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100+ Free CII LM1 Practice Questions

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2026 Statistics

Key Facts: CII LM1 Exam

50 questions

LM1 is a 50-question multiple-choice exam

CII LM1 Examination Guide / syllabus 2026

1 hour

Time allowed to complete the LM1 exam

CII LM1 syllabus 2026

70% nominal pass

Standard nominal pass mark for LM1

CII LM1 unit page

10 credits

CII credit value of the LM1 unit

CII LM1 unit page / qualifications brochure

40 hours

CII-recommended study time for LM1

CII LM1 unit page

82.36%

Published 2025 pass rate for LM1

CII LM1 unit page

11 outcomes

Official learning outcomes on the 2026 LM1 syllabus

CII LM1 Examination Guide 2026

100

Free original LM1-style practice questions here

OpenExamPrep

CII LM1 is the essentials unit of the Award/Certificate in London Market Insurance pathways (10 credits). The official exam is 50 MCQs in 1 hour with a nominal 70% pass mark; the CII reported an 82.36% pass rate for 2025. This free bank offers 100 original practice questions weighted to the eleven 2026 learning outcomes, emphasising insurance principles and terminology, regulation, market structure, and broker/underwriter roles. Confirm live enrolment fees on the CII unit page.

Sample CII LM1 Practice Questions

Try these sample questions to test your CII LM1 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In pre-contract negotiations for a non-consumer insurance contract under English law, what does the duty of fair presentation primarily require of the proposer?
A.To make a fair presentation of the risk by disclosing every material circumstance they know or ought to know, or giving sufficient information to put a prudent underwriter on notice
B.To wait until after inception before disclosing any risk information
C.To disclose only facts that reduce the premium
D.To disclose only information already published in the company's annual report
Explanation: Under the Insurance Act 2015, non-consumers must make a fair presentation: disclose every material circumstance known or that ought to be known, or provide enough information to put a prudent underwriter on enquiry. The duty is about material risk information for underwriting, not public interest or delaying disclosure.
2How does the legal duty of disclosure typically differ between a consumer and a non-consumer insurance proposer under English law?
A.Consumers and non-consumers have identical fair-presentation duties under the Insurance Act 2015
B.Consumers are generally subject to Consumer Insurance (Disclosure and Representations) Act 2012 rules on taking reasonable care not to make a misrepresentation, while non-consumers owe a fair presentation duty under the Insurance Act 2015
C.Only consumers must disclose material circumstances
D.Non-consumers never need to answer underwriters' questions
Explanation: Consumer insurance is governed mainly by CIDRA 2012 (reasonable care not to misrepresent). Non-consumer contracts fall under the Insurance Act 2015 fair presentation regime. The duties are not identical; both sides may need to answer questions, but the statutory frameworks differ.
3For insurance purposes, which statement best describes the proximate cause of a loss?
A.Always the first event in a chronological chain, regardless of dominance
B.Always the last event in time before the loss occurs
C.The dominant, effective cause that sets in motion the chain of events leading to the loss
D.Any remote cause that can be imagined by the insured
Explanation: Proximate cause is the dominant or effective cause of the loss, not merely the first or last event in time. Insurers apply it to decide whether an insured peril caused the loss so that cover responds. Remote or merely chronological labels are insufficient.
4Which principle aims to place the insured, after a covered loss, in the same financial position they occupied immediately before that loss, neither better nor worse?
