when the proposal was completed.
   3. C.It collects information about actual driving behaviour.Correct answer: C
   4. D.It relies solely on the driver's estimate of annual mileage.

   Explanation: The source states: "Your insurer will begin collecting information about your driving habits and, over time, assign you a driving score." Telematics adds observed driving behaviour, unlike relying solely on declared vehicle value, convictions or estimated annual mileage.

   Reference: Aviva: Telematics car insurance — How does telematics car insurance work?

7. 7Which proposed call-handling standard gives an insurer a directly measurable service target?

   1. A.Deal with incoming calls as efficiently as possible.
   2. B.Make a strong effort to answer customers promptly.
   3. C.Answer at least 90% of incoming calls within 60 seconds.Correct answer: C
   4. D.Provide a friendly telephone service whenever convenient.

   Explanation: The source states: "each one made up of measurable elements organisations are assessed against." A stated percentage and time limit make attainment measurable. The other formulations express intentions without an objective threshold.

   Reference: Customer Service Excellence: The Standard — Structure of the Standard

8. 8Which additional loss to the policyholder's vehicle distinguishes third-party, fire and theft cover from third-party-only cover?

   1. A.Damage caused by a collision with a roadside wall.
   2. B.Mechanical failure of the engine through wear and tear.
   3. C.Damage to another driver's vehicle in an accident.
   4. D.Loss of the vehicle when it is stolen.Correct answer: D

   Explanation: The source states: "Third party, fire and theft adds protection if your car is stolen or damaged by fire." Theft is an added insured risk; third-party liability is already covered, while own collision damage and wear are not the stated additions.

   Reference: MIB: Am I insured? — FAQ: third-party, fire and theft

9. 9What pre-contract duty does section 3 of the Insurance Act 2015 impose on a commercial insured?

   1. A.Make a fair presentation of the risk to the insurer.Correct answer: A
   2. B.Guarantee that no loss will occur during the policy.
   3. C.Obtain the insurer's agreement to every business decision.
   4. D.Provide only information specifically requested on a form.

   Explanation: The source states: "Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk." The non-consumer insured owes this presentation duty. It is not a loss guarantee or a duty restricted to answering a proposal form.

   Reference: Insurance Act 2015 — s. 3(1)

10. 10A UK home insurance premium is £500 before standard-rate Insurance Premium Tax. With no fees or other adjustments, what total premium including IPT is due?

    1. A.£512.
    2. B.£550.
    3. C.£560.Correct answer: C
    4. D.£600.

    Explanation: The source states: "The rate is 12% on most types of insurance, including car, pet and home insurance." IPT = £500 × 12% = £60; total = £500 + £60 = £560. £512 adds 12 pounds rather than 12%; £550 uses 10%; £600 uses 20%.

    Reference: GOV.UK: Insurance Premium Tax — Standard rate IPT