IF3ExaminationGuide Flashcards
A peril can be defined as: A. a combination of hazards. B. something which gives rise to a loss. C. something which influences the outcome of a loss. D. the subject matter of the insurance.
B. something which gives rise to a loss.
In order to confirm the material circumstances relating to a complicated commercial insurance risk, the underwriter will enlist the services of: A. an actuary. B. a compliance officer. C. a loss adjuster. D. a risk surveyor.
D. a risk surveyor.
Why are material circumstances important to an insurer?
A. Declaration of material circumstances makes the contract binding.
B. Material circumstances are the sole basis of the premium calculation.
C. Material circumstances determine which perils are covered.
D. Material circumstances may influence the insurer’s judgement.
D. Material circumstances may influence the insurer’s judgement.
Maurice submits a motor insurance proposal form to an insurer for a quotation. In the proposal form, he discloses three previous convictions for motoring offences; two for speeding and one for reckless driving. In terms of hazard, these convictions indicate that Maurice is a: A. good moral hazard. B. good physical hazard. C. poor moral hazard. D. poor physical hazard.
C. poor moral hazard.
When applying for household contents insurance, why might the address of the property be particularly relevant?
A. The address is likely to form part of the rating process.
B. The insurer may wish to check the electoral register.
C. The property may be close to the insurer’s branch office.
D. The property may be subject to a mortgage.
A. The address is likely to form part of the rating process.
Janie has completed a household insurance proposal form to insure the property she has just purchased. In respect of the insurance contract, apart from Janie, who else has a duty of disclosure? A. The estate agent. B. The insurer. C. The mortgage lender. D. The solicitor.
B. The insurer.
An insurer provides Anna with a motor insurance quotation which states that it is valid for 14 days. When is the latest that Anna can accept the quotation?
A. During the 14-day period only.
B. After the 14-day period only.
C. After the 14-day period, for as long as the material circumstances remain unchanged.
D. After the 14-day period, until the quotation is specifically withdrawn by the insurer.
A. During the 14-day period only.
The declaration on a proposal form states that:
A. all disputes in respect of cover will be referred to mediation.
B. the information provided is correct to the best of the proposer’s knowledge and belief.
C. the proposer and the insurer are forming a contract for cover in return for a premium.
D. the proposer has an insurable interest in the property to be insured.
B. the information provided is correct to the best of the proposer’s knowledge and belief.
Under which class of insurance would an insurer ask the proposer for her annual gross profit? A. Business interruption insurance. B. Employers’ liability insurance. C. Money insurance. D. Theft insurance.
A. Business interruption insurance
Insurance Premium Tax applies to most general insurances when the insured risk is located
A. in the UK, excluding Northern Ireland.
B. anywhere in the UK.
C. anywhere in the EU.
D. anywhere in the world.
B. anywhere in the UK.
Insurance premium payment, or a promise to pay the insurance premium, forms which part of an insurance contract?
A. The acceptance made by the insured.
B. The agreement made by the insured.
C. The consideration made by the insured.
D. The offer made by the insured.
C. The consideration made by the insured.
Luke has arranged a household contents insurance policy with a direct insurer and paid the premium, but has NOT received the policy documentation. In the event of a claim, what is Luke’s legal position?
A. A copy of the proposal form will be required before the claim will be considered.
B. He cannot make a claim without producing the policy documentation.
C. Proof of premium payment will be required.
D. The claim will be met subject to the usual claims processes.
D. The claim will be met subject to the usual claims processes.
An employers’ liability insurance policy is rated at £2.50% on declared wages of £100,000. What is the annual premium for the policy before the application of Insurance Premium Tax? A. £250 B. £2,500 C. £25,000 D. £250,000
B. £2,500
When calculating the premium for a large manufacturer’s products liability insurance policy, which factor is most relevant? A. The number of employees. B. The sum insured. C. The turnover. D. The wage roll.
C. The turnover.
When requesting a quotation for standard motor insurance, an individual will usually be asked for A. a copy of his driving licence. B. a copy of the log book. C. his previous claims history. D. proof of the vehicle’s value.
