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Hawaii Property & Casualty (P&C) Insurance Producer
Licensing Examination | Latest Verified Questions and
Detailed Answers
OVERVIEW DESCRIPTION:
This comprehensive set of multiple-choice questions is designed for the Hawaii Property &
Casualty (P&C) Insurance Producer Exam. It covers key topics including insurance
principles (risk, peril, hazard, indemnity, subrogation), contract law (adhesion, aleatory,
unilateral), policy components (declarations, insuring agreement, conditions, exclusions),
liability and property coverages (CGL, Homeowners, Auto, Inland Marine, Workers’
Compensation), Hawaii-specific regulations (fines, license renewal, reporting
requirements, Commissioner’s authority), and ethical/legal concepts (negligence,
comparative fault, unfair trade practices). Each question includes a correct answer and a
concise expert rationale to reinforce understanding of both general insurance
fundamentals and Hawaii state-specific rules.
QUESTION 1
An applicant intentionally conceals a material fact on their insurance application, leading
the insurer to issue a policy they would have otherwise denied. What is the most likely
consequence?
A) The policy will be automatically renewed with an increased premium.
B) The policy will be voidable by the insurer.
C) The producer will be required to refund the premium to the applicant.
D) The policy becomes a contract of adhesion.
CORRECT ANSWER: B
EXPERT RATIONALE: A material misrepresentation or concealment made with intent to
deceive allows the insurer to void the policy, as it violates the principle of utmost good
faith.
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QUESTION 2
Under Hawaii's pure comparative negligence rule, how is a plaintiff's recovery of
damages determined in a lawsuit?
A) The plaintiff recovers only if the defendant is 100% at fault.
B) The plaintiff recovers nothing if they are 51% or more at fault.
C) The plaintiff's recovery is reduced by their own percentage of fault, regardless of how
high it is.
D) The plaintiff's recovery is reduced only if they are more than 50% at fault.
CORRECT ANSWER: C
EXPERT RATIONALE: Hawaii follows a pure comparative negligence rule, meaning a
plaintiff's recovery is reduced by their own percentage of fault, no matter how high that
percentage is.
QUESTION 3
Which element is NOT required to establish a claim of negligence in a Hawaii casualty
case?
A) Duty of care owed to the plaintiff.
B) Breach of that duty by the defendant.
C) Proximate causation linking the breach to the injury.
D) Intent by the defendant to cause the specific harm.
CORRECT ANSWER: D
EXPERT RATIONALE: Negligence is based on a failure to exercise reasonable care, not
on intentional conduct. Intent to cause harm is required for an intentional tort, not for a
negligence claim.
QUESTION 4
What is the maximum fine the Hawaii Insurance Commissioner can impose for a
violation of a cease and desist order?
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A) $1,000
B) $5,000
C) $10,000
D) $50,000
CORRECT ANSWER: C
EXPERT RATIONALE: Under Hawaii insurance regulations, the maximum fine for
violating a cease and desist order is $10,000 per violation.
QUESTION 5
An insurer cancels a policy that has been in effect for four months. The policy was paid
in full with an annual premium. Under standard policy conditions, what type of refund is
typically required?
A) Short-rate refund.
B) Pro-rata refund.
C) No refund is required.
D) Flat rate refund.
CORRECT ANSWER: B
EXPERT RATIONALE: When an insurer cancels a policy, a pro-rata refund is typically
required, meaning the unearned premium for the remaining time period is returned to
the insured.
QUESTION 6
In a mutual insurance company, the policyholders are considered:
A) Customers.
B) Owners.
C) Creditors.
D) Third-party beneficiaries.
CORRECT ANSWER: B
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EXPERT RATIONALE: A mutual company is owned by its policyholders, who have
voting rights and may receive policy dividends as a return of surplus.
QUESTION 7
A producer submits an application to an insurer but has not yet received the policy. The
producer then gives the applicant a document stating coverage is in force immediately.
