[Jun-2026] The Best Insurance Law (M05) E05 Professional Exam Questions
Try 100% Updated E05 Exam Questions [2026]
NEW QUESTION # 16
According to statute law, an unfair term in a consumer insurance contract is defined as one which
- A. provides insurance where the scope of cover is narrow compared to the premium charged.
- B. causes a significant imbalance in the parties' rights to the detriment of the consumer.
- C. does not restrict liability for death or personal injury.
- D. has been individually negotiated and is to the detriment of either one of the parties.
Answer: B
NEW QUESTION # 17
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. 35% for personal injury cases and 25% for employment tribunal cases.
- B. 35% for both cases.
- C. 25% for personal injury cases and 35% for employment tribunal cases.
- D. 50% for both cases.
Answer: C
NEW QUESTION # 18
Adam was bitten by a stray dog in Africa. He washed his wound in a pond and a week later he became very ill with a high temperature. Initially, the local hospital treated him for malaria and later treated him for the fever following the dog bite. Adam died in hospital. What is the proximate cause of his death?
- A. The delay in seeking medical treatment.
- B. The original physical injury of the dog bite.
- C. The unhygienic washing of the dog bite.
- D. The delay in obtaining the correct medical treatment.
Answer: B
NEW QUESTION # 19
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. The inadvertent non-cancellation of a policy when a new policy is taken out.
- C. A merger between two major insurance companies.
- D. A deliberate attempt to obtain the proceeds of two policies.
Answer: A,D
NEW QUESTION # 20
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. Apply any terms it would have applied if the misrepresentation had not taken place.
- B. Avoid the contract, refuse all claims and keep the premium.
- C. Reduce the claim amount in proportion to the premium it would have charged.
- D. Reject the claim, but maintain the policy.
Answer: A,C
NEW QUESTION # 21
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 the safety of another person involved in an accident which he witnessed.
- C. through fear for his own safety in an accident.
- D. as a result of grief or sorrow for the loss of a person with whom he had a close relationship.
Answer: C
NEW QUESTION # 22
At what stage is insurable interest required for a marine cargo insurance policy?
- A. Throughout the duration of the contract.
- B. At inception of the policy only.
- C. At the time of the loss only.
- D. At both inception of the policy and at the time of the loss.
Answer: C
NEW QUESTION # 23
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. Where the building was destroyed by an explosion.
- B. Upon the request of any person(s) interested in the buildings.
- C. When fraud or arson by the insured is suspected.
- D. Where there is underinsurance.
Answer: B,C
NEW QUESTION # 24
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 fraudulent.
- B. the misrepresentation was innocent.
- C. the premium was paid by monthly installments.
- D. no claim had been submitted or paid.
Answer: B
NEW QUESTION # 25
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. avoid the claim automatically due to the breach of the policy condition.
- B. settle the claim and cancel the insurance policy from inception.
- C. settle the claim and recover its outlay from the insured.
- D. only avoid the claim if the delay has seriously prejudiced its investigation and handling of the claim.
Answer: A
NEW QUESTION # 26
A claimant may possibly recover money transferred under an illegal contract when
- A. the legal portion of the contract can be severed from the illega portion.
- B. the contract is against public policy but not substantive law.
- C. both parties to the contract are equal in wrongdoing.
- D. the illegality makes the contract voidable rather than void.
Answer: C
NEW QUESTION # 27
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. Where there is a variation in the insured risk.
- C. It does not apply as the duty is to take reasonable care not to make a misrepresentation.
- D. On submission of a claim.
Answer: B
NEW QUESTION # 28
In terms of private motor insurance, a renewal offer can be accepted
- A. only by written communication.
- B. by any third party.
- C. only by the proposer personally.
- D. by the proposer acting in reliance of the offer.
Answer: D
NEW QUESTION # 29
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. Paul as it is a consumer contract.
- B. No one as Tim is not a party to the insurance contract.
- C. The insurer at all times.
- D. Both the insurer and Paul at different times.
Answer: C
NEW QUESTION # 30
What are the main objectives of the principle of insurable interest?
- A. To reduce physical hazard and to discourage wagering.
- B. To reduce moral hazard and to discourage wagering.
- C. To reduce moral hazard and to discourage profiteering.
- D. To reduce physical hazard and to discourage profiteering.
Answer: B
NEW QUESTION # 31
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