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Pass E05 Exam - Real Questions & Answers

NEW QUESTION 23
What is the intended purpose of a subrogation waiver clause in an insurance po

• A. The insured has a duty to ensure that the insurer's subrogation rights are maintained.
• B. The doctrine of subrogation is excluded from the policy.
• C. Cover is suspended whilst the insurer pursues an action for subrogation.
• D. The insurer's subrogation rights will not be exercised against certain parties associated with the insured.

Answer: D

 

NEW QUESTION 24
According to statute, a term under a consumer personal accident insurance policy may potentially be considered unfair if the insurer

• A. provides coverage that is more restrictive than that of other insurers.
• B. requires notification of a claim within a very short time period.
• C. imposes a premium loading.
• D. applies a specific exclusion within the policy wording.

Answer: B

 

NEW QUESTION 25
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 condition precedent to liability.
• B. A collateral condition.
• C. A condition precedent to the contract.
• D. A suspensive condition.

Answer: A

 

NEW QUESTION 26
A property policy contains a condition regarding prompt loss notification. If the insured fails to comply with this condition, in practice, the insurer is likely to

• A. settle the claim and recover its outlay from the insured.
• B. settle the claim and cancel the insurance policy from inception.
• C. only avoid the claim if the delay has seriously prejudiced its investigation and handling of the claim.
• D. avoid the claim automatically due to the breach of the policy condition.

Answer: D

 

NEW QUESTION 27
For this question more than 1 option is correct. You must select ail the correct options to gain the mark.
In what circumstances does the Fires Prevention (Metropolis) Act 1774 require insurance companies to ensure that claims monies are used to rebuild or reinstate buildings destroyed or damaged by fire?

• A. When fraud or arson by the insured is suspected.
• B. Upon the request of any person(s) interested in the buildings.
• C. Where the building was destroyed by an explosion.
• D. Where there is underinsurance.

Answer: A,B

 

NEW QUESTION 28
For this question more than 1 option is correct. You must select all the correct options to gain the mark. In a consumer insurance policy, a warranty can arise as

• A. an exception clause.
• B. an express term.
• C. a continuing warranty.
• D. a basis of the contract clause.

Answer: B,D

 

NEW QUESTION 29
Ambiguous terms in a household insurance contract are generally construed against the

• A. insurer due to the contra proferentem rule.
• B. policyholder due to the noscitur a sociis rule.
• C. policyholder due to the literal rule.
• D. insurer due to the ejusdem generis rule.

Answer: A

 

NEW QUESTION 30
As a result of a breach of good faith under a commercial insurance policy, the insurer avoided the policy as a whole, but was NOT permitted to retain the premium because

• A. the misrepresentation was innocent.
• B. the premium was paid by monthly installments.
• C. no claim had been submitted or paid.
• D. the misrepresentation was fraudulent.

Answer: A

 

NEW QUESTION 31
In the tort of negligence, a primary victim of nervous shock is a class of person who suffers psychiatric injury

• A. as a result of stress or harassment at work.
• B. through fear for his own safety in an accident.
• C. through fear for the safety of another person involved in an accident which he witnessed.
• D. as a result of grief or sorrow for the loss of a person with whom he had a close relationship.

Answer: B

 

NEW QUESTION 32
The test of the materiality of facts in an insurance contract is defined according to the opinion of a

• A. reasonable person.
• B. prudent underwriter.
• C. honest proposer.
• D. diligent broker.

Answer: B

 

NEW QUESTION 33
Tim is a local insurance broker. He has authority to receive premiums for a personal lines insurer and earns commission from the insurer for sales. Paul, an elderly customer, asked Tim for advice regarding his personal insurance requirements and to assist with completing the proposal form for household insurance. In these circumstances, who, if anyone, is Tim's principal?

• A. Both the insurer and Paul at different times.
• B. Paul as it is a consumer contract.
• C. No one as Tim is not a party to the insurance contract.
• D. The insurer at all times.

Answer: D

 

NEW QUESTION 34
What are the main objectives of the principle of insurable interest?

• A. To reduce physical hazard and to discourage profiteering.
• B. To reduce moral hazard and to discourage wagering.
• C. To reduce physical hazard and to discourage wagering.
• D. To reduce moral hazard and to discourage profiteering.

Answer: B

 

NEW QUESTION 35
When, if at all, does the duty of fair presentation of a risk apply after a non-consumer insurance contract has been formed?

• A. From the date of a breach of warranty.
• B. It does not apply as the duty is to take reasonable care not to make a misrepresentation.
• C. Where there is a variation in the insured risk.
• D. On submission of a claim.

Answer: C

 

NEW QUESTION 36
What is the maximum contingency fee percentage under a damages-based agreement that can be charged by a solicitor for personal injury cases and employment tribunal cases respectively?

• A. 25% for personal injury cases and 35% for employment tribunal cases.
• B. 35% for both cases.
• C. 50% for both cases.
• D. 35% for personal injury cases and 25% for employment tribunal cases.

Answer: A

 

NEW QUESTION 37
In terms of private motor insurance, a renewal offer can be accepted

• A. by any third party.
• B. only by the proposer personally.
• C. only by written communication.
• D. by the proposer acting in reliance of the offer.

Answer: D

 

NEW QUESTION 38
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 the tumble dryer is covered by extended warranty insurance.
• B. If the policyholder exaggerates the value of the claim.
• C. If there is a subrogation action against the manufacturer of the tumble dryer.
• D. If there is a breach of a warranty requiring the burglar alarm to be set.

Answer: B

 

NEW QUESTION 39
The principle of subrogation prevents a policyholder from profiting from

• A. assigning abandonment rights to the insurer.
• B. claiming under both his insurance policy and against any negligent third party.
• C. submitting a full claim recovery under more than one insurance policy.
• D. retaining salvaged property.

Answer: B

 

NEW QUESTION 40
John owns stock that he intentionally insured for £15,000, although the full value of the stock is £18.000. His insurance policy has no excess and is subject to a pro rata condition of average. In the event of water damaging
£6.000 of John's stock, how much will the insurer pay for a valid claim after the application of average?

• A. £5,000
• B. £6,000
• C. £3,000
• D. £15,000

Answer: A

 

NEW QUESTION 41
A person insures her own life under a life insurance policy but does so expressly for the benefit of another. To facilitate this, which type of arrangement is most commonly established?

• A. Coinsurance.
• B. Lien.
• C. Power of Attorney.
• D. Trust.

Answer: D

 

NEW QUESTION 42
A claimant may possibly recover money transferred under an illegal contract when

• A. the contract is against public policy but not substantive law.
• B. the illegality makes the contract voidable rather than void.
• C. the legal portion of the contract can be severed from the illega portion.
• D. both parties to the contract are equal in wrongdoing.

Answer: D

 

NEW QUESTION 43
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