EO5 mock- 2018-2019

Question 1

The final court of appeal for a number of common wealth countries is the:

A. Crown court
B. High court
C. Judicial Committee of The Privy Council
D. Supreme Court

Answer 1

C. Judicial Committee of the Privy council

Question 2

The Marine Insurance Act 1906 is an example of:

A. A codifying act
B. Delegated Legislation
C. Internal Legislation
D. A retrospective Act

Answer 2

B. A codifying act

Question 3

A ‘litigation friend’/ ‘next friend’ is someone who is responsible for litigation awards awarded against a claimant who is a:

A. Bankrupt
B. Company
C. Partnership
D. Minor

Answer 3

D. Minor

Question 4

One of the requirements of the rule in Ryland V. Fletcher to operate, is that there must be:

A. A defamatory statement
B. Fault or negligence by the defendant.
C. A negligent misstatement.
D. A non natural use of the land by the defendant.

Answer 4

D. Non natural use of the land by the defendant.

Question 5

For which tort is the claimant never required to prove that he has suffered loss or damage?

A. Negligence
B. Nuisance
C. Slander
D. Trespass

Answer 5

D. Trespass

Question 6

Katies mother brought her an iron, which turned out to be defective and caused a fire. It resulted in damage to Katy’s personal property amounting to £500 and also caused severe burns to Katy’s right hand. In order to achieve a recovery at law, which legal action should be pursued?

A. Katy’s mother should sue the seller in tort based on the principal of negligence.
B. Katy should sue her mother based on the principle of vicarious liability
C. Katy should sue the manufacturer based on the provisions of the consumer protection act 1987.
D. Katy should sue the seller for breach of contract in selling a defective electrical product.

Answer 6

C. Katy should sue the seller based on the provisions of the consumer protection act 1987.

Question 7

An insurance policy would automatically be illegal and void if it is:

A. An employers liability policy for a company without employees.
B. A house hold contents policy covering a gun collection.
C. A life assurance policy taken out by a person who has no insurable interest in the life insured.
D. A marine cargo policy taken out by a person who is not the owner of the cargo.

Answer 7

C. A life insurance policy taken out by a person who has no insurable interest in the life insured.

Question 8

With regard to formation of a contract, consideration must always be a:

A. benefit to the person receiving it or a detriment to the person giving it.
B. Detriment to the person receiving it or a benefit to the person giving it.
C. Benefit to both
D. Detriment to both

Answer 8

A. Benefit to the person receiving it or a detriment to the person giving it.

Question 9

Adam had a contract with a specialist storage company to store some valuable paintings but damp storage conditions resulted in damage to the paintings. Although Adams contract did not expressly state the storage requirements had to be suitable, he successfully sued the storage company on the basis that the contract terms were implied

A. by custom
B. By EU regulation
C. In fact
D. In law

Answer 9

C. In fact

Terms implied in fact are those which are not usually stated but are assumed to be intended by the parties.
This may sometimes be known as an implied term
The contract would be commercial nonsense without it.

Question 10

An Insurance Broker grants cover to a 21 year old proposer. However, the brokers authority is restricted to drivers aged 23 and over. What basis, if at all, is the insurer bound to cover the 21 year old?`

A. Agency by estoppel
B. Apparent authority
C. Implied actual authority
D. The insurer is not bound.

Answer 10

B. Apparent authority.

4F - Apparent/ostensible authority.

When a third party deals with an agent. they will often not be aware of the extent of the agents authority.

They are, therefore, bound to rely on what appears to be the authority of the agent. The law recognises this as ‘apparent authority’.

The principal is bound by the acts that are within the actual authority and also any acts for which the agent appears to have authority.

Question 11

Whilst Tim was on holiday, unknown to him, his agent made a contract on his behalf. Tim is happy to ratify the contract but he does want to ratify a minor term. The service under the contract is scheduled to be carried out in the next week. What is the legal position regarding ratification?

A. Tim cannot ratify the contract as it was made without his knowledge
B. Tim cannot ratify the contract excluding the minor term as the whole contract must be ratified
C. Tim can ratify the contract and change the term as it is only minor.
D. Tim can ratify the contract and change the minor term if this is done within reasonable time.

