Insurance law (IL) Exam (M05) Free Practice Test

Question 1

What is the role of the Financial Ombudsman Service (FOS) in insurance disputes?

A. It provides legal advice to insurers

B. It helps consumers resolve complaints with their insurers

C. It issues licenses to insurance companies

D. It regulates the pricing of insurance products

Correct Answer: B

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Question 2

The proximate cause of a loss is best described as the

A. most remote cause of the loss.

B. most dominant cause of the loss.

C. first peril to cause the loss.

D. final peril to cause the loss.

Correct Answer: B

Question 3

A household insurance policyholder leaves his home to go to work without setting the burglar alarm. Whilst he was out, his new tumble dryer overheats and causes fire damage to the kitchen. In what circumstances may the insurer legally reject a fire claim?

A. If there is a subrogation action against the manufacturer of the tumble dryer.

B. If there is a breach of a warranty requiring the burglar alarm to be set.

C. If the policyholder exaggerates the value of the claim.

D. If the tumble dryer is covered by extended warranty insurance.

Correct Answer: C

Question 4

What is the most common for of corporation?

A. Registered corporation.

B. Corporation sole.

C. Statutory corporation.

D. Chartered corporation.

Correct Answer: A

Question 5

How can an agency relationship be best described?

A. A person has the authority to act on behalf of another party.

B. A person has transferred his obligations under a contract to another party.

C. A person, who has paid another party under a contract, has the right to stand in the place of that other party and avail himself of the rights and remedies of that party.

D. A person has ratified another party's action.

Correct Answer: A

Question 6

For this question more than 1 option is correct. You must select all the correct options to gain the mark.
A proposer for private motorcycle insurance carelessly states the motorcycle's engine capacity as 500cc when in fact it is 1500cc. A policy is issued by the insurer on this basis. In the event of a valid claim causing damage to the motorcycle, what potential remedies are available to the insurer under the Consumer Insurance (Disclosure and Representations) Act 2012?

A. Reject the claim, but maintain the policy.

B. Apply any terms it would have applied if the misrepresentation had not taken place.

C. Avoid the contract, refuse all claims and keep the premium.

D. Reduce the claim amount in proportion to the premium it would have charged.

Correct Answer: B,D

Question 7

In the context of insurance law, who is considered a third-party claimant?

A. A person who suffers a loss or injury caused by the policyholder's actions

B. A family member of the policyholder

C. An insurance broker acting on behalf of a client

D. The policyholder who initiates a claim

Correct Answer: D

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Question 8

A professional indemnity policy includes a condition requiring that the insured must give prompt notice of any circumstance that could give rise to a claim. What type of condition is this?

A. A suspensive condition.

B. A condition precedent to the contract.

C. A collateral condition.

D. A condition precedent to liability.

Correct Answer: D

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CII Insurance law (IL) (M05) Free Practice Test