Free CILA Certificate CH2 – Claims Handling Practice Questions

Sample Practice Questions

Try these 10 sample questions from the CILA Certificate CH2 – Claims Handling practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1An English claims handler traces a proposed refund to jewellery bought with the proceeds of burglary. The handler knows that history. Under section 340 of POCA, which feature makes the refund criminal property?

   1. A.It indirectly represents a benefit obtained from criminal conduct.Correct answer: A
   2. B.It represents an asset whose insurance valuation is in dispute.
   3. C.It represents a payment exceeding the policyholder's premium.
   4. D.It represents a debt payable before the claim has been adjusted.

   Explanation: The source states: "it constitutes a person’s benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly)" The indirect conversion through jewellery does not remove the criminal origin. Section 340 also requires the alleged offender's knowledge or suspicion, which the facts provide; valuation disputes, overpayments and payment timing do not establish criminal origin.

   Reference: Proceeds of Crime Act 2002, Part 7 — s. 340(3)

2. 2Before negotiating a disputed repair settlement, an adjuster considers a higher immediate saving that could damage future dealings with the same contractor. Which preparation question addresses that trade-off?

   1. A.How would each proposed outcome affect later dealings between the parties?Correct answer: A
   2. B.How would each proposed outcome affect the timing of this claim's payment?
   3. C.How would each proposed outcome affect the amount of this claim's reserve?
   4. D.How would each proposed outcome affect the allocation of this claim's excess?

   Explanation: CILA states: "you must consider the implications of each outcome." Assess the effect on future dealings before choosing the immediate saving. Payment timing, this claim’s reserve and excess allocation are current-claim effects rather than the long-term relationship consequence posed.

   Reference: CILA CH2 Introduction to Claims Handling Course Book — p. 38, 5.2 Preparation

3. 3After an insured pipe leak, a handler arranges prompt drying to prevent water damage spreading before permanent repairs. Which claims activity does that drying primarily represent?

   1. A.Validation
   2. B.Contribution
   3. C.Subrogation
   4. D.MitigationCorrect answer: D

   Explanation: CILA states: "reduce the severity or negative effects of a claim." Drying limits the consequences of the loss. Validation establishes the claim, contribution concerns sharing between insurers, and subrogation concerns recovery rights.

   Reference: CILA CH2 Introduction to Claims Handling Course Book — p. 47, Introduction

4. 4A customer returns from a fortnight away and discovers roof damage that was not immediately noticeable. The date of damage is uncertain. How should the handler use weather records to validate the alleged storm cause?

   1. A.Use records for the day on which the customer notified the insurer.
   2. B.Examine records further back over the possible period of damage.Correct answer: B
   3. C.Use the strongest recorded gust from the customer's renewal year.
   4. D.Examine records for the date on which the roof was last repaired.

   Explanation: The source states: "it’s reasonable to look further back in the records." Notification is not necessarily the loss date. Examine the plausible period rather than substitute renewal or maintenance dates; this tests an uncertain event date, not just a general description of bad weather.

   Reference: Financial Ombudsman Service: Storm damage — Information about the weather

5. 5A buildings policy requires a sum insured sufficient for full reinstatement. The home has a high sale price because of its location. Which value should be tested for adequacy of the buildings sum insured?

   1. A.The price at which the whole property could currently be sold.
   2. B.The amount outstanding under the owner's mortgage agreement.
   3. C.The rental income the owner could receive over the next policy year.
   4. D.The full cost of rebuilding the insured building.Correct answer: D

   Explanation: The source states: "carefully identify the full rebuilding cost of the building" The reinstatement requirement concerns rebuilding, not sale value, mortgage debt or rent. Land/location value in a sale price does not by itself measure the cost of reinstating the structure.

   Reference: CILA CH2 Course Book — 9.2.1 Change of the Basis of Settlement

6. 6An adjuster has delegated authority to investigate and recommend settlements. The agreement is silent in the summary the adjuster has seen about rejecting claims. What should be checked before the adjuster issues a repudiation?

   1. A.Whether the broker's appointment authorises the broker to arrange the policy.
   2. B.Whether the insurer's delegation authorises the adjuster to repudiate the claim.Correct answer: B
   3. C.Whether the customer's mandate authorises the adjuster to obtain quotations.
   4. D.Whether the repair agreement authorises the contractor to start insured work.

   Explanation: CILA states: "this may not always include the authority to repudiate." The relevant power must come from the insurer’s actual delegation. Broker placement authority, a customer mandate for quotations and a contractor’s repair authority govern different powers and cannot establish the adjuster’s authority to reject the claim.

   Reference: CILA CH2 Course Book — 10.2 When and How to Repudiate

7. 7A handler has the standard policy wording but needs the customer's insured address, sums insured and particular period of cover. Which document normally records those individual risk details?

   1. A.Policy scheduleCorrect answer: A
   2. B.Definitions section
   3. C.General exclusions
   4. D.Insuring clause

   Explanation: The source states: "the policy schedule details the specific information regarding the insured risk" The schedule applies the standard wording to the particular insured risk. Definitions, exclusions and the insuring clause have different functions.

   Reference: CILA CH2 Course Book — 1.1 What is an Insurance Policy?

8. 8An insurance policy expressly states a requirement to notify the insurer of specified changes to the risk. In the CH2 distinction between express and implied conditions, how is that written requirement classified?

   1. A.An express conditionCorrect answer: A
   2. B.An implied condition
   3. C.A general exclusion
   4. D.An insuring promise

   Explanation: The source states: "Express conditions are those that are stated in the contract" The requirement is expressly stated, rather than inferred. An exclusion removes specified cover and an insuring promise describes cover; neither is the classification of this obligation.

   Reference: CILA CH2 Course Book — 2.3 Types of Conditions, Express Conditions

9. 9A hot implement leaves a scorch mark on fabric, with no ignition or burning of the fabric. Applying the CH2 distinction, which feature would be needed to classify the damage under the fire peril?

   1. A.Actual ignition involving something that was not intended to burn.Correct answer: A
   2. B.Surface discolouration caused by contact with a sufficiently hot object.
   3. C.Material fracture caused by a sufficiently rapid temperature change.
   4. D.Permanent distortion remaining after the heated material has cooled.

   Explanation: The source states: "actual ignition" Heat can discolour, fracture or distort property without ignition. Those damage effects do not by themselves establish the fire peril. The source also requires something to burn that should not have been on fire; separate accidental-damage cover may need consideration.

   Reference: CILA CH2 Course Book — 3.1 Fire

10. 10A property policy uses a general reasonable-care condition without imposing a specific security measure. In the CH2 account of the FOS approach, what conduct is central to applying that exclusion?

    1. A.Ordinary carelessness in handling the insured property.
    2. B.An accidental failure of precautions to prevent the loss.
    3. C.Recklessness or deliberately courting the danger.Correct answer: C
    4. D.Non-compliance with a separate specific security requirement.

    Explanation: The source states: "reckless or “courted the danger”" The CH2 account of the general reasonable-care clause focuses on recklessness. Ordinary carelessness or an unsuccessful precaution is not by itself that standard. A separately specified security restriction must be assessed on its own terms rather than substituted for the general-clause test.

    Reference: CILA CH2 Course Book — 6.4 Key Points to Remember