CIPS L5M2 Exam - Topic 5 Question 45 Discussion

Actual exam question for CIPS's L5M2 exam

Question #: 45
Topic #: 5

[All L5M2 Questions]

The legal principle of insurable interest means which of the following statements are TRUE? Select TWO.

Ait is possible to insure someone else's factory

Bit is not possible to insure someone else's factory

Cit is possible to insure your supplier's factory

Dit is not possible to insure your supplier's factory

Show Suggested Answer

Suggested Answer: B, C

Insurable Interest means that it is not possible to insure someone else's factory. The study guide explains that you can only take out insurance where you have at least partial ownership of that risk. Therefore option 3 is also correct as you have a partial risk if something were to happen to your supplier's factory. You can take out CBI insurance for this. see p.100-101 for further s of Legal Principles of Insurance

by Tresa at Sep 15, 2024, 12:33 AM

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Devon

3 months ago

I thought you could insure anything, but this is confusing!

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Cristy

3 months ago

C is correct, you can insure your supplier's factory if you have an interest.

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Allene

3 months ago

Wait, can you really insure your supplier's factory? Sounds off.

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Lashonda

4 months ago

Totally agree, B is definitely true!

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Justine

4 months ago

You can’t insure someone else's factory.

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Deja

4 months ago

I thought you couldn’t insure someone else's property unless you had a direct interest, which makes me lean towards B and D.

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Stefany

4 months ago

I practiced a similar question where it was about personal property, and I think the key is whether you would suffer a loss. So maybe C is correct?

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Harris

4 months ago

I’m not sure about A and C. I feel like you can insure a factory if you have a business relationship, but I can’t recall the specifics.

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Arlette

5 months ago

I remember insurable interest means you have to have a stake in the property, so I think B is definitely true.

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Lilli

5 months ago

Okay, I've got a strategy. I'll read through the statements and ask myself whether each one is consistent with the idea of insurable interest. That should help me identify the two correct answers.

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Ammie

5 months ago

Hmm, this is a tricky one. I'm a bit unsure about the nuances of insurable interest and how it applies in different situations. I'll need to think this through carefully.

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Stanford

5 months ago

I think the key here is understanding the concept of insurable interest. I'll need to carefully consider the statements and determine which ones align with that principle.

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Paulina

5 months ago

I'm feeling pretty confident about this one. I've reviewed the concept of insurable interest, and I think I know which statements are true based on that. I'll select the two that I'm most certain about.

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Sharika

1 year ago

A and C, for sure! You've gotta protect your investments, even if they're not technically yours. It's like insuring your friend's wedding dress - you've got a vested interest in it!

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Sheridan

1 year ago

Haha, this question is a real head-scratcher! I bet the insurance company would love to insure my neighbor's car, but I don't think that's how it works. I'll go with B and D.

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