Get New 2021 Valid Practice To your E05 Exam (Updated 52 Questions)
Insurance Law (M05) E05 Exam Practice Test Questions Dumps Bundle!
NEW QUESTION 11
What is the most common for of corporation?
- A. Statutory corporation.
- B. Chartered corporation.
- C. Registered corporation.
- D. Corporation sole.
Answer: C
NEW QUESTION 12
The principle of subrogation prevents a policyholder from profiting from
- A. assigning abandonment rights to the insurer.
- B. retaining salvaged property.
- C. submitting a full claim recovery under more than one insurance policy.
- D. claiming under both his insurance policy and against any negligent third party.
Answer: D
NEW QUESTION 13
A professional indemnity policy includes a condition requiring that the insured must give prompt notice of any circumstance that could give rise to a claim. What type of condition is this?
- A. A collateral condition.
- B. A condition precedent to liability.
- C. A suspensive condition.
- D. A condition precedent to the contract.
Answer: B
NEW QUESTION 14
Dan made a financial arrangement on behalf of Liz. However, Liz had the arrangement set aside by the court on the basis that she had been unduly influenced by Dan. To establish undue influence, the court must have specifically identified Dan as
- A. Liz's husband.
- B. a person holding a dominant position over Liz.
- C. a person holding a senior position at Liz's bank.
- D. Liz's independent financial adviser.
Answer: B
NEW QUESTION 15
How can an agency relationship be best described?
- A. 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.
- B. A person has ratified another party's action.
- C. A person has the authority to act on behalf of another party.
- D. A person has transferred his obligations under a contract to another party.
Answer: C
NEW QUESTION 16
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. Bankruptcy of the agent.
- B. Bankruptcy of the principal.
- C. Disclosure of the name of the principal.
- D. Death of the agent.
Answer: B,D
NEW QUESTION 17
A married couple have equal shares in a property and are insured under a buildings insurance policy. What is the likely position in law of a breach of good faith by one party, which was unknown to the other party?
- A. Cover for both parties would be invalidated as the cover is likely to be a joint policy.
- B. Cover would be maintained in full for the innocent party as the cover is likely to be a composite policy.
- C. Cover for both parties would be invalidated as the cover is likely to be a composite policy.
- D. Cover would be maintained in full for the innocent party as the cover is likely to be a joint policy
Answer: A
NEW QUESTION 18
The test of the materiality of facts in an insurance contract is defined according to the opinion of a
- A. reasonable person.
- B. diligent broker.
- C. prudent underwriter.
- D. honest proposer.
Answer: C
NEW QUESTION 19
According to statute, a term under a consumer personal accident insurance policy may potentially be considered unfair if the insurer
- A. provides coverage that is more restrictive than that of other insurers.
- B. requires notification of a claim within a very short time period.
- C. applies a specific exclusion within the policy wording.
- D. imposes a premium loading.
Answer: B
NEW QUESTION 20
Ambiguous terms in a household insurance contract are generally construed against the
- A. policyholder due to the literal rule.
- B. insurer due to the ejusdem generis rule.
- C. policyholder due to the noscitur a sociis rule.
- D. insurer due to the contra proferentem rule.
Answer: D
NEW QUESTION 21
For this question more than 1 option is correct. You must select all the correct options to gain the mark. How may double insurance arise?
- A. The inadvertent non-cancellation of a policy when a new policy is taken out.
- B. A deliberate attempt to obtain the proceeds of two policies.
- C. An overlap in cover between two different types of insurance policy.
- D. A merger between two major insurance companies.
Answer: B,C
NEW QUESTION 22
A person insures her own life under a life insurance policy but does so expressly for the benefit of another. To facilitate this, which type of arrangement is most commonly established?
- A. Coinsurance.
- B. Lien.
- C. Trust.
- D. Power of Attorney.
Answer: C
NEW QUESTION 23
At what stage is insurable interest required for a marine cargo insurance policy?
- A. At the time of the loss only.
- B. Throughout the duration of the contract.
- C. At both inception of the policy and at the time of the loss.
- D. At inception of the policy only.
Answer: A
NEW QUESTION 24
For this question more than 1 option is correct. You must select ail the correct options to gain the mark.
In what circumstances does the Fires Prevention (Metropolis) Act 1774 require insurance companies to ensure that claims monies are used to rebuild or reinstate buildings destroyed or damaged by fire?
- A. Where the building was destroyed by an explosion.
- B. Upon the request of any person(s) interested in the buildings.
- C. Where there is underinsurance.
- D. When fraud or arson by the insured is suspected.
Answer: B,D
NEW QUESTION 25
As a result of a breach of good faith under a commercial insurance policy, the insurer avoided the policy as a whole, but was NOT permitted to retain the premium because
- A. the premium was paid by monthly installments.
- B. the misrepresentation was innocent.
- C. no claim had been submitted or paid.
- D. the misrepresentation was fraudulent.
Answer: B
NEW QUESTION 26
A breach of warranty under the general law of contract legally entitles an injured party to
- A. claim damages.
- B. obtain specific performance.
- C. avoid the contract ab initio.
- D. avoid the contract from the date of the breach.
Answer: A
NEW QUESTION 27
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. £9,000,000
- C. £10,000,000
- D. £5,000,000
Answer: B
NEW QUESTION 28
A property policy contains a condition regarding prompt loss notification. If the insured fails to comply with this condition, in practice, the insurer is likely to
- A. settle the claim and recover its outlay from the insured.
- B. only avoid the claim if the delay has seriously prejudiced its investigation and handling of the claim.
- C. avoid the claim automatically due to the breach of the policy condition.
- D. settle the claim and cancel the insurance policy from inception.
Answer: C
NEW QUESTION 29
In respect of a life assurance policy, the duty to take reasonable care NOT to make a misrepresentation ends when the proposer
- A. assigns the contract to a third party.
- B. dies and his estate submits a claim to the insurer.
- C. forms the contract with the insurer.
- D. signs and submits the completed proposal form to the insurer.
Answer: C
NEW QUESTION 30
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 an express term in reaching or recording an agreement?
- A. It will usually override any implied term which conflicts with it.
- B. It may be oral or in writing.
- C. It must be evidenced in documentary form.
- D. It may be implied by conduct.
Answer: A,B
NEW QUESTION 31
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