Answer 11

B. Tim cannot ratify the contract excluding the minor term as the whole contract must be ratified.

Question 12

Alice acted as an agent for Ted in a house clearance sale and has successfully claimed commission by implied agreement. What does this indicate about commission?

A. It was agreed as it was based on verbal agreement
B. It was agreed as it was detailed in an agency contract
C. It was not agreed but Alice had a lien on Ted’s property
D. It was not agreed, but Alice’s work was in her usual line of business for which she would normally be paid.

Answer 12

D. It was not agreed, but Alice’s work was in her usual line of business for which she would usually be paid.

Question 13

In respect of consumer contracts the practical application of utmost good faith means that the;

A. Broker has a duty to the proposer to find the widest coverage at the best price.
B. Insured and the Insurer have a duty of confidentiality regarding contract information.
C. Proposer and the broker have a joint duty to disclose all material facts relating to the contract.
D. proposer and the insurer have a duty to deal honestly and openly in negotiations leading to the formation of the contract.

Answer 13

D. The proposer and the insurer have a duty to deal honestly and openly in negotiations leading to the formation of the contract.

Question 14

Stuart has a joint mortgage with his wife at £60,000 and a personal loan of £5,000, but no other debts. How much insurable interest does his wife have in his life?

A. A maximum of £30,000.
B. A maximum of £60,000.
C. A maximum of £65,000
D. An unlimited amount.

Answer 14

D. An unlimited amount.

Question 15

A proposer for a property insurance did not inform the insurer that his business premises were protected by a burglar alarm. What are the implications, if any, of this omission once the insurer is on risk and the premium is paid?

A. None, as it is a factor which lessons the risk.
B. The insurer is obliged to refund a proportion of the premium.
C. The insurer can avoid the policy, but must refund the premium.
D. The insurer is obliged to quote revised terms to the proposer.

Answer 15

A. None, as it is a factor which lessons the risk.

Question 16

When effecting a household contents policy, the proposer deliberately provided the insurer with misleading information and so the insurer avoided the policy. In what circumstances, if any, is the insurer obliged to return the premium to the policyholder.

A. In no circumstances.
B. The premium exceeds a de minimis amount
C. The premium was paid on the day of the policy period.
D. Retaining the premium would be unfair to the policy holder.

Answer 16

D. If retaining the premium would be unfair to the policy holder.

(In consumer insurance only)

Question 17

Under English Law, the right to insure the life of another person arises if there is:

A. The consent of the Law Commission.
B. The consent of the life assured.
C. A financial relationship recognised at law.
D. A relationship characterised by a close bond of natural affection.

Answer 17

C. When there is a financial relationship recognised at law.

Question 18

The Consumer Insurance (Disclosure and Representations) Act 2012 abolished the duty of disclosure for consumer insurance. A consumers duty is now to take reasonable care not to make a:

A. Fraudulent statement.
B. Misrepresentation.
C. Qualifying disclosure.
D. Representation.

Answer 18

B. Misrepresentation

Question 19

Under English Law, an element of statutory control over the wording of consumer insurance policies is imposed by the:

A. Consumer Insurance (disclosure and Representations) Act 2012.
B. Consumer Protection Act 1987
C. Consumer Rights Act 2015
D. Unfair Contract Terms Act 1977

Answer 19

C. Consumer Rights Act 2015.

Terms in non consumer contracts are governed by the Unfair Contract Terms Act 1977 but in consumer contracts are governed by the Consumer Rights Act 2015

Question 20

To what extent, if any does the duty of good faith apply to Employers Liability Insurance?

A. In the same way it does to all other non-consumer insurances.
B. It does not apply as it is a compulsory class of insurance.
C. It only applies at inception of the policy but not at subsequent renewal.
D. It only applies to large companies (over 50 staff)

Answer 20

A. In the same way it does to all other non - consumer insurances.

Question 21

A life insurance policy would automatically be void for illegality if:

A. The insured committed suicide.
B. There is no insurable interest.
C. The premium had not been paid.
D. The insurer became insolvent.

Answer 21

B. If there was no insurance interest.

Question 22

The contractual term stating that a life insurance policy will not come into effect until the premium is paid is an example of:

A. A condition precedent to contract.
B. A condition precedent to liability.
C. A continuous warranty.
D. An implied warranty.

