Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25

- Free Preparation Discussions

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

Limited Time Offer

25%

Off

Get Premium L5M2 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Devon

9 months ago

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

upvoted 0 times

...

Cristy

9 months ago

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

upvoted 0 times

...

Allene

10 months ago

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

upvoted 0 times

...

Lashonda

10 months ago

Totally agree, B is definitely true!

upvoted 0 times

...

Justine

10 months ago

You can’t insure someone else's factory.

upvoted 0 times

...

Deja

10 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.

upvoted 0 times

...

Stefany

11 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?

upvoted 0 times

...

Harris

11 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.

upvoted 0 times

...

Arlette

11 months ago

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

upvoted 0 times

...

Lilli

11 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.

upvoted 0 times

...

Ammie

11 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.

upvoted 0 times

...

Stanford

11 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.

upvoted 0 times

...

Paulina

11 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.

upvoted 0 times

...

Sharika

2 years 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!

upvoted 0 times

...

Sheridan

2 years 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.

upvoted 0 times

Hershel

2 years ago

Yeah, I think both statements are true.

upvoted 0 times

...

Pamella

2 years ago

I agree, I also think it's not possible to insure your supplier's factory.

upvoted 0 times

...

Farrah

2 years ago

I think it's not possible to insure someone else's factory.

upvoted 0 times

...

...

Jaclyn

2 years ago

But insurable interest allows you to insure your own property or property you have a financial interest in, like a supplier's factory.

upvoted 0 times

...

Walton

2 years ago

Hmm, this is a tricky one. I'm going to go with A and D. You can insure your own supplier's factory, but not just anyone else's property.

upvoted 0 times

...

Penney

2 years ago

I'm pretty sure B and D are the correct answers. You can't insure something that doesn't belong to you, right? That's just common sense.

upvoted 0 times

Casey

2 years ago

D) it is not possible to insure your supplier's factory

upvoted 0 times

...

Desire

2 years ago

C) it is possible to insure your supplier's factory

upvoted 0 times

...

Elza

2 years ago

B) it is not possible to insure someone else's factory

upvoted 0 times

...

Caitlin

2 years ago

A) it is possible to insure someone else's factory

upvoted 0 times

...

...

Isreal

2 years ago

I disagree, I believe the correct answers are B and D.

upvoted 0 times

...

Lauran

2 years ago

I think A and C are true. You should be able to insure someone else's property as long as you have a legitimate interest in it.

upvoted 0 times

Leonida

2 years ago

I believe insurable interest is important for insurance to work properly. It ensures that the policyholder has a stake in the insured property.

upvoted 0 times

...

Timmy

2 years ago

I'm not sure about B and D. I think insurable interest allows for some flexibility in who can be insured.

upvoted 0 times

...

Shayne

2 years ago

I think C is also true. You can insure your supplier's property because it affects your business.

upvoted 0 times

...

Georgene

2 years ago

I agree, A is true. You can insure someone else's property if you have a legitimate interest in it.

upvoted 0 times

...

...

Jaclyn

2 years ago

I think the correct answers are A and C.

upvoted 0 times

...