Chapter 3

Question 1

What is the consideration given by insurers when an insurance contract is formed?

Answer 1

An agreement to pay claims in accordance with the terms of the policy.

Question 2

Agency by consent must be?

Answer 2

Expressed or implied.

Question 3

which is an example of a short period insurance contract?

Answer 3

Travel Insurance.

Question 4

where a policy allows the insured to cancel a mid-term term what is the generally accepted norm regarding how any return premium is calculated?

Answer 4

A pro rata return premium should be given

Question 5

under the law of agency, what is an undisclosed principal?

Answer 5

someone for whom an agent acts while seeming to act on their own behalf.

Question 6

what should be included in the premiums and credit section of the insurers TOBA?

Answer 6

The broker’s obligation to release all statutory documentation.

Question 7

Where the parties to a contract have agreed to use the post as a method of communication, when is acceptance of an offer complete?

Answer 7

When the letter of acceptance is posted.

Question 8

Margaret has bought herself a new top-of-the-range sports car. The first insurer she contacts for a quotation offers to cover her at a premium of £975, subject to her having an immobiliser fitted to the vehicle. Margaret confirms that she wants to go ahead with cover on this basis. This is an example of:

Answer 8

unconditional acceptance.

Question 9

In which circumstances is an insurer most likely to invoke the cancellation condition in a home insurance policy?

Answer 9

If the insurer suspects the insured is guilty of fraud in connection with a claim.

Question 10

In which circumstances is an independent intermediary considered to be the agent of the insured?

Answer 10

When giving advice on cover, the placing of insurance or on how to make a claim.

Question 11

One of the duties of an agent to their principal is a duty of good faith. This means that they must:

Answer 11

not allow their own interest to conflict with their duties towards their principal.

Question 12

When a policy is due for renewal, which of the following is an insurer required to do to comply with FCA rules?

Answer 12

Provide appropriate information in good time so that customers can make an informed decision.

Question 13

What is a claimant in regard to legal cases?

Answer 13

The party who brings a civil action in a court of law

Question 14

What is a defendant in regard to legal cases

Answer 14

The party against whom an action is bought in a court of law.

Question 15

What is Contract Law?

Answer 15

An agreement enforceable by law

Question 16

To ensure a valid and enforceable contract is formed an agreement must be?

Answer 16

Offer and acceptance
Consideration

Question 17

Which parties of a contract must act in good faith

Answer 17

All.

Question 18

What is unconditional acceptance?

Answer 18

offer is accepted on the original terms and conditions.

Question 19

what is a conditional acceptance?

Answer 19

where a counteroffer is offered the original offer is rejected.

Question 20

What is consideration?

Answer 20

Each other part of the bargain supports the contract E.G. payment of the premium from the insured.

Question 21

Policy renewal should be offered….

Answer 21

In good time

Question 22

New regulatory rules were introduced by the FCA in April 2017 that requires insurers selling retail general insurance products to…

Answer 22

disclose the previous year’s premiums
include text to encourage consumers to check their cover and shop around
if been with a company for 4 consecutive year encourage that they should be shopping around

Question 23

How many days does a consumer have to cancel for payment protection policies

Answer 23

30 days

Question 24

Which policy can an insurer not charge for a cancelation

Answer 24

Payment protection Contract

Question 25

What did the Deregulation Act 2015 Change?

Answer 25

Policy cancelled mid term the policyholder is no longer required to return the certificate.

Question 26

What is fulfilment?

Answer 26

The total loss of a subject matter , meaning the contract is automatically terminated.

Question 27

What is a breach of warrenty?

Answer 27

According to the Marine Insurance, Act 1906 is an insurance contract that must be exactly and literally complied with whether material to the risk or not.

Question 28

What did the Insurance Act 2015 change in regard to a breach of warranty?

Answer 28

cover will be suspended from the time of the breach until the breach has been remedied.

Question 29

Under the Insurance Act if a fraudulent claim is made the insurer is….

Answer 29

Not liable to pay a claim
can recover any amount already paid for the claim
choose to terminate the contract from the date of the fraudulent act

Question 30

If the insurer chooses to terminate a contract due to a fraudulent claim it can…

Answer 30

Refuse all liabilities occurring after the date of the fraudulent act
not return any premium.

Question 31

What are the 3 methods in which the relationship of a principal and agent can arise

Answer 31

Consent
Necessity
Ratification

Question 32

When can an agency by necessity be created?

Answer 32

when a person is entrusted with someone else’s goods and it becomes necessary to act in a certain way in an emergency.

Question 33

What is Agency by ratification?

Answer 33

When an agent acts without authority, and is acting outside the terms of an agency agreement.

Question 34

an agent of the insured is considered when?

Answer 34

Giving advise on cover
giving advice on how to make a claim

Question 35

What is express Authority?

Answer 35

May be oral or written

Question 36

which following situations would an insurance policy be voidable at the option of the insurer?

Answer 36

Where the insurer discovers that the insured has deliberately failed to disclose two previous claims when taking out a fire policy.