CII Certificate in Insurance

Fire is the peril when it directly causes damage; identify the insured event first, then test the property, exclusions and evidence against the wording.

Apply it: A bakery’s oven starts a fire that damages the shop

Insurable interest means a person or organisation has a recognised financial relationship to the subject matter and can suffer loss from its damage.

Pure risk can produce loss or no loss, while speculative risk can also produce gain; insurers generally focus on fortuitous financial loss.

The insured proportion is 300,000 divided by 400,000, or 75%. Apply it to the covered loss: 40,000 × 75% = 30,000 before the excess.

Apply it: A building is insured for $300,000 but its full value is $400,000. A covered partial loss is $40,000 and an average clause applies proportionately

An excess is the portion of an otherwise covered loss borne by the insured. Subtract $500 from $6,800 to get $6,300, assuming the excess applies once and no other limit or adjustment changes the amount.

When wording permits repair or replacement, verify the like-for-like scope and agreed method; using market value automatically may understate the contractual settlement.

Indemnity aims to compensate the actual financial loss, not create a profit. The value may reflect age, condition, limits, excess and the basis stated in the wording.

Apply it: A one-year-old laptop is stolen. The policy settles on an indemnity basis and the wording allows for wear and tear

The schedule identifies important details but does not replace the full contract. Read the wording with endorsements because an endorsement may amend or add terms.

Compare invoices, repair estimates, age and condition with the wording’s valuation basis; today’s retail price alone may not measure the insured loss.

Contribution applies where more than one policy covers the same interest, subject matter and loss. Check other insurance clauses and disclose the overlapping cover.

Apply it: The same stock is validly insured against fire under two policies, each responding to the same loss

Subrogation allows an insurer, after indemnifying the insured, to pursue recovery against a responsible third party to the extent of the payment and subject to applicable rights and terms.

Keep evidence of overlapping cover, indemnity paid, third-party responsibility and recovery correspondence; incomplete records can weaken an insurer’s recovery rights.

Resolve inconsistent proposal answers before submission so underwriting can price the actual exposure and apply suitable terms rather than assumptions.

Apply it: A signed home proposal says cover starts Monday, but insurer acceptance and the issued schedule show Wednesday. Confirm the accepted effective date before assuring the customer.

Confirm insurer acceptance and any commencement condition; a signed proposal alone may leave a gap before cover starts and prevent accidental reliance.

Read each endorsement with the schedule and base wording to see exactly which limit, exclusion or duty has changed and avoid applying old provisions.

Record notice time and reasonable emergency action; this helps separate prompt mitigation from damage that could have been limited during claim review.

Apply it: A kitchen leak damages flooring and cabinets. Record notice time, emergency drying, photographs and repair invoices, then check cause and settlement basis against the wording.

Match ownership, cause and repair evidence to the valuation basis and limit, so the amount follows the covered loss without unsupported additions.

Cite the operative clause and calculation, then give the review route; a reasoned outcome is easier to understand and challenge.