Answer 22

A. A condition precedent to contract

7B - If a condition precedent is never fulfilled, the contract never comes into existence)

Question 23

Why may an insurer insert a continuing warranty into an insurance policy?

A. To avoid paying a loss if it is caused by a peril stated in the policy.
B. To enable an insurer to charge an additional premium if the warranty is breached.
C. To ensure that a full sums insured is declared to avoid underinsurance.
D. To ensure that measures are taken to improve risk management.

Answer 23

D. To ensure that measures are taken to improve risk management.

7B - Continuing warranties are often applied by insurers to ensure that good housekeeping/risk management is observed by the insured.

Question 24

When an insured breaches a suspensive condition, for how long is the policy cover invalid?

A. It is never invalid, but the insurer is entitled to damages.
B. It is valid on the condition that the insured describes the risk in reasonable time.
C. It is invalid only for the period that the insured continues to breach a condition.
D.It is permanently invalid as the policy is terminated from the date of the breach.

Answer 24

C. It is invalid only for the period that the insured continues to breach a condition.

Question 25

Two policies were incepted and both were in joint names. Policy X was arranged by a lessor and lessee and policy Y was taken out by a married couple who have equal share in their home.
What are the likely types of policy X and Y?

A. Policy X is composite and Y is joint.
B. Policy X is joint and Y is composite.
C. Both policy X and Y are composite.
D. Both policy X and Y are joint.

Answer 25

A. Policy X is composite and Y is joint.

Question 26

A clause in a company’s professional liability policy enables the insurer to avoid paying for any losses when an insured admits responsibility for the loss. The type of clause is:

A. A condition precedent to contract
B. A condition precedent to liability
C. An express warranty
D. An implied warranty

Answer 26

B. A condition precedent to liability.

Question 27

A warranty in a household buildings insurance states that the chimney of the property should be professionally swept every year prior to winter use. A loss occurs as a result of sever winds and the chimney is damaged. How is the insurer legally entitled to respond to the claim for property damage to the chimney if the insured has breached the warranty?

A. Avoid the claim but keep the policy in force.
B. Reduce the claim payment pro rata.
C. Reject the claim and terminate the policy.
D. Settle the claim in full.

Answer 27

D. Settle the claim in full.

7B4B ‘if a loss occurs and the term has not been complied with, the insurer cannot rely on non-compliance to exclude, limit or remove liability if the insured can show that the non- compliance ‘could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred’.

if the warranty applies to a loss of a particular kind, or loss at a particular location or time, s.11 will apply. If the insured can show that the breach did not increase the risk of the loss that occurred, they should be able to claim under the policy (this is stated in s.11(4)) despite the non-compliance with the warranty.

Question 28

A policy holder has a fire insurance policy which excludes storm and other perils. A fire broke out due to faulty machinery. At the same time, a violent storm blew the roof off the buildings and caused a power cut so that the fire alarm didn’t operate. This led to more serious fire damage than what would have occurred otherwise.
For what damage, if any, would the fire insurers be liable?

A. The fire damage only.
B. The fire damage only less a reduction for the fire alarm being non-operational.
C. The fire damage and the storm damage as they are concurrent causes.
D. No damage.

Answer 28

A. The fire damage only.

8C4 - Concurrent causes
Where the perils are independent (in the sense that one did not lead to the other) and either one would have caused some loss without the other, the insurers are simply liable for that part of the loss attributable to whichever peril is insured. So, , if the policy covered fire but excluded storm the insurers would be liable for the fire damage but not for the storm damage. In some cases, of course, it may be difficult to say how much damage would have been caused by the insured peril alone - this is looked at later in 8C4

Question 29

Joe has been injured in a motor accident. Under section 151 of the RTA 1988, he has the right to make a direct claim against the insurer of the negligent driver, sally if he:

A. Is a minor and has no contractual capacity.
B, Has an unsatisfied court judgement against sally.
C. Has already had a claim against the Motor Insurance Bureau rejected.
D. Was wearing a seatbelt at the time of the accident and no contributory negligence applies.

Answer 29

B. If he has an unsatisfied court judgement against sally.

8A4 - The right to make a direct claim under section 151 of the RTA 1988 arises where;

1) The accident victim has obtained a judgement against the negligent driver (the court has ordered the driver to pay compensation to him)
2) The driver has failed to satisfy the judgement within 7 days.

