Mixed

Question 1

What two branches of civil law have the most relevance in the context of insurance

Answer 1

Contract & Torts

Question 2

Where are minor civil cases relating to personal injury claims usually dealt with

Answer 2

County Courts

Question 3

What is the standard of care that would be required of a newly- qualified electrician

Answer 3

Standard of the profession

Question 4

Trespass, what is a requirement for a claimant to succeed in an action

Answer 4

Intention

Question 5

Main common law remedy for the tort of nuisance

Answer 5

Unliquidated damages

Question 6

How many years for a for a simple contract to become statue-barred if the action is not in respect of personal injuries

Answer 6

6 Years

3 Years for personal injuries

Question 7

When is a gratuitous promise contractually valid and binding on the promisor

Answer 7

When in the form of a deed

Question 8

How may an agent be able to protect his rights to remuneration and indemnity

Answer 8

By exercising a lien on the principals property

Question 9

Who is responsible if a TP suffers a financial loss of as a result of an agent (of a disclosed principal), knowingly making false statement

Answer 9

The agent and principal

Question 10

Name two key elements of insurance interest that a policyholder must have

Answer 10

Legal interest & Current interest

Question 11

When does life insurance require insurance interest

Answer 11

Only requires insurance interest at the time the contract is made

Question 12

The subject matter of an insurance policy cannot be a future inheritance. True or False

Answer 12

True

Question 13

The final court of appeal for a number of commonwealth countries is the

Answer 13

Judical Committee of the Privy Council

Question 14

The final court of appeal in the UK is

Answer 14

The Supreme Court

Question 15

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 15

A. a condition precedent to contract.

Question 16

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 16

B. there is no insurable interest.

Question 17

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 17

C. Consumer Rights Act 2015.

Question 18

The Consumer Insurance (Disclosure and Representations) Act 2012 abolished the duty of
disclosure in consumer insurance. A consumer’s 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, 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 19

C. a financial relationship recognised at law.

Question 20

When effecting a household contents insurance 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 day one of the policy period.
D. Retaining the premium would be unfair to the policyholder.

Answer 20

D. Retaining the premium would be unfair to the policyholder.

Question 21

A proposer for 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 that lessens 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 21

A. None, as it is a factor that lessens the risk.

Question 22

14. Stuart has a joint mortgage with his wife of £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 22

D. An unlimited amount.

Question 23

In respect of consumer contracts the practical application of the doctrine 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
formation of the contract.

Answer 23

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

Question 24

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 the commission?
A. It was agreed as it was based on a 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 24

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

Question 25

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 change a minor term. The services under the contract are scheduled to be carried out next week. What is the legal position regarding ratification of the contract?
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 a minor term.
D. Tim can ratify the contract and change the minor term if this is done within reasonable time.

Answer 25

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

Question 26

An insurance broker grants cover for motor insurance to a 21-year-old proposer. However, the
broker’s authority is restricted to only granting cover to drivers aged 23 years 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 26

B. Apparent authority.

Question 27

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 Adam’s 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 27

C. in fact.

Question 28

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 the person giving it and the person receiving it.
D. detriment to both the person giving it and the person receiving it.

Answer 28

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

Question 29

An insurance policy would automatically be illegal and void if it is
A. an employer’s liability policy for a company without any employees.
B. a household 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 29

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

Question 30

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 30

D. Trespass.

Question 31

A ‘litigation friend’(‘next friend’) is responsible for litigation costs awarded against a claimant who
is a
A. bankrupt.
B. company.
C. partnership.
D. minor.

Answer 31

D. minor.

Question 32

One of the requirements for the rule in Rylands 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 land by the defendant.

Answer 32

D. a non-natural use of land by the defendant.

Question 33

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. This 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 33

B. a condition precedent to liability.

Question 34

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. This 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 34

B. a condition precedent to liability.

Question 35

A warranty in a household buildings insurance policy states that the chimney of the property should be professionally swept every year prior to winter use. A loss occurs as a result of severe 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 35

D. Settle the claim in full.

Question 36

A policyholder has a fire insurance policy which excludes storm and other perils. A fire broke out
due to faulty machinery overheating. At the same time as the fire, a violent storm blew the roof off
the buildings and caused a power cut so that the fire alarm did not operate. This led to a more
serious fire than 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 36

A. The fire damage only.

Question 37

Joe has been injured in a motor accident. Under section 151 of the Road Traffic Act 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 judgment against Sally.
C. has already had a claim against the Motor Insurers’ Bureau rejected.
D. was wearing a seat belt at the time of the accident and no contributory negligence applies.

