[Sep-2021] E05 Pre-Exam Practice Tests | Exam Questions and Answers for Insurance Law (M05) Study Guide
Examination element of M05 Insurance law Certification Sample Questions
NEW QUESTION 23
The proximate cause of a loss is best described as the
- A. final peril to cause the loss.
- B. most dominant cause of the loss.
- C. first peril to cause the loss.
- D. most remote cause of the loss.
Answer: B
NEW QUESTION 24
Ambiguous terms in a household insurance contract are generally construed against the
- A. insurer due to the contra proferentem rule.
- B. policyholder due to the noscitur a sociis rule.
- C. policyholder due to the literal rule.
- D. insurer due to the ejusdem generis rule.
Answer: A
NEW QUESTION 25
Bill owned a painting which was insured under a policy containing a first refusal clause. The painting was stolen and Bill's claim was settled, but several months later the painting was recovered by the police. As a consequence, what is Bill's position under his insurance policy?
- A. Bill may exercise an option to buy the painting back.
- B. Bill must buy the painting back.
- C. Bill must return the claim settlement in exchange for the painting.
- D. Bill may keep the claim settlement and also keep the painting.
Answer: A
NEW QUESTION 26
In the tort of negligence, a primary victim of nervous shock is a class of person who suffers psychiatric injury
- A. as a result of grief or sorrow for the loss of a person with whom he had a close relationship.
- B. as a result of stress or harassment at work.
- C. through fear for the safety of another person involved in an accident which he witnessed.
- D. through fear for his own safety in an accident.
Answer: D
NEW QUESTION 27
The principle of subrogation prevents a policyholder from profiting from
- A. retaining salvaged property.
- B. assigning abandonment rights to the insurer.
- C. claiming under both his insurance policy and against any negligent third party.
- D. submitting a full claim recovery under more than one insurance policy.
Answer: C
NEW QUESTION 28
How can an agency relationship be best described?
- A. A person has ratified another party's action.
- B. A person, who has paid another party under a contract, has the right to stand in the place of that other party and avail himself of the rights and remedies of that party.
- C. A person has transferred his obligations under a contract to another party.
- D. A person has the authority to act on behalf of another party.
Answer: D
NEW QUESTION 29
Within what time period, from the date when the damage first began, does the owner of an office block have a right to sue the builder for negligent construction work?
- A. 15 years.
- B. 3 years.
- C. 6 years.
- D. 9 years.
Answer: B
NEW QUESTION 30
For this question more than 1 option is correct. You must select fill the correct options to gain the mark. In what circumstances would an agency agreement be automatically terminated?
- A. Disclosure of the name of the principal.
- B. Death of the agent.
- C. Bankruptcy of the principal.
- D. Bankruptcy of the agent.
Answer: B,C
NEW QUESTION 31
A breach of warranty under the general law of contract legally entitles an injured party to
- A. avoid the contract from the date of the breach.
- B. avoid the contract ab initio.
- C. claim damages.
- D. obtain specific performance.
Answer: C
NEW QUESTION 32
For this question more than 1 option is correct. You must select all the correct options to gain the mark. What are the characteristics of a corporation aggregate?
- A. It is answerable to its shareholders or members.
- B. It is an organisation with a separate legal existence to its membership.
- C. It is not treated as a separate legal entity.
- D. It is a legal person representing one official position.
Answer: A,B
NEW QUESTION 33
When a defendant deliberately destroys possessions belonging to someone else, he has committed the tort(s) of
- A. trespass to goods only.
- B. trespass to goods, conversion, nuisance and battery.
- C. trespass to goods and conversion only.
- D. trespass to goods, conversion and nuisance only,
Answer: A
NEW QUESTION 34
In terms of private motor insurance, a renewal offer can be accepted
- A. only by written communication.
- B. by the proposer acting in reliance of the offer.
- C. only by the proposer personally.
- D. by any third party.
Answer: B
NEW QUESTION 35
Adam was bitten by a stray dog in Africa. He washed his wound in a pond and a week later he became very ill with a high temperature. Initially, the local hospital treated him for malaria and later treated him for the fever following the dog bite. Adam died in hospital. What is the proximate cause of his death?
- A. The original physical injury of the dog bite.
- B. The delay in seeking medical treatment.
- C. The delay in obtaining the correct medical treatment.
- D. The unhygienic washing of the dog bite.
Answer: A
NEW QUESTION 36
Tim is a local insurance broker. He has authority to receive premiums for a personal lines insurer and earns commission from the insurer for sales. Paul, an elderly customer, asked Tim for advice regarding his personal insurance requirements and to assist with completing the proposal form for household insurance. In these circumstances, who, if anyone, is Tim's principal?
- A. Both the insurer and Paul at different times.
- B. Paul as it is a consumer contract.
- C. The insurer at all times.
- D. No one as Tim is not a party to the insurance contract.
Answer: C
NEW QUESTION 37
For this question more than 1 option is correct. You must select all the correct options to gain the mark. In a consumer insurance policy, a warranty can arise as
- A. a basis of the contract clause.
- B. an exception clause.
- C. an express term.
- D. a continuing warranty.
Answer: A,C
NEW QUESTION 38
According to statute law, an unfair term in a consumer insurance contract is defined as one which
- A. provides insurance where the scope of cover is narrow compared to the premium charged.
- B. has been individually negotiated and is to the detriment of either one of the parties.
- C. causes a significant imbalance in the parties' rights to the detriment of the consumer.
- D. does not restrict liability for death or personal injury.
Answer: C
NEW QUESTION 39
Two liability policies with different insurers cover the same loss of £15,000,000. The limit of liability is
£10,000,000 under policy X and £20,000,000 under policy Y. Neither policy has a non-contribution clause.
What amount will policy Y contribute towards the claim payment?
- A. £7,500,000
- B. £5,000,000
- C. £10,000,000
- D. £9,000,000
Answer: D
NEW QUESTION 40
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