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Q12. What is the primary purpose of the Duty of Disclosure in an insurance contract?

To ensure that both parties understand the terms of the contract

To ensure the insurer is able to assess the risk involved in underwriting the policy

To protect the insurer from financial instability

To allow the policyholder to choose the terms of coverage

Q13. For this question more than 1 option is correct. You must select all the correct options to gain the mark. What are the main sources of new English Law?

International treaties.

Case law.

Legislation.

Official law reports.

Q14. Under the principle of indemnity, what is the objective of an insurance contract?

To ensure the insured profits from the loss

To restore the insured to the same financial position they were in before the loss

To protect the insurer from fraudulent claims

To ensure the insured receives full compensation for their loss regardless of the circumstances

Q15. When completing a proposal form, Tom declares that he has two spent speeding convictions. How, if at all, will the spent convictions affect an underwriter’s decision to write the risk?

They will not be considered as this is not an underwriting factor in motor insurance risk assessment.

They will only be considered if Tom had a further speeding conviction in the last 12 months.

They will be ignored in accordance with the provisions of the Rehabilitation of Offenders Act 1974.

They will be classed as relevant information and will affect the premium.

Q16. Under insurance law, what is the effect of a fraudulent claim on an insurance policy?

The policyholder may still receive a partial payout

The insurer is required to pay the claim regardless of the fraud

The insurer may cancel the policy and deny the claim

The policyholder must repay any claim payments made previously

Q17. In the context of an insurance claim, what does the principle of subrogation refer to?

The insured’s right to receive compensation up to the value of their loss

The insurer’s right to pursue a third party responsible for the loss

The insurer’s right to reduce the claim payout

The insured’s obligation to provide all relevant documents to the insurer

Q18. Fran is self-employed and works from home. She uses her spare bedroom as an office and separately insures her computer, photocopier and other items of office equipment. She occasionally uses the equipment for personal use. Under the Consumer Insurance (Disclosure and Representations) Act 2012. in relation to insuring this equipment, she would be defined as a

consumer because she is an individual.

consumer because she is working from home rather than on business premises.

non-consumer because her insurance cover is mainly for business use.

non-consumer because the items covered are not household items.

Q19. When, if at all, does the duty of fair presentation of a risk apply after a non-consumer insurance contract has been formed?

From the date of a breach of warranty.

It does not apply as the duty is to take reasonable care not to make a misrepresentation.

Where there is a variation in the insured risk.

On submission of a claim.

Q20. What is the most common for of corporation?

Registered corporation.

Chartered corporation.

Corporation sole.

Statutory corporation.

Q21. Which of the following terms in an insurance policy is typically enforceable in a court of law?

Representations

Warranties

Conditions precedent

Exclusions

Q22. In a chain of events, the proximate cause of a loss is always the

only event contributing towards the loss.

last event before the loss occurs.

dominant event leading to the loss.

only event which is not excluded by the terms of the policy.

Q23. In the context of insurance law, who is considered a third-party claimant?

The policyholder who initiates a claim

A family member of the policyholder

A person who suffers a loss or injury caused by the policyholder’s actions

An insurance broker acting on behalf of a client

Q24. In the context of insurance, what does “utmost good faith” (uberrimae fidei) require?

Both parties must fully disclose all relevant information

The insurer must offer the policyholder the best possible coverage

The policyholder must always pay premiums in advance

The insurance contract must be written in simple, easy-to-understand language

Q25. Ambiguous terms in a household insurance contract are generally construed against the

policyholder due to the literal rule.

policyholder due to the noscitur a sociis rule.

insurer due to the contra proferentem rule.

insurer due to the ejusdem generis rule.

Q26. Which of the following is an example of a condition precedent in an insurance contract?

A policyholder’s obligation to make premium payments

The insured’s duty to disclose any material changes in their circumstances

The insurer’s requirement to pay claims within a specific period after notification

A policyholder’s agreement to not engage in fraudulent behavior

Q27. Which of the following statements is true regarding exclusions in an insurance policy?

Exclusions are added to increase the risk of the insurer

Exclusions are always inapplicable if the insured pays extra for coverage

Exclusions limit the scope of coverage, specifying situations that are not covered

Exclusions apply only if the loss is caused by fraud

Q28. 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

an express term.

a continuing warranty.

an exception clause.

a basis of the contract clause.

Q29. A breach of warranty under the general law of contract legally entitles an injured party to

claim damages.

avoid the contract from the date of the breach.

obtain specific performance.

avoid the contract ab initio.

Q30. 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?

3 years.

6 years.

9 years.

15 years.

Q31. John owns stock that he intentionally insured for £15,000, although the full value of the stock is £18.000. His insurance policy has no excess and is subject to a pro rata condition of average. In the event of water damaging £6.000 of John’s stock, how much will the insurer pay for a valid claim after the application of average?

£3,000

£5,000

£6,000

£15,000

Q32. What does the Consumer Insurance (Disclosure and Representations) Act 2012 require from consumers applying for insurance?

Consumers must disclose all material facts honestly and accurately.

Consumers must answer questions about their past claims history.

Consumers are required to pay for claims made during the policy term.

Consumers must choose an insurer based on premium prices alone.

Q33. What is the intended purpose of a subrogation waiver clause in an insurance po

The doctrine of subrogation is excluded from the policy.

The insured has a duty to ensure that the insurer’s subrogation rights are maintained.

Cover is suspended whilst the insurer pursues an action for subrogation.

The insurer’s subrogation rights will not be exercised against certain parties associated with the insured.

Q34. A proposer for household insurance completes and submits an online application. When the insurer’s website responds with a quotation based on the application, the quotation is most likely to be legally regarded as:

an invitation to treat

an offer

an acceptance of an offer

a counter offer

Q35. Which of the following is a characteristic of a contract of insurance?

It is always a contract of adhesion

It requires both parties to meet in person

It involves a promise of a return on investment

It must be written in a formal language

Q36. An employee suffered a minor injury lo his arm at work, due to a breach of duty by his employer. The medical treatment he received at hospital was negligent and caused his minor injury to deteriorate to the extent that his arm had to be amputated. To what extent, if at all, is the employer liable?

The employer will not be liable for the employee’s injuries at all

The employer will be held strictly liable for the full extent of the employee’s injuries

The employer and the hospital will split liability on an equal basis

The employer will not be held liable for the unforeseeable extent of the employee’s injuries