A.Contribution
B.Utmost good faith alone
C.Subrogation
D.Indemnity
Explanation: Indemnity seeks to restore the insured's pre-loss financial position without allowing profit from the claim. Subrogation and contribution are related recovery and sharing doctrines; good faith governs disclosure and conduct but is not the indemnity measure itself.
5Which of the following is a common modification of strict indemnity in property insurance?
A.Agreed-value or new-for-old (reinstatement) bases that depart from a pure pre-loss market-value measure
B.Refusing ever to pay anything after a loss
C.Ignoring the sum insured when settling claims
D.Paying the insured twice the rebuild cost as a windfall
Explanation: Insurers may modify pure indemnity through agreed values, reinstatement/new-for-old settlements, or similar bases so that the payment basis differs from a simple second-hand market value. Windfalls, non-payment as a principle, or ignoring the sum insured are not valid indemnity modifications.
6When two policies cover the same interest, peril and subject-matter for the same insured, which principle may require each insurer to share the claim?
A.Subrogation
B.Contribution
C.Proximate cause
D.Pooling of speculative risks only
Explanation: Contribution arises where dual/double insurance exists and insurers share the loss according to policy terms and contribution methods. Subrogation concerns third-party recoveries; proximate cause identifies the effective cause of loss; pooling is a market risk-spreading concept, not the dual-insurance sharing rule.
7A building is insured with Insurer A for £200,000 and Insurer B for £300,000 (same interest and peril). Using the sum insured method of contribution for a £50,000 covered loss with no excess, how much does each insurer typically pay?
A.A pays £0 and B pays £50,000
B.A pays £25,000 and B pays £25,000
C.A pays £20,000 and B pays £30,000
D.A pays £30,000 and B pays £20,000
Explanation: Under the sum insured contribution method, each insurer pays in proportion to its sum insured to the total: A £200k/£500k = 40% → £20,000; B £300k/£500k = 60% → £30,000. Equal shares would reflect an independent-liability outcome in this fully covered example, not the sum insured method; inverted proportions reverse the sums insured.
8After paying a motor damage claim caused by a negligent third party, under which principle may the insurer pursue recovery from that third party in the insured's name?
A.Average
B.Pooling
C.Contribution
D.Subrogation
Explanation: Subrogation allows an indemnifying insurer to step into the insured's rights against a responsible third party to recover the claim outlay. Contribution shares between insurers; average relates to underinsurance; pooling is risk-spreading across many insureds.
9Which circumstance is most likely to prevent an insurer from exercising subrogation rights?
A.The wrongdoer is the insured's own household family member and the policy or law restricts recovery in that situation
B.A third party clearly caused the loss
C.The insured cooperates fully with the recovery action
D.The insurer has paid a valid indemnity claim
Explanation: Subrogation generally follows after indemnity, but rights may not apply against certain related parties (for example some family/household situations) or where contract/law restricts them. Payment, a clear third-party cause, and cooperation typically support rather than block subrogation.
10Which fact is most clearly a material circumstance for fair presentation purposes?
A.The proposer's preferred office stationery supplier
B.A recent survey showing serious structural cracking in a warehouse proposed for property cover
C.The colour of the office carpets
D.Whether the underwriter's assistant takes milk in tea
Explanation: A material circumstance is one that would influence a prudent underwriter's judgement in setting terms or accepting the risk. Serious structural defects go to physical hazard and terms; trivial personal preferences do not.

