2026 Valid M05 Real Exam Questions, practice Insurance Law (M05)
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NEW QUESTION # 58
Which of the following is a feature of an insurance contract under the principle of "utmost good faith"?
- A. The insurer must be transparent about the terms of the policy.
- B. The insured must disclose all material facts relevant to the risk.
- C. Both parties must agree on the premium amount in advance.
- D. The insurer must pay all claims, regardless of the terms of the policy.
Answer: B
Explanation:
Under the principle of utmost good faith (also known as "uberrimae fidei"), the insured must disclose all material facts to the insurer that could affect the insurer's decision to provide coverage or the terms of the policy.
NEW QUESTION # 59
Julie has agreed to feed lan's cat whilst he is away on holiday in a remote location. When the cat becomes seriously ill. Julie is unable to contact Ian, so she takes the cat to the vet and also pays the vet's bill. In these circumstances. Julie is best described as:
- A. an implied agent
- B. an express agent
- C. an agent by estoppel
- D. an agent by necessity
Answer: A
NEW QUESTION # 60
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 grief or sorrow for the loss of a person with whom he had a close relationship.
- B. as a result of stress or harassment at work.
- C. through fear for the safety of another person involved in an accident which he witnessed.
- D. through fear for his own safety in an accident.
Answer: D
NEW QUESTION # 61
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. Contribution
- C. Indemnity
- D. Subrogation
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 # 62
According to statute law, an unfair term in a consumer insurance contract is defined as one which
- A. does not restrict liability for death or personal injury.
- B. causes a significant imbalance in the parties' rights to the detriment of the consumer.
- C. provides insurance where the scope of cover is narrow compared to the premium charged.
- D. has been individually negotiated and is to the detriment of either one of the parties.
Answer: B
NEW QUESTION # 63
What is the principal reason for which a proposer is asked by the insurer whether his car will be driven by anyone else?
- A. It is a material circumstance.
- B. To enable a discount to be applied.
- C. To enable a loading to be applied.
- D. To establish whether insurable interest exists.
Answer: A
NEW QUESTION # 64
Why may an insurer insert a continuing warranty into an insurance policy?
- A. To encourage good risk management by the insured throughout the policy period.
- B. To enable an insurer to charge an additional premium if the warranty is continually breached.
- C. To ensure that underinsurance is avoided at all times.
- D. To maintain the annual aggregate limit of liability throughout the policy period.
Answer: A
NEW QUESTION # 65
Under UK insurance law, which document outlines the terms of the insurance agreement between the insurer and the insured?
- A. The statement of fact
- B. The insurance policy
- C. The proposal form
- D. The schedule of benefits
Answer: B
Explanation:
The insurance policy is the formal document that outlines the terms, conditions, and coverage of the insurance agreement between the insurer and the insured. It specifies the risks covered, exclusions, and other contractual details.
NEW QUESTION # 66
What is the effect of a waiver on an insurance contract?
- A. It allows the insurer to increase the premium
- B. It reduces the policyholder's obligation to make full disclosure
- C. It terminates the policy
- D. It allows one party to ignore certain policy terms
Answer: D
Explanation:
A waiver in insurance law refers to the voluntary relinquishment of a known right, such as forgiving a breach of a condition in the policy. It doesn't cancel the contract but may alter certain terms.
NEW QUESTION # 67
For this question more than 1 option is correct. You must select all the correct options to gain the mark. What are the main sources of new English Law?
- A. Legislation.
- B. Official law reports.
- C. Case law.
- D. International treaties.
Answer: A,C
NEW QUESTION # 68
A warranty in Emily's personal travel insurance policy states that cash must be kept in a locked safe. Whilst on holiday, a storm destroys her hotel and its contents. When Emily completes a claim form for loss of money, she admits that her cash was NOT locked in the safe. What will be the insurer's likely response to her claim for the lost money?
- A. Make an ex-gratia payment.
- B. Avoid the policy ab initio.
- C. Pay the claim in full.
