Mock exam Flashcards
If more than one peril has caused a loss and one of those perils is excluded from risks insured under
the policy, it is necessary to establish the
A. contributing factor of the loss.
B. initial cause of the loss.
C. last cause of the loss.
D. proximate cause of the loss.
D proximate cause of the loss.
The failure of an insured to notify the police in the event of a theft from its premises will most likely cause its household insurer to A. cancel the theft cover. B. cancel the whole policy. C. reduce the amount of the settlement. D. refuse to pay the claim
D refuse to pay the claim
- Most household insurance policies require that claims are notified to them
A. after the insured’s costs have been calculated.
B. as soon as reasonably possible.
C. within 14 days of the loss.
D. within 30 days of the loss.
B. as soon as reasonably possible.
- When, if at all, does an insured’s duty to mitigate a loss exist?
A. It always exists regardless of whether it is stated with the policy.
B. It always falls to the insurer and never to the insured.
C. Only if specifically requested by the insurer after a loss has occurred.
D. Only when it is expressly stated within the policy.
A. It always exists regardless of whether it is stated with the policy.
. Mark, an adviser employed by a firm of insurance brokers, sold an insurance policy to Alison. When
dealing with a claim under this policy, the onus of proof that it is a valid claim legally rests with
A. Alison.
B. the firm of insurance brokers.
C. the insurer.
D. Mark.
A. Alison.
- Where a policy condition is classed as an express condition, this means that it
A. can be removed by payment of an extra premium.
B. is based on common law requirements.
C. is stated in writing within the terms of the policy.
D. only applies for an initial period.
C. is stated in writing within the terms of the policy.
- For a vehicle theft to be considered under a motor insurance policy, the insured must notify the
A. Driver and Vehicle Licensing Agency (DVLA).
B. Financial Conduct Authority.
C. Motor Insurers’ Bureau.
D. Police.
D. Police.
- A week before James returns from a holiday, a storm dislodges tiles from his roof and water enters
his house causing significant staining to carpets and soft furnishings. What is the proximate cause
of the loss?
A. The dislodged tiles.
B. The staining.
C. The storm.
D. The vacant property.
C. The storm.
9. When an insurer assumes the rights of the insured to attempt to recover from a responsible third party, this is known as A. arbitration. B. contribution. C. litigation. D. subrogation.
D. subrogation.
- An insured has a condition in his commercial theft policy that tools must NOT be left in the vehicle
overnight. The insured fails to abide by this condition and the tools are stolen. What action will the
insurer most likely take?
A. Avoid the policy.
B. Cancel the policy.
C. Pay the claim.
D. Repudiate the claim.
D. Repudiate the claim.
Jane has a motor vehicle accident which results in damage to a third party’s car. Her motor
insurance policy will most likely include a condition which states that she must NOT admit
responsibility for the accident without having first obtained
A. independent legal advice.
B. the insurer’s written consent.
C. a police accident report.
D. proof of the third’s party’s financial loss.
B. the insurer’s written consent.
. What is the usual maximum payment period for temporary total disablement under a personal accident policy? A. 26 weeks. B. 52 weeks. C. 104 weeks. D. 208 weeks.
C. 104 weeks.
Rosie drops her mobile telephone in the street and the screen cracks. She has gadget insurance
and telephones the insurer’s helpline for assistance. What will the helpline most likely do?
A. Advise Rosie that only theft and breakdown are covered.
B. Immediately send Rosie a replacement phone.
C. Refer Rosie to her household insurer in the first instance.
D. Take details of the claim and request she send supporting documents.
D. Take details of the claim and request she send supporting documents.
A business interruption insurance policy is designed primarily to cover a A. loss caused by bad debts. B. loss caused by a drop in share value. C. loss of profits. D. loss of turnover
C. loss of profits.
A legal expenses extension of a motor insurance policy would normally cover the costs in relation
to
A. defending a liability claim on behalf of the insured.
B. pursuing a claim for breach of contract with an insurer.
C. pursuing a recovery on behalf of the insurer.
D. pursuing an uninsured loss claim on behalf of the insured
D. pursuing an uninsured loss claim on behalf of the insured
What type of motor insurance policy provides cover in respect of accidental damage to the insured vehicle? A. Comprehensive. B. Road Traffic Act only. C. Third party only. D. Third party fire and theft.
A. Comprehensive.
During a night out with friends, Mike starts a fight. As a result of his injuries he is unable to work
for six months and fails to submit the claim until a year after the incident. He has cover for
temporary disablement at £250 per week under his personal accident policy, but his insurer refuses
to settle his claim. What is the most likely reason for this?
