Question 1

What legally recognised financial relationship must exist, between a policyholder and the items being insured, to constitute a valid household contents insurance policy?

Options :

A : Insurable interest.

B : Risk indemnity.

C : Vicarious liability.

D : Delegated authority.

Answer: A

Question 2

John and his wife arrange a household contents insurance policy in joint names with insurer A for a sum insured of £10,000. His wife arranges a second policy on the same basis with insurer B for a sum insured of £20,000. Both policies have identical terms and conditions. What is insurer A's liability if a valid claim of £3,000 is subsequently made?

Options :

A : £1,000

B : £1,500

C : £2,000

D : £3,000

Answer: A

Question 3

The purpose of the EU solvency requirements for insurers and intermediaries is to

Options :

A : create a standard format for the presentation of accounting data.

B : introduce monitoring procedures by the Prudential Regulation Authority.

C : provide authorisation to transact insurance business.

D : strengthen the financial security of the insurer or intermediary.

Answer: A

Question 4

Reinsurance is usually purchased by the

Options :

A : intermediary.

B : insurer.

C : regulator.

D : insured.

Answer: B

Question 5

A policyholder achieves peace of mind when insuring his car by

Options :

A : eliminating the risk of loss.

B : reducing the chance of a loss occurring.

C : preventing the chance of a loss occurring.

D : transferring the risk to the insurer.

Answer: D