M05 Tested & Approved Insurance Law (M05) Study Materials
Validate your Skills with Updated Insurance Law (M05) Exam Questions & Answers and Test Engine
NEW QUESTION # 45
Which of the following is not a typical requirement for the formation of an insurance contract?
- A. An acceptance of the offer
- B. The payment of a premium.
- C. The disclosure of a medical history
- D. An offer to insure
Answer: C
Explanation:
The disclosure of a medical history
Explanation: While disclosure of material facts, such as medical history, is crucial under the principle of utmost good faith, it isnotarequirementfor the formation of an insurance contract. The core requirements are an offer, acceptance, and consideration (premium).
NEW QUESTION # 46
Which of the following is an example of a condition precedent in an insurance contract?
- A. The insured must pay the premium
- B. The insurer must provide coverage for accidental damage
- C. The insured must maintain the insured item in good condition
- D. The insurer is required to pay claims for theft
Answer: C
Explanation:
A condition precedent is an obligation that must be met before the insurer becomes liable for a claim. For example, the insured might need to maintain property in good condition or comply with safety measures before coverage applies.
NEW QUESTION # 47
Which of the following is true regarding the "principle of subrogation"?
- A. It allows the insurer to pursue third parties responsible for the loss
- B. It allows the insured to be compensated twice for the same loss
- C. It means the insurer is entitled to the premium even if the claim is not paid
- D. It prevents the insurer from recovering any costs from a third party
Answer: A
Explanation:
Subrogation allows the insurer to "step into the shoes" of the insured after they pay a claim, allowing them to pursue recovery from any third parties who may be responsible for the loss.
NEW QUESTION # 48
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. Lien.
- B. Power of Attorney.
- C. Coinsurance.
- D. Trust.
Answer: D
NEW QUESTION # 49
The Chancery Division is a division of the:
- A. Magistrates Court.
- B. High Court.
- C. County Court.
- D. Crown Court.
Answer: B
Explanation:
The Chancery Division is one of the three divisions of the High Court in the United Kingdom, dealing with matters such as business law, trusts, and intellectual property.
NEW QUESTION # 50
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 cancel the insurance policy from inception.
- 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 recover its outlay from the insured.
Answer: C
NEW QUESTION # 51
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 must return the claim settlement in exchange for the painting.
- B. Bill may keep the claim settlement and also keep the painting.
- C. Bill may exercise an option to buy the painting back.
- D. Bill must buy the painting back.
Answer: C
NEW QUESTION # 52
In the context of insurance, what does "utmost good faith" (uberrimae fidei) require?
- A. The insurance contract must be written in simple, easy-to-understand language
- B. Both parties must fully disclose all relevant information
- C. The insurer must offer the policyholder the best possible coverage
- D. The policyholder must always pay premiums in advance
Answer: B
Explanation:
The principle of utmost good faith requires both the insurer and the insured to disclose all material facts truthfully. Failure to do so can result in the contract being voided.
NEW QUESTION # 53
Insurance agencies are usually created by way of
- A. deed of agreement.
- B. express agreement.
- C. unilateral agreement.
- D. implied agreement.
Answer: B
NEW QUESTION # 54
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. a person holding a senior position at Liz's bank.
- B. a person holding a dominant position over Liz.
- C. Liz's husband.
- D. Liz's independent financial adviser.
Answer: B
NEW QUESTION # 55
The test of the materiality of facts in an insurance contract is defined according to the opinion of a
- A. reasonable person.
- B. honest proposer.
- C. prudent underwriter.
- D. diligent broker.
Answer: C
NEW QUESTION # 56
A survey of a car repairers reveals a spray booth exists by an unguarded paraffin space beater. Also, a day's supply of paint is kept within the building and waste is removed daily from a metal bin. What will the underwriter perceive as the main physical hazard?
- A. The spray booth.
- B. The unguarded paraffin space heater.
- C. The waste bin.
- D. The paint.
Answer: B
NEW QUESTION # 57
A claimant may possibly recover money transferred under an illegal contract when
- A. the contract is against public policy but not substantive law.
- B. both parties to the contract are equal in wrongdoing.
- C. the illegality makes the contract voidable rather than void.
- D. the legal portion of the contract can be severed from the illega portion.
Answer: B
NEW QUESTION # 58
For this question more than 1 option is correct. You must select all the correct options to gain the mark.
