Master 2025 Latest The Questions Insurance Law (M05) and Pass M05 Real Exam!
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NEW QUESTION # 31
What is the principle of utmost good faith in insurance?
- A. Insurers must provide coverage for all types of risks.
- B. The insurance policy must be renewed annually.
- C. Both parties in the contract must act honestly and disclose all material facts.
- D. A policyholder's claims must always be paid out without dispute.
Answer: C
Explanation:
Both parties in the contract must act honestly and disclose all material facts.
NEW QUESTION # 32
A claimant may possibly recover money transferred under an illegal contract when
- A. both parties to the contract are equal in wrongdoing.
- B. the contract is against public policy but not substantive law.
- C. the legal portion of the contract can be severed from the illega portion.
- D. the illegality makes the contract voidable rather than void.
Answer: A
NEW QUESTION # 33
A nurse working shifts is regularly disturbed by her neighbour givig brass instrument lessons in Ihe evenings.
She is tired and losing concentration at work but is NOT at risk of losing her job. What remedy can be provided by equity as an alternative source of law to common law?
- A. An injunction.
- B. Punitive damages.
- C. General damages.
- D. Specific performance
Answer: A
Explanation:
In this case, the nurse is facing a disturbance from her neighbor, which is affecting her concentration and well- being. Aninjunctionis an equitable remedy that could be used to stop the neighbor from causing the disturbance, either temporarily (atemporary injunction) or permanently (apermanent injunction). This is often used to prevent ongoing nuisance or harm, like in this situation where the noise is impacting the nurse's ability to work.
Specific performance (A) would typically apply to compelling someone to fulfill a contractual obligation, not for stopping a nuisance. Punitive damages (B) and general damages (C) are not equitable remedies but are more common in common law for compensating harm or punishment.
NEW QUESTION # 34
A survey of a car repairers reveals a spray booth exists by an unguarded paraffin space beater. Also, a day's supply of paint is kept within the building and waste is removed daily from a metal bin. What will the underwriter perceive as the main physical hazard?
- A. The paint.
- B. The waste bin.
- C. The spray booth.
- D. The unguarded paraffin space heater.
Answer: D
NEW QUESTION # 35
Which divisional court of the High Court includes a Commercial Court?
- A. Partnership Division.
- B. Family Division.
- C. Chancery Division.
- D. Queen's Bench Division.
Answer: C
NEW QUESTION # 36
Which of the following is a key principle of insurance law that requires the insured to disclose all material facts?
- A. Utmost good faith
- B. Subrogation
- C. Indemnity
- D. Contribution
Answer: A
Explanation:
The principle of utmost good faith (or uberrimae fidei) requires both parties to an insurance contract to disclose all material facts truthfully. Non-disclosure or misrepresentation of material facts may result in the contract being void.
NEW QUESTION # 37
For this question more than 1 option is correct. You must select all the correct options to gain the mark. How may double insurance arise?
- A. An overlap in cover between two different types of insurance policy.
- B. A deliberate attempt to obtain the proceeds of two policies.
- C. A merger between two major insurance companies.
- D. The inadvertent non-cancellation of a policy when a new policy is taken out.
Answer: A,B
NEW QUESTION # 38
John has a whole of life policy and has recently been diagnosed with cancer. When, if at all. must he disclose this to his insurer?
- A. Immediately, irrespective of prognosis.
- B. At the date of the next premium payment.
- C. Immediately, but only if the diagnosis is terminal.
- D. He does not need to disclose this.
Answer: D
NEW QUESTION # 39
Insurance agencies are usually created by way of
- A. unilateral agreement.
- B. implied agreement.
- C. express agreement.
- D. deed of agreement.
Answer: C
NEW QUESTION # 40
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. The policyholder who initiates a claim
- C. A family member of the policyholder
- D. An insurance broker acting on behalf of a client
Answer: B
Explanation:
A third-party claimant is someone who is not a party to the insurance contract but claims compensation from the policyholder's insurer for losses or injuries caused by the policyholder.
NEW QUESTION # 41
A married couple have equal shares in a property and are insured under a buildings insurance policy. What is the likely position in law of a breach of good faith by one party, which was unknown to the other party?
- A. Cover would be maintained in full for the innocent party as the cover is likely to be a joint policy
- B. Cover for both parties would be invalidated as the cover is likely to be a joint policy.
- C. Cover would be maintained in full for the innocent party as the cover is likely to be a composite policy.