Question 30

If an insurance claim is disputed and causation is an issue, what approach will a court take when looking to identify the proximate cause of the loss?

A. It will accept the decision of the jury as guided on points of law by the judge.
B. It will follow decisions made by the international courts.
C. It will rely on the common understanding of causation by a normal person.
D. It will require proof of causation by scientific and or technical means.

Answer 30

C. It will rely on the common understanding of causation by a normal person.

Question 31

Dan’s insurer identified fire as the proximate cause of his insurance claim although the loss resulted from a series of perils. This indicates the insurer has judged that the fire must be:

A. The only insured peril.
B. The most dominant of the perils.
C. The first series of perils.
D. The last of the series of perils.

Answer 31

B. The most dominant of perils.

Question 32

Ians speedboat suffered damage during a storm. The insurer identified that a design fault on the boat was the second and concurrent cause of the damage. Neither the storm or the design fault would have caused the loss on its own. Ians marine policy provided cover against the storm but the design fault was uninsured. How, it at all would Ians insurer be liable for the claim?

A. They would be liable for one half.
B. They would be liable in full.
C. They would only be liable for the portion of the claim caused by the storm.
D. They would not be liable at all.

Answer 32

B. They would be liable in full

Question 33

Harry owns a vintage car which he insures on an agreed value basis. An expert valuation was accepted at inception. When the car was subsequently written off, why did harry receive less than indemnity?

A. A loss adjuster appointed by the insurer subsequently disputed the experts valuation.
B. An equivalent replacement was available at a lower price.
C. The market value of an equivalent car had decreased.
D. The market value of an equivalent car had increased.

Answer 33

D. The market value of an equivalent car had increased.

9C2C - Variations in the principal of indemnity

“Under an agreed valued policy, the insurers must pay the agreed value regardless of the actual value at the time of the loss, even if they can prove beyond doubt that the value of the property has declined since the insurance was opened. The insured may receive more than indemnity , but may also receive less than indemnity if the value has increased.

Question 34

When Fred’s Yacht ran aground on rocks, but was not totally destroyed, he abandoned his rights to the yacht to his insurer but did not serve a formal notice of abandonment on the insurer. If Fred submits a claim, the insurer is entitled to classify it as:

A. An actual total loss.
B. A constructive total loss.
C. Partial loss.
D. Salvage

Answer 34

C. A partial loss.

9E1A - If no such notice is served, the insured is deemed to have suffered a partial loss and may only claim for this.

If a notice is served, this would be a constructive total loss (they would then be paid for a total loss)

Question 35

Which type of insurance cannot have its annual limit of indemnity exhausted by a series of partial losses?

A. Employers liability
B. Motor third party liability
C. A theft cover on stock
D. Products liability policy.

Answer 35

B. Motor third party liability.

Question 36

Following the case of Lister V. Romford ice and Cold Storage Ltd (1957), insurers generally agreed to:

A. Give up their subrogation rights agains workers who negligently injure their fellow employees in the course of employment.
B. Pursue subrogation rights against directors on the grounds of vicarious liability.
C. Use the independent liability method for the calculation of subrogation.
D. Waive their rights of subrogation between subsidiary and associated companies of the insured.

Answer 36

A. Give up their subrogation rights against workers who negligently injure their fellow employees in the course of employment.

Question 37

Tina has an insurance policy which contains a contribution known as an escape clause. She takes out a second policy with another insurer, but despite the cover under the two policies overlapping, the original policy is to avoided using the escape clause. This is because:

A. Both policies have an escape clause so they both contribute equally.
B. Statute Law prohibits the use of escape clauses.
C. Tina has notified both insurers of the double insurance.
D. Tina has obtained the consent of her insurers.

Answer 37

D. Tina has obtained the consent of both the insurers,

Question 38

An insurer is entitled to make profit following an insured loss when:

A. The property is abandoned by the insured.
B. Contribution is received from another insurer.
C. Subrogation rights are exercised.
D. Settlement is by way of indemnity.

Answer 38

A. The property is abandoned by the insured.

Question 39

Two policies with different insurers cover the same loss of £12,000. The limit of indemnity is £20,000 under policy X and £40,000 under policy Y. Neither policy is subject to average or has a non contribution clause, but policy X is subject to a £4,000 excess. What amount will policy X contribute towards the claim payment.