Answer 37

B. has an unsatisfied court judgment against Sally.

Question 38

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 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 38

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

Question 39

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

Answer 39

B. most dominant of the perils.

Question 40

Ian’s speedboat suffered damage during a storm. The insurer identified that a design fault on the
boat was a second and concurrent cause of the damage. Neither the storm nor the design fault
would have caused the loss on its own. Ian’s marine insurance policy provided cover against storm
damage but the design fault was an uninsured peril. How, if at all, would Ian’s insurer be liable for
the claim?
A. It would be liable for one half of the claim.
B. It would be liable for the claim in full.
C. It would only be liable for the portion of the claim caused by the storm.
D. It would not be liable for the claim at all.

Answer 40

B. It would be liable for the claim in full.

Question 41

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. The loss adjuster appointed by the insurer subsequently disputed the expert’s 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 41

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

Question 42

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. a partial loss.
D. salvage.

Answer 42

C. a partial loss.

Question 43

hich type of insurance CANNOT have its annual limit of liability exhausted by a series of partial
losses?
A. An employers’ liability policy.
B. Motor third party bodily injury cover.
C. A theft cover on stock.
D. A products liability policy.

Answer 43

B. Motor third party bodily injury cover.

Question 44

Following the case of Lister v. Romford Ice and Cold Storage Ltd (1957), insurers generally agreed to
A. give up their subrogation rights against 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 contribution.
D. waive their subrogation rights between subsidiary and associated companies of an insured.

Answer 44

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

Question 45

Tina has an insurance policy which contains a contribution condition 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 NOT avoided using the escape clause. This is because
A. both policies have an escape clause so they will 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 45

D. Tina has obtained the consent of her insurers.

Question 46

An insurer is entitled to make a 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 46

A. the property is abandoned by the insured.

Question 47

An insurer has paid a policyholder for fire damage to his home caused by an electrician’s faulty
work, less the policy excess. How should any subrogation action for damages be brought against
the negligent electrician and for what amount(s)?
A. By the insurer and the insured separately in their own names for the amount of the claim
payment and the policy excess respectively.
B. By the insurer only in its own name for the amount of the claim payment and the policy excess.
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 payment and the policy
excess.

Answer 47

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

Question 48

The effect of the European Communities Act 1972 on statutory interpretation is that English courts
must

Select which answers

A. adopt a literal approach.
B. adopt a purposive approach.
C. apply domestic legislation in line with European Community obligations.
D. take into account judgments from the European Court of Justice.

Answer 48

B. adopt a purposive approach.
C. apply domestic legislation in line with European Community obligations.
D. take into account judgments from the European Court of Justice.

Question 49

A 17-year-old in full-time education can

Select which answer

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 outright.

Answer 49

A. be fully responsible for his criminal actions.

B. be a beneficiary of a trust.

Question 50

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

Select which answers

A. damage to clothing.
B. injury to feelings.
C. loss of earnings.
D. medical expenses.
E. pain and suffering.

Answer 50

A. damage to clothing.
C. loss of earnings.
D. medical expenses.

Question 51

In contract law, acceptance of an offer

Select which answers

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 offer.

Answer 51

B. may be implied by conduct.

E. must exactly match the terms of the offer.

Question 52

45. An agency will be automatically terminated

Select which answers

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 52

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.
E. on death of the principal.

Question 53

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

Select which answers

A. Factors which lessen the risk.
B. Details about a trade which the insurers regularly underwrite.
C. Information which the insurer’s risk survey should have revealed.
D. Unusual features of a risk that the insurer’s standard survey would not reveal.

Answer 53

A. Factors which lessen the risk.
B. Details about a trade which the insurers regularly underwrite.
C. Information which the insurer’s risk survey should have revealed.

Question 54

47. Common law rules for the interpretation of insurance policies include the

Select which answers

A. application of a technical or legal meaning.
B. contra proferentum rule.
C. mischief rule.
D. golden rule.

Answer 54

A. application of a technical or legal meaning.

B. contra proferentum rule.

Question 55

48. What legal remedies, are available to an insured who has suffered a loss as a result of an insurer’s unreasonably late payment of a claim?

Select which answers

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

Answer 55

A. Contractual damages.

B. Interest on any sums due under the policy.

Question 56

49. Which insurance terms and conditions can reduce a policyholder’s entitlement to a full indemnity following a loss?

Select which answers

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

Answer 56

A. An average clause.

C. A policy excess.

Question 57

50. An insurer’s subrogation rights may arise

Select which answers

A. following an ex gratia payment.
B. in contract.
C. in tort.
D. under estoppel.
E. under statute.

Answer 57

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