- D. Cover for both parties would be invalidated as the cover is likely to be a composite policy.
Answer: B
NEW QUESTION # 42
In the context of an insurance claim, what does the principle of subrogation refer to?
- A. The insurer's right to pursue a third party responsible for the loss
- B. The insurer's right to reduce the claim payout
- C. The insured's obligation to provide all relevant documents to the insurer
- D. The insured's right to receive compensation up to the value of their loss
Answer: A
Explanation:
Subrogationis the principle that allows the insurer to step into the shoes of the insured and pursue any third party responsible for causing the loss. This helps the insurer recover the claim amount paid out to the insured.
NEW QUESTION # 43
According to statute, a term under a consumer personal accident insurance policy may potentially be considered unfair if the insurer
- A. applies a specific exclusion within the policy wording.
- B. provides coverage that is more restrictive than that of other insurers.
- C. requires notification of a claim within a very short time period.
- D. imposes a premium loading.
Answer: C
NEW QUESTION # 44
In a chain of events, the proximate cause of a loss is always the
- A. only event contributing towards the loss.
- B. dominant event leading to the loss.
- C. last event before the loss occurs.
- D. only event which is not excluded by the terms of the policy.
Answer: B
NEW QUESTION # 45
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.
Answer: B
NEW QUESTION # 46
For this question more than 1 option is correct. You must select fill the correct options to gain the mark. In what circumstances would an agency agreement be automatically terminated?
- A. Bankruptcy of the agent.
- B. Death of the agent.
- C. Disclosure of the name of the principal.
- D. Bankruptcy of the principal.
Answer: B,D
NEW QUESTION # 47
Which of the following is an example of a condition precedent in an insurance contract?
- A. The insured must pay the premium
- B. The insured must maintain the insured item in good condition
- C. The insurer must provide coverage for accidental damage
- D. The insurer is required to pay claims for theft
Answer: B
Explanation:
A condition precedent is an obligation that must be met before the insurer becomes liable for a claim. For example, the insured might need to maintain property in good condition or comply with safety measures before coverage applies.
NEW QUESTION # 48
Which of the following is an essential element in the formation of an insurance contract?
- A. The payment of a premium
- B. A valid claim history
- C. A formal written agreement
- D. A signed declaration by the policyholder
Answer: A
NEW QUESTION # 49
Paul made a formal offer to John and gave hun (out weeks to accept it. Three weeks later, and before, John had responded. Paul needed to withdraw the offer. What is the position in contract law?
- A. Paul does not have the right to withdraw the offer within the four-week period.
- B. John cannot enforce the contract but is entitled to claim damages from Paul.
- C. Paul has the right to withdraw the offer at any time before acceptance.
- D. John can enforce the contract as the offer was formally made.
Answer: C
NEW QUESTION # 50
Which legislation regulates the conduct of insurance companies and their intermediaries in the UK?
- A. The Insurance Act 2015
- B. The Companies Act 2006
- C. The Financial Services and Markets Act 2000
- D. The Consumer Insurance (Disclosure and Representations) Act 2012
Answer: C
Explanation:
The Financial Services and Markets Act 2000 (FSMA) regulates the conduct of financial services firms, including insurance companies and intermediaries, in the UK. It establishes the framework for the regulation of the insurance industry.
NEW QUESTION # 51
In the context of an insurance claim, what does the principle of subrogation refer to?
- A. The insurer's right to pursue a third party responsible for the loss
- B. The insurer's right to reduce the claim payout
- C. The insured's obligation to provide all relevant documents to the insurer
- D. The insured's right to receive compensation up to the value of their loss
Answer: A
Explanation:
Subrogationis the principle that allows the insurer to step into the shoes of the insured and pursue any third party responsible for causing the loss. This helps the insurer recover the claim amount paid out to the insured.
NEW QUESTION # 52
In accordance with the principle of good faith, which facts must a potential policyholder disclose to the insurer when applying for insurance?
- A. Only those facts considered likely to reduce the cost of cover
- B. Any facts which are in the public domain.
- C. Any facts which are considered material to the risk.
- D. Any facts of law.
Answer: C
NEW QUESTION # 53
A proposer for household insurance completes and submits an online application. When the insurer's website responds with a quotation based on the application, the quotation is most likely to be legally regarded as:
- A. an acceptance of an offer
- B. an offer
- C. an invitation to treat
- D. a counter offer
Answer: B
NEW QUESTION # 54
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