About the CII LM1 Exam

LM1 London Market Insurance Essentials is a Level 3 CII unit (10 credits) that introduces how the London insurance market works. It covers core insurance terminology (fair presentation, proximate cause, indemnity, contribution, subrogation), fundamental risk and insurance principles, main London Market classes (marine, non-marine, aviation), the insurance cycle, reinsurance basics, market structure (Lloyd's, company market, brokers, MGAs and associations), the UK regulatory and legal environment (FCA/PRA, Consumer Duty, SM&CR, FOS/FSCS, contract essentials), systems and controls including sanctions, data protection and AML, and the roles of brokers and underwriters (including lead/follow and the GUA). The exam is a 1-hour, 50-question multiple-choice paper examined on English law and practice unless otherwise stated.

Assessment

50 compulsory four-option multiple-choice questions. The official test specification allocates questions across 11 learning outcomes, generally within ±2 of the published counts. There is no negative marking.

Time Limit

1 hour (60 minutes) to complete all 50 questions.

Passing Score

Nominal pass mark of 70% on the 50-question paper (notionally 35 correct). The CII may adjust the actual cut score slightly through standard-setting to keep the standard consistent across sittings.

Exam Fee

Purchased from the CII via Enrolment plus or Enrolment only packages that include assessment entry. The CII 2026 General Insurance fees schedule lists digital Enrolment around £294 (member) / £379 (non-member), Enrolment plus around £303 / £403, and resits around £182 / £217. Confirm current CII prices, membership discounts, VAT and any print postage at enrolment. (Chartered Insurance Institute (CII))

CII LM1 Exam Content Outline

12%

Basic insurance terminology

Fair presentation, proximate cause, indemnity, contribution and subrogation.

20%

Fundamental principles of insurance

Risk categories, pooling, peril/hazard, insurable risks, insurance functions and claims service.

8%

Main classes written in the London Market

Marine, non-marine specialty and aviation features.

2%

The insurance cycle

Hard/soft markets driven by capacity, demand and external factors.

6%

Reinsurance within the insurance market

Purpose of reinsurance and facultative/treaty and proportional/non-proportional terms.

10%

Structure of the London Market

Lloyd's and company participants, associations and subscription placing.

20%

Regulatory and legal environment

FCA/PRA, Consumer Duty, SM&CR, licensing, Lloyd's governance, FOS/FSCS and contract essentials.

4%

Systems and controls

Sanctions and controls for UK, US and EU legal compliance.

4%

Data protection and money laundering

Data protection principles and AML customer due diligence.

8%

Broker's role in the London Market

Agency, placing, premiums, claims support and contract certainty.

6%

Underwriter's role in the London Market

Underwriting functions, lead/follow roles and the GUA.

How to Pass the CII LM1 Exam

What You Need to Know

  • Passing score: Nominal pass mark of 70% on the 50-question paper (notionally 35 correct). The CII may adjust the actual cut score slightly through standard-setting to keep the standard consistent across sittings.
  • Assessment: 50 compulsory four-option multiple-choice questions. The official test specification allocates questions across 11 learning outcomes, generally within ±2 of the published counts. There is no negative marking.
  • Time limit: 1 hour (60 minutes) to complete all 50 questions.
  • Exam fee: Purchased from the CII via Enrolment plus or Enrolment only packages that include assessment entry. The CII 2026 General Insurance fees schedule lists digital Enrolment around £294 (member) / £379 (non-member), Enrolment plus around £303 / £403, and resits around £182 / £217. Confirm current CII prices, membership discounts, VAT and any print postage at enrolment.

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

CII LM1 Study Tips from Top Performers

1Prioritise Learning Outcomes 2 and 7 (principles and regulation): together they account for 20 of the 50 official questions.
2Drill fair presentation, proximate cause, indemnity, contribution and subrogation until you can apply each to short scenarios without hesitation.
3Know pure vs speculative and particular vs fundamental risk, and be able to spot moral versus physical hazard examples.
4Map London Market participants: Lloyd's syndicates/managing agents/members, company market, retail vs wholesale brokers, MGAs and key associations (LMA, IUA, BIBA, LIIBA).
5Distinguish FCA conduct regulation from PRA prudential supervision, and know what FOS and FSCS each do.
6Use the official LM1 Examination Guide specimen paper under timed conditions (50 questions in 60 minutes) so pacing matches the live exam.

Frequently Asked Questions

How many questions are on the CII LM1 exam and how long is it?

LM1 has 50 multiple-choice questions answered in 1 hour. There is no negative marking.

What is the pass mark for CII LM1?

The standard nominal pass mark is 70% (notionally 35 out of 50). The CII may adjust the cut score slightly through standard-setting.

What does the LM1 syllabus cover?

Eleven learning outcomes spanning insurance terminology and principles, London Market classes, the insurance cycle, reinsurance, market structure, regulation and law (including FOS/FSCS), systems and controls, data protection and AML, and broker and underwriter roles.

How many CII credits is LM1 worth and what qualification does it lead to?

LM1 is worth 10 CII credits at Level 3. Completing LM1 and LM2 achieves the Award in London Market Insurance; adding LM3 achieves the Certificate in London Market Insurance.

Which law does LM1 examine?

Candidates are examined on English law and practice unless a question states otherwise. Legislative and industry changes are generally not examined earlier than three months after they take effect.

Are these official CII practice questions?

No. These are original OpenExamPrep questions modelled on the 2026 LM1 syllabus and exam style. The CII provides its own study text, Knowledge Checker and specimen examination guide separately.