Which principle of insurance seeks to share the burden of loss fairly among all insurers who cover the loss?
Self-test questions
a. Subrogation
b. Contribution
c. Average condition
d. Proximate cause
(66) An insurer pays for the repair of damage to a policyholder’s car caused by a vandal, who is later identified. What option can the insurer exercise to recover the claim paid?
iF1 Exam 2023
A. The arbitration clause
B. The average clause
C. The contribution condition
D. Its subrogation rights
Gareth has two policies covering his camera. The sum insured with policy A is £500. The sum insured with policy B is £250. What is the rateable proportion payable by insurer A?
Self-test questions
a. 1/4
b. 1/3
c. 2/3
d. 1/2
Romesh has two insurance policies covering the same loss. Policy A’s sum insured is £20,000. Policy B’s sum insured is £30,000. The total value at risk is £50,000. If the claim is for a loss of £30,000, what contribution would policy A pay?
Self-test questions
a. £15,000
b. £20,000
c. £30,000
d. £12,000
An insurer has paid a claim of £150,000 but, under their subrogation rights, has recovered £160,000. Who is entitled to the balance of £10,000 over and above the claim value?
Self-test questions
a. The insured
b. The insurer
c. The third party
d. The insured and the insurer in equal shares
(67) Clare’s cottage is valued at £100,000 and is covered by two fire insurance policies, one with a sum insured of £50,000 and the other with a sum insured of £100,000. Under the principle of contribution, what maximum payment will Clare receive from the first policy if a fire causes damage costing £60,000 to repair?
iF1 Exam 2023
A. £20,000
B. £25,000
C. £30,000
D. £50,000
In common law, a breach of duty to act in a reasonable way towards others is known as:
Self-test questions
a. A tort
b. Subrogation
c. A breach of contract
d. Liability
A car is badly damaged in an accident and is found to be beyond economic repair. If the insurer meets the loss in full and the car is then sold for scrap, who is entitled to the salvage value?
Self-test questions
a. The policyholder
b. The garage
c. The insurer
d. The insurer and the policyholder in equal shares
(68) A private medical insurance policy includes a clause that allows the insurer to recover payment from a third party for private medical treatment expenses that arise as a result of accidental injury caused by the third party. Under which insurance principle is this clause allowing the insurer to assume the rights of the insured?
iF1 Exam 2023
A. Contribution
B. Reinstatement
C. Subrogation
D. Tort
Julie bought a new bicycle for £1,550 and the next day it was badly damaged by a negligent third party. Her insurer pays her £1,500 and in addition allows her to keep the damaged bicycle as salvage, valued at £50. What is the value of the insurer’s subrogation rights against the negligent third party?
Self-test questions
a. £50
b. £1,500
c. £1,450
d. £1,550
A ‘hold harmless’ clause in respect of a recent accident means that the insurer:
Self-test questions
a. Can acquire Tony’s subrogation rights
b. Can claim only if the third party is insured
c. Must pay the full amount of the claim
d. Has no subrogation rights
(69) By exercising its right of subrogation, an insurer can
iF1 Exam 2023
A. deduct an amount for wear and tear
B. ensure that the insured bears part of the loss
C. recover costs from a third party
D. request a contribution from another insurer
What type of insurance policy has no subrogation rights?
Self-test questions
a. A benefit policy
b. An indemnity policy
c. Motor insurance
d. Household insurance
An insurer is least likely to waive their subrogation rights if the claim is against a:
Self-test questions
a. Parent company of the insured
b. Subsidiary company of the insured
c. Negligent third party of the insured
d. Negligent fellow employee of the insured
(70) Which insurance principle gives an insurer the right to call upon other insurers to share in the settling of a claim?
iF1 Exam 2022
A. Average.
B. Contribution.
C. Good faith.
D. Subrogation.
(71) A building valued at £250,000 is jointly owned by Karen and Delsin, who each individually arrange insurance on it. Karen insures the building for £100,000, whilst Delsin insures it for £150,000. How much of the valid claim is each insurer liable to pay if a loss of £55,000 occurs?
iF1 Exam 2022
A. Karen’s insurer is liable for £22,000 and Delsin’s for £33,000.
B. Karen’s insurer is liable for £27,500 and Delsin’s for £27,500.
C. Karen’s insurer is liable for £33,000 and Delsin’s for £22,000.
D. Karen’s insurer is liable for £55,000 and Delsin’s for £55,000.
(72) Under which insurance principle can an insurer assume the rights of the insured against a negligent
third party to recover money paid out under a claim?
iF1 Exam 2022
A. Arbitration.
B. Average.
C. Contribution.
D. Subrogation.
(73) When a claim is made under a standard fire insurance policy, at what stage can an insurer begin to exercise subrogation rights?
iF1 Exam 2022
A. As soon as a valid claim is notified.
B. As soon as any negligent third party admits liability.
C. As soon as settlement has been agreed.
D. As soon as the insured has been paid.
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06
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0 - General Insurance Definitions2
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0 - Exam Definitions3
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1 - Core principles of insurance45
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2 - The Insurance Market46
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3 - Contract & Agency36
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4 - Insurable Interest18
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5 - Good faith & Disclosure31
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6 - Proximate Cause14
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7 - Indemnity23
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8 - Contribution & Subrogation19
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_Fraud Interview20
