M05 Free Exam Study Guide! (Updated 121 Questions) [Q49-Q73]

31 Oct, 2026 By admin M05, CII 0 Comments

M05 Free Exam Study Guide! (Updated 121 Questions) [Q49-Q73]

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M05 Free Exam Study Guide! (Updated 121 Questions)

M05 Dumps for Insurance Law (M05) Certified Exam Questions and Answer

CII M05 Exam Syllabus Topics:

Section	Objectives
Formation of Insurance Contracts	– Core insurance principles 1. Insurable interest 2. Utmost good faith 3. Disclosure and misrepresentation
Law of Agency and Insurance	– Agency relationships 1. Authority of agents 2. Creation of agency 3. Duties and liabilities
Nature and Sources of English Law and Legal Persons	– Legal personality 1. Juristic persons 2. Natural persons – Nature and sources of English law 1. Statute law 2. Common law 3. European and international influences
Indemnity and Loss Measurement	– Principle of indemnity 1. Methods of indemnification 2. Valuation of loss
Subrogation and Contribution	– Recovery rights and sharing of losses 1. Contribution 2. Subrogation
Insurance Claims	– Claims process and legal principles 1. Claims handling 2. Policyholder duties 3. Claims notification
Law of Contract	– Contract formation and operation 1. Breach of contract 2. Offer and acceptance 3. Consideration 4. Terms of contract
Insurance Contract Terms and Vitiating Factors	– Policy terms and breaches 1. Conditions 2. Representations 3. Warranties – Factors affecting validity 1. Non-disclosure 2. Fraud 3. Misrepresentation
Law of Torts	– Principles of tort law 1. Nuisance 2. Trespass 3. Negligence

NO.49 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 suspensive condition.

A condition precedent to the contract.

A condition precedent to liability.

A collateral condition.

NO.50 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?

She can sue both Fred and Tina jointly for breach of good faith.

She can sue Fred for breach of agency agreement.

She can sue Tina for breach of contract.

She has no legal right to sue.

NO.51 In an insurance policy arranged through an insurance broker the parties to the contract are the:

insurance broker only

Insurance broker and the insured only

insured only

insured and the insurer only

NO.52 What are the main objectives of the principle of insurable interest?

To reduce moral hazard and to discourage profiteering.

To reduce physical hazard and to discourage profiteering.

To reduce physical hazard and to discourage wagering.

To reduce moral hazard and to discourage wagering.

NO.53 Under the principle of indemnity, what is the objective of an insurance contract?

To ensure the insured profits from the loss

To restore the insured to the same financial position they were in before the loss

To protect the insurer from fraudulent claims

To ensure the insured receives full compensation for their loss regardless of the circumstances

Explanation: The principle of indemnity aims to ensure that the insured is financially restored to the same position they were in before the loss occurred, without allowing them to profit from the insurance claim.

NO.54 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?

No one as Tim is not a party to the insurance contract.

Both the insurer and Paul at different times.

The insurer at all times.

Paul as it is a consumer contract.

NO.55 A storm blew down the wall of a limber building. The failing wall broke electrical wiring, which short- circuited and the resultant sparks caused a fire. The lire brigade used water to put out the fire and the water caused damage to the unburnt contents. What is the proximate cause of the damage to the unburnt contents?

The falling wall.

The storm.

The fire.

The water damage.

NO.56 For this question more than 1 option is correct. You must select all the correct options to gain the mark. What are the characteristics of an express term in reaching or recording an agreement?

It will usually override any implied term which conflicts with it.

It must be evidenced in documentary form.

It may be oral or in writing.

It may be implied by conduct.

NO.57 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?

Disclosure of the name of the principal.

Bankruptcy of the principal.

Bankruptcy of the agent.

Death of the agent.

NO.58 Which of the following is true about insurable interest?

The policyholder must have a financial stake in the property or event insured at the time of loss

The policyholder must have an interest in the property at the time of policy purchase but not at thetime of loss

Insurable interest is only required for life insurance policies

Insurable interest must always be proven at the time the policy is issued

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.

NO.59 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?