A proposer for private motorcycle insurance carelessly states the motorcycle's engine capacity as 500cc when in fact it is 1500cc. A policy is issued by the insurer on this basis. In the event of a valid claim causing damage to the motorcycle, what potential remedies are available to the insurer under the Consumer Insurance (Disclosure and Representations) Act 2012?
- A. Avoid the contract, refuse all claims and keep the premium.
- B. Reduce the claim amount in proportion to the premium it would have charged.
- C. Apply any terms it would have applied if the misrepresentation had not taken place.
- D. Reject the claim, but maintain the policy.
Answer: B,C
NEW QUESTION # 59
If a proposer has failed to fully answer a question on a proposal form, the insurer is deemed to have waived its rights to this information because it
- A. should be able to underwrite the risk based on the information already provided.
- B. has statistics on similar risks.
- C. does not have the right to ask the proposer for more information.
- D. did not request further information.
Answer: D
NEW QUESTION # 60
Which body represents the solicitors' profession in England and Wales?
- A. Bar Council.
- B. The Law Society.
- C. The Solicitors Regulation Authority.
- D. The Faculty of Advocates.
Answer: B
Explanation:
The Law Society represents the solicitors' profession in England and Wales. It is the professional body for solicitors, providing support, setting standards, and promoting the interests of its members.
TheSolicitors Regulation Authority (SRA)is responsible for regulating solicitors, but it is not the representative body.
NEW QUESTION # 61
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. No one as Tim is not a party to the insurance contract.
- B. The insurer at all times.
- C. Both the insurer and Paul at different times.
- D. Paul as it is a consumer contract.
Answer: B
NEW QUESTION # 62
When, if at all, does the duty of fair presentation of a risk apply after a non-consumer insurance contract has been formed?
- A. From the date of a breach of warranty.
- B. It does not apply as the duty is to take reasonable care not to make a misrepresentation.
- C. On submission of a claim.
- D. Where there is a variation in the insured risk.
Answer: D
NEW QUESTION # 63
What is the role of a condition precedent in an insurance policy?
- A. It is a requirement that must be met before the insurer is liable for a claim
- B. It outlines exclusions from coverage
- C. It defines the scope of coverage for the policyholder
- D. It ensures that the insurer will cover all risks associated with a policy
Answer: A
Explanation:
A condition precedent refers to a requirement that must be met before an insurer is obligated to pay a claim.
Failure to meet this condition can result in the insurer not being liable.
NEW QUESTION # 64
What principle requires that both the insurer and insured disclose all material facts to each other before and during the contract?
- A. The principle ofsubrogation
- B. The principle ofindemnity
- C. The principle ofcontribution
- D. The principle ofutmost good faith (uberrimae fidei)
Answer: D
Explanation:
Explanation: Under the principle ofutmost good faith, both parties in an insurance contract are required to disclose all material facts that may influence the other party's decision to accept or reject the policy or determine the premium. This obligation exists both before and during the contract.
NEW QUESTION # 65
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?
- A. They will be classed as relevant information and will affect the premium.
- B. They will be ignored in accordance with the provisions of the Rehabilitation of Offenders Act 1974.
- C. They will not be considered as this is not an underwriting factor in motor insurance risk assessment.
- D. They will only be considered if Tom had a further speeding conviction in the last 12 months.
Answer: B
NEW QUESTION # 66
In the context of an insurance claim, what does the principle of subrogation refer to?
- A. The insurer's right to reduce the claim payout
- B. The insurer's right to pursue a third party responsible for the loss
- C. The insured's right to receive compensation up to the value of their loss
- D. The insured's obligation to provide all relevant documents to the insurer
Answer: B
Explanation:
Subrogationis the principle that allows the insurer to step into the shoes of the insured and pursue any third party responsible for causing the loss. This helps the insurer recover the claim amount paid out to the insured.
NEW QUESTION # 67
Fred knew Susie wanted to sell her car. On behalf of Susie, Fred agreed the sale of the car to Tina for £5.000.
That evening, Susie ratified Fred's agreement with Tina The next day. Tina decided NOT to proceed with the purchase What is Susie's legal position in these circumstances?
- A. She can sue Tina for breach of contract.
- B. She has no legal right to sue.
- C. She can sue both Fred and Tina jointly for breach of good faith.
- D. She can sue Fred for breach of agency agreement.
Answer: B
NEW QUESTION # 68
......
M05 [Sep-2025] Newly Released] M05 Exam Questions For You To Pass: https://examsforall.actual4dump.com/CII/M05-actualtests-dumps.html