A. The claim is excluded under the terms of his policy.
B. The claim falls under an employers’ liability policy.
C. The claim is against public policy.
D. The claim is within the policy excess.
A. The claim is excluded under the terms of his policy.
. Which insurance policy would cover liability arising from, or in connection with, advice, design or
specification provided by the policyholder to a third party for a fee?
A. Employers’ liability.
B. Products liability.
C. Professional indemnity.
D. Public liability.
C. Professional indemnity.
The purpose of a specified suppliers extension to the business interruption section of a commercial
property insurance policy is to indemnify
A. the policyholder in respect of a loss of profit arising as a consequence of insured damage at a
named supplier’s premises.
B. the policyholder in respect of a loss of profit arising from a named supplier’s failure to fulfil a
contractual obligation as a consequence of insolvency.
C. a named supplier in respect of a loss of profit arising as a consequence of insured damage at the
policyholder’s premises.
D. a named supplier in respect of material damage and any associated loss of profit arising as a
consequence of an insured event at its own premises.
B. the policyholder in respect of a loss of profit arising from a named supplier’s failure to fulfil a
contractual obligation as a consequence of insolvency.
The flat roof to Jon’s garage is 15 years old and has suddenly started leaking causing damage to his
contents. He puts in a claim for the full replacement value of the roof and the damaged contents.
Which part(s) of Jon’s claim, if any, would his insurer usually agree to settle?
A. None of the claim.
B. The contents damage only.
C. The replacement roof only.
D. Both the contents and the roof damage.
B. The contents damage only.
What level of cover does an insured have under a driving other cars extension of a comprehensive motor insurance policy? A. Comprehensive. B. Road Traffic Act only. C. Third party only. D. Third party, fire and theft.
C. Third party only.
Assam’s two-year-old freezer is damaged due to refrigerant fumes escaping. He has a household
policy which includes a standard freezer extension. He claims for a new freezer, replacing spoiled
food and lost wages for his time spent dealing with the damage. Which part(s) of the claim will the
insurer most likely pay?
A. The spoiled food only.
B. The new freezer only.
C. The spoiled food and new freezer only.
D. The spoiled food, new freezer and lost wages.
C. The spoiled food and new freezer only.
A warehouse stores gardening equipment. The manager arrives for work one morning and
discovers that some power tools and £500 of cash have been stolen. He reports the theft to the
police and submits a claim under his theft insurance. How would the insurer most likely respond to
the claim?
A. Decline the whole claim.
B. Pay the claim for the stolen cash only.
C. Pay the claim for the power tools only.
D. Pay the claim in full.
C. Pay the claim for the power tools only.
The purpose of technical reserves is to provide
A. catastrophe claims reserves only.
B. dividends given to shareholders.
C. funds to cover all outstanding underwriting liabilities.
D. incurred but not reported (IBNR) claims reserves only
C. funds to cover all outstanding underwriting liabilities.
The main advantage to a liability insurer of handling the negotiations with a third party who makes
a claim against its insured is that the insurer can
A. always secure a subrogation recovery prior to settling with the third party.
B. ensure that the full limit of indemnity is paid.
C. limit the number of claims that can be made against the insured.
D. use its expertise and resources to obtain a favourable settlement.
D. use its expertise and resources to obtain a favourable settlement.
. What is the maximum binding award that the Financial Ombudsman Service can make against an insurer? A. £50,000 B. £150,000 C. £250,000 D. £500,000
B. £150,000
What is the main long-term effect of successful insurance fraud against an insurer on all its customers? A. Claims will take longer to process. B. Excesses will be higher. C. Premiums will be higher. D. Underwriters will be more selective.
C. Premiums will be higher.
An insurer will only raise the common law defence of contributory negligence when defending a
claim made by which parties to an insurance contract?
A. First parties.
B. First parties and second parties.
C. Second parties and third parties.
D. Third parties.
D. Third parties.
Where a claims department publishes a set of service standards, this is usually done in order to manage A. cash flow. B. customer expectations. C. moral hazards. D. risk exposure.
B. customer expectations.
An intermediary realises that he is acting as an agent for two separate insureds that are both
parties to the same loss. In addition to disclosing the conflict, how should the intermediary handle
the claim?
A. Have one account handler administering both claims.
B. Have two separate account handlers administering each party’s claim.
C. Inform both insureds that they will have to deal directly with their insurers.
D. Only be involved with the claim administration for the insured that first notified the loss.
B. Have two separate account handlers administering each party’s claim.