A. £2,000
B. £4,000
C. £4,800
D. £7,200

Answer 39

C. £4,800.

10H - independent liability method.

Question 40

An insurer has paid a policy holder for fire damage to his home caused by an electricians faulty work, less the policy excess. How should any subrogation action for damages be brought against the negligent electrician and for what amounts?

A. By the insurer and the insured separately in their own names for the amount of the claim payment and the policy excess.
B. By the insurer only in its own name for the amount of the claim payment only.
C. By the insurer in the name of the insured for the amount of the claim payment only.
D. By the insurer in the name of the insured for the amount of the claim and the excess.

Answer 40

D. By the insurer in the name of the insured for the amount of the claim and the excess.

Question 41

The effect of the European communities act 1972 on statutory interpretation is that English courts must:

A. Adopt a literal approach
B. Adopt a purposive approach.
C. Apply domestic legislation in line with the European community obligations.
D. Take into account judgements from the European court of justice.

Answer 41

B,C,D -

The effect of the European communities act 1972 is that the English courts must:

B. Adopt a purposive approach
C. Apply domestic legislation in line with EU community obligations
D. Take into account judgements from the EU court of justice.

L.O 1.2 - Describe the sources of English law: 1C,1D,1F,1G

Question 42

A 17 year old in full time education can:

A. Be fully responsible for his criminal actions
B. Be a beneficiary of a trust 
C. Be a member of a jury 
D. Make a valid will
E. Own a house

Answer 42

A,B

A. Be fully responsible for his criminal actions
B. Be a beneficiary of a trust

Question 43

Following a motor accident, an insured may be able to claim for special damages for:

A. Damage to clothing.
B. Injury to feelings.
C. Loss of earnings.
D. Medical expenses 
E. Pain and suffering

Answer 43

A, C, D,

A. Damage to clothing,
C. Loss of earnings
D. Medical expenses

Question 44

In contract Law, acceptance of an offer:

A. May be achieved by taking no action
B. May be implied by conduct
C. May vary the terms of the offer
D. Must be made in writing 
E. Must exactly match the terms of the contract

Answer 44

B,E

B. May be implied by conduct
E. Must exactly match the terms of the contract

Question 45

An agency will be automatically terminated:

A. By lapse of time if the agreement was created for a specific period of time.
B. By mutual agreement of the parties.
C By performance of the task specified in the agreement
D. on bankruptcy of the agent.
E. On death of the principal.

Answer 45

A, B, C, E

A. By lapse of time if the agreement was created for a specific period
B. By mutual agreement.
C. By performance of the task specified
E. On death of the principal.

Question 46

Which material circumstances do not need to be disclosed by a manufacturing company in an insurance proposal?

A. Factors which lessen the risk.
B. Details about atrade which the underwriter regularly underwrites.
C. Information which the insurers risk survey should have revealed.
D. Unusual features of a risk that the insurers standard survey would not reveal.

Answer 46

A, B, C

A. Factors which lessen the risk
B. Details about a trade which the underwriter regularly underwrites
C. Information which a risk survey should have revealed.

Question 47

Common law rules for the interpretation of insurance policies include:

A. The application of a technical or legal meaning.
B. Contra proferentum rule
C. Mischeif rule
D. Golden rule.

Answer 47

A, B

A. the application of the technical or legal meaning
B. Contra preferentum rule.

REMEMBER: Mischeif, golden literal rules (noscitur a socis and ejusdem) are a part of statutory interpretation, not insurance policies.

Question 48

What legal remedies, are available to an insured who has suffered a loss as a result of an insurers unreasonably late payment of a claim?

A. contractual damages
B. Interest on any sums due under a policy
C. Punitive damages
D. Specific performance.

Answer 48

A, B.

A. Contractual damages
B. Interest on any sums due.

Question 49

Which insurance terms and conditions can reduce a policy holders entitlement to a full indemnity following a loss?

A. An average clause
B. An insuring clause.
C. A policy excess
D. a subrogation clause.

Answer 49

A, C

A. An average clause
C. A policy excess

Question 50

An insurers subrogation rights may arise

A. Following an ex gratia payment 
B. In contract 
C. In tort 
D. under estoppel 
E. under statute.

Answer 50

B, C, E

B. In contract
C. In tort
E. under statute