- D. Reject the claim for breach of warranty.
Answer: C
NEW QUESTION # 69
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 unguarded paraffin space heater.
- B. The waste bin.
- C. The spray booth.
- D. The paint.
Answer: A
NEW QUESTION # 70
Which of the following is a key principle of insurance that ensures that a policyholder is not overcompensated for a loss?
- A. Utmost good faith
- B. Insurable interest
- C. Indemnity
- D. Subrogation
Answer: C
Explanation:
The principle of indemnity ensures that the policyholder is compensated only to the extent of the loss suffered and does not profit from an insurance claim. This principle is essential to prevent overcompensation.
NEW QUESTION # 71
When an insurer is aware that the total value of stock is more than the sum insured and issues a policy on this basis, this is known as
- A. a first loss policy.
- B. a real statement.
- C. a new for old policy.
- D. an indemnity policy.
Answer: A
NEW QUESTION # 72
Which of the following is not a typical requirement for the formation of an insurance contract?
- A. The payment of a premium.
- B. The disclosure of a medical history
- C. An offer to insure
- D. An acceptance of the offer
Answer: B
Explanation:
The disclosure of a medical history
Explanation: While disclosure of material facts, such as medical history, is crucial under the principle of utmost good faith, it isnotarequirementfor the formation of an insurance contract. The core requirements are an offer, acceptance, and consideration (premium).
NEW QUESTION # 73
At what stage is insurable interest required for a marine cargo insurance policy?
- A. At both inception of the policy and at the time of the loss.
- B. At the time of the loss only.
- C. Throughout the duration of the contract.
- D. At inception of the policy only.
Answer: B
NEW QUESTION # 74
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. Cover is suspended whilst the insurer pursues an action for subrogation.
- C. The doctrine of subrogation is excluded from the policy.
- D. The insurer's subrogation rights will not be exercised against certain parties associated with the insured.
Answer: D
NEW QUESTION # 75
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 ratified another party's action.
- C. A person has transferred his obligations under a contract to another party.
- D. 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.
Answer: A
NEW QUESTION # 76
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. Power of Attorney.
- B. Trust.
- C. Lien.
- D. Coinsurance.
Answer: B
NEW QUESTION # 77
Insurance agencies are usually created by way of
- A. express agreement.
- B. implied agreement.
- C. unilateral agreement.
- D. deed of agreement.
Answer: A
NEW QUESTION # 78
Which of the following is true about insurable interest?
- A. The policyholder must have a financial stake in the property or event insured at the time of loss
- B. The policyholder must have an interest in the property at the time of policy purchase but not at thetime of loss
- C. Insurable interest is only required for life insurance policies
- D. Insurable interest must always be proven at the time the policy is issued
Answer: A
Explanation:
interestrefers to the requirement that the policyholder must stand to suffer a financial loss from the event insured. In most cases, this must be proven at the time of loss, not just when the policy is issued.
NEW QUESTION # 79
Fred knew Susie wanted to sell her car. On behalf of Susie, Fred agreed the sale of the car to Tina for £5.000.
That evening, Susie ratified Fred's agreement with Tina The next day. Tina decided NOT to proceed with the purchase What is Susie's legal position in these circumstances?
- A. She can sue Fred for breach of agency agreement.
- B. She can sue both Fred and Tina jointly for breach of good faith.
- C. She can sue Tina for breach of contract.
- D. She has no legal right to sue.
Answer: D
NEW QUESTION # 80
What is the most common for of corporation?
- A. Chartered corporation.
- B. Registered corporation.
- C. Corporation sole.
- D. Statutory corporation.
Answer: B
NEW QUESTION # 81
Ambiguous terms in a household insurance contract are generally construed against the
- A. policyholder due to the noscitur a sociis rule.
- B. policyholder due to the literal rule.
- C. insurer due to the contra proferentem rule.
- D. insurer due to the ejusdem generis rule.
Answer: C
NEW QUESTION # 82
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