The delay in seeking medical treatment.

The unhygienic washing of the dog bite.

The original physical injury of the dog bite.

The delay in obtaining the correct medical treatment.

NO.60 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 real statement.

a new for old policy.

a first loss policy.

an indemnity policy.

NO.61 Which of the following is a feature of an insurance contract under the principle of “utmost good faith”?

The insurer must be transparent about the terms of the policy.

The insured must disclose all material facts relevant to the risk.

Both parties must agree on the premium amount in advance.

The insurer must pay all claims, regardless of the terms of the policy.

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.

NO.62 What is the effect of a waiver on an insurance contract?

It terminates the policy

It allows one party to ignore certain policy terms

It allows the insurer to increase the premium

It reduces the policyholder’s obligation to make full disclosure

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.

NO.63 What is the principal reason for which a proposer is asked by the insurer whether his car will be driven by anyone else?

To enable a loading to be applied.

To establish whether insurable interest exists.

To enable a discount to be applied.

It is a material circumstance.

NO.64 Which body represents the solicitors’ profession in England and Wales?

The Faculty of Advocates.

The Solicitors Regulation Authority.

The Law Society.

Bar Council.

The Law Society represents the solicitors’ profession in England and Wales. It is the professional body for solicitors, providing support, setting standards, and promoting the interests of its members.
TheSolicitors Regulation Authority (SRA)is responsible for regulating solicitors, but it is not the representative body.

NO.65 In a chain of events, the proximate cause of a loss is always the

only event contributing towards the loss.

last event before the loss occurs.

dominant event leading to the loss.

only event which is not excluded by the terms of the policy.

NO.66 What does the Consumer Insurance (Disclosure and Representations) Act 2012 require from consumers applying for insurance?

Consumers must disclose all material facts honestly and accurately.

Consumers must answer questions about their past claims history.

Consumers are required to pay for claims made during the policy term.

Consumers must choose an insurer based on premium prices alone.

Under the Consumer Insurance (Disclosure and Representations) Act 2012, consumers are required to disclose material facts that could affect the insurer’s decision to provide coverage. However, unlike the previous law, it does not require consumers to disclose every fact, but only material facts.

NO.67 Which of the following regulatory bodies oversees the conduct of insurance firms in the UK?

Financial Conduct Authority (FCA)

Prudential Regulation Authority (PRA)

Bank of England

Insurance Ombudsman Service

Financial Conduct Authority (FCA)

NO.68 What is the most common for of corporation?

Registered corporation.

Chartered corporation.

Corporation sole.

Statutory corporation.

NO.69 The principle of indemnity is the

obligation of the insurer to provide a maximum sum insured or limit of liability.

placing of the insured, at expiry of a policy, in the same financial position as enjoyed at inception.

obligation of the insurer to pay all valid claims according to the terms and conditions of the policy.

placing of the insured, after a loss, in the same financial position as enjoyed immediately before the loss.

NO.70 What is the primary purpose of the Duty of Disclosure in an insurance contract?

To ensure that both parties understand the terms of the contract

To ensure the insurer is able to assess the risk involved in underwriting the policy

To protect the insurer from financial instability

To allow the policyholder to choose the terms of coverage

The Duty of Disclosure ensures that the insured provides all relevant information about the risk they are insuring. This allows the insurer to assess the risk accurately and set appropriate premiums.

NO.71 In the context of an insurance claim, what does the principle of subrogation refer to?

The insurer’s right to reduce the claim payout

The insured’s obligation to provide all relevant documents to the insurer

The insurer’s right to pursue a third party responsible for the loss

The insured’s right to receive compensation up to the value of their loss

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.

NO.72 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?

Immediately, irrespective of prognosis.

He does not need to disclose this.

Immediately, but only if the diagnosis is terminal.

At the date of the next premium payment.

NO.73 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?

Paul does not have the right to withdraw the offer within the four-week period.

John cannot enforce the contract but is entitled to claim damages from Paul.

Paul has the right to withdraw the offer at any time before acceptance.

John can enforce the contract as the offer was formally made.

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