C. his previous claims history.
An insurer provides a quotation for motor insurance, which is valid for 14 days, on a vehicle with a
1.4 litre engine. On day 10, the proposer changes the vehicle to one with a 1.6 litre engine and accepts the original quotation the following day. What is the insurer’s legal position?
A. The insurer is bound to honour the original quotation.
B. The insurer is bound to honour the original quotation, but may charge an additional premium.
C. The insurer is not bound to honour the original quotation, unless the proposer submits a new proposal form.
D. The insurer is not bound to honour the original quotation.
D. The insurer is not bound to honour the original quotation.
Which document forms the legal basis of a motor insurance contract? A. The certificate of insurance. B. The policy. C. The proposal form. D. The quotation.
C. The proposal form.
An insurer calculates household insurance premiums on the basis of 2% for the initial £100,000 of the sum insured and £1.30 per mille for any additional sum insured above £100,000. Excluding Insurance Premium Tax, what will be the premium for a sum insured of £150,000? A. £2,065 B. £2,650 C. £4,950 D. £6,700
A. £2,065
If an insured is allowed to pay his insurance policy premium by instalments, what is the method that is normally used by an insurer to collect the agreed premium? A. Direct debit. B. Post-dated cheques. C. Regular credit card payments. D. Standing order.
A. Direct debit.
Which part of an insurance policy contains a detailed account of the extent of cover? A. The heading. B. The operative clause. C. The recital clause. D. The schedule.
B. The operative clause.
Under a general insurance policy, why are war and its consequences excluded?
A. It is beyond the capacity of an individual insurer.
B. It is considered to be a speculative risk.
C. It is considered to be the responsibility of the State.
D. It would be against public policy to cover it.
C. It is considered to be the responsibility of the State.
A clothes manufacturer has a theft insurance policy which contains a requirement from the insurer that the manufacturer will keep a security guard at the premises from 6pm to 6am, 7 days a week. This undertaking is known as
A. a condition precedent to the contract.
B. an express warranty.
C. an implied warranty.
D. a representation.
B. an express warranty.
A company obtains a quotation for engineering insurance which states that cover is subject to a deductible of £50,000. This means that
A. a deposit premium of £50,000 is required.
B. any claim over £50,000 would be paid in full.
C. all claims are subject to a maximum payment of £50,000.
D. the company would be liable for the first £50,000 of any claim.
D. the company would be liable for the first £50,000 of any claim.
An exclusion that applies to only part of an insurance policy is known as a A. general exception. B. market exception. C. market specific exception. D. specific exception.
D. specific exception.
What policy condition allows the insurer to take over and deal with the recovery of monies from a negligent third party, prior to the settlement of any claim, in the name of the policyholder? A. Cancellation. B. Contribution. C. Notification. D. Subrogation.
D. Subrogation.
Samantha has a personal accident insurance policy that provides a temporary total disablement benefit of £200 per week. The policy has a compulsory one week excess. If Samantha breaks her ankle in a riding accident and is disabled for six weeks, how much benefit will she receive? A. £200 B. £600 C. £1,000 D. £1,200
C. £1,000
In which part of the UK will insurers NOT cover damage caused by a riot? A. England. B. Northern Ireland. C. Scotland. D. Wales.
B. Northern Ireland.
Under a contract of insurance, good faith is an example of A. an arbitration condition. B. an express warranty. C. an implied condition. D. a written representation.
C. an implied condition.
Why is there a contractual liability exclusion under all general insurance policies?
A. Contractual liability extends an insured’s position beyond the common law position.
B. Contractual liability should be specifically insured elsewhere.
C. The exclusion limits an insurer’s liability to a proportion of any claim with any other insurer that also excludes the risk.
D. The exclusion provides an insurer with recovery rights against its own insured.
A. Contractual liability extends an insured’s position beyond the common law position.
In which part of a standard household insurance policy will details of the risk address be found? A. The operative clause. B. The policy conditions. C. The policy schedule. D. The recital clause.
C. The policy schedule.