This document is known as a(n):
A) Endorsement.
B) Binder.
C) Declaration page.
D) Warranty.
CORRECT ANSWER: B
EXPERT RATIONALE: A binder is a temporary, written evidence of coverage that
provides immediate protection until the actual policy is issued by the insurer.
QUESTION 8
A business owner leaves an oily rag on the floor of a woodworking shop, increasing the
chance of a fire. This is an example of what type of hazard?
A) Morale hazard.
B) Physical hazard.
C) Moral hazard.
D) Legal hazard.
CORRECT ANSWER: B
EXPERT RATIONALE: A physical hazard arises from the tangible condition or use of the
property itself, such as an oily rag that increases the chance of fire.
QUESTION 9
Which statement best describes the function of the Law of Large Numbers in insurance?
Hawaii Property & Casualty (P&C) Insurance Producer
Licensing Examination | Latest Verified Questions and
Detailed Answers
OVERVIEW DESCRIPTION:
This comprehensive set of multiple-choice questions is designed for the Hawaii Property &
Casualty (P&C) Insurance Producer Exam. It covers key topics including insurance
principles (risk, peril, hazard, indemnity, subrogation), contract law (adhesion, aleatory,
unilateral), policy components (declarations, insuring agreement, conditions, exclusions),
liability and property coverages (CGL, Homeowners, Auto, Inland Marine, Workers’
Compensation), Hawaii-specific regulations (fines, license renewal, reporting
requirements, Commissioner’s authority), and ethical/legal concepts (negligence,
comparative fault, unfair trade practices). Each question includes a correct answer and a
concise expert rationale to reinforce understanding of both general insurance
fundamentals and Hawaii state-specific rules.
QUESTION 1
An applicant intentionally conceals a material fact on their insurance application, leading
the insurer to issue a policy they would have otherwise denied. What is the most likely
consequence?
A) The policy will be automatically renewed with an increased premium.
B) The policy will be voidable by the insurer.
C) The producer will be required to refund the premium to the applicant.
D) The policy becomes a contract of adhesion.
CORRECT ANSWER: B
EXPERT RATIONALE: A material misrepresentation or concealment made with intent to
deceive allows the insurer to void the policy, as it violates the principle of utmost good
faith.
,2|Page
QUESTION 2
Under Hawaii's pure comparative negligence rule, how is a plaintiff's recovery of
damages determined in a lawsuit?
A) The plaintiff recovers only if the defendant is 100% at fault.
B) The plaintiff recovers nothing if they are 51% or more at fault.
C) The plaintiff's recovery is reduced by their own percentage of fault, regardless of how
high it is.
D) The plaintiff's recovery is reduced only if they are more than 50% at fault.
CORRECT ANSWER: C
EXPERT RATIONALE: Hawaii follows a pure comparative negligence rule, meaning a
plaintiff's recovery is reduced by their own percentage of fault, no matter how high that
percentage is.
QUESTION 3
Which element is NOT required to establish a claim of negligence in a Hawaii casualty
case?
A) Duty of care owed to the plaintiff.
B) Breach of that duty by the defendant.
C) Proximate causation linking the breach to the injury.
D) Intent by the defendant to cause the specific harm.
CORRECT ANSWER: D
EXPERT RATIONALE: Negligence is based on a failure to exercise reasonable care, not
on intentional conduct. Intent to cause harm is required for an intentional tort, not for a
negligence claim.
QUESTION 4
What is the maximum fine the Hawaii Insurance Commissioner can impose for a
violation of a cease and desist order?
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A) $1,000
B) $5,000
C) $10,000
D) $50,000
CORRECT ANSWER: C
EXPERT RATIONALE: Under Hawaii insurance regulations, the maximum fine for
violating a cease and desist order is $10,000 per violation.
QUESTION 5
An insurer cancels a policy that has been in effect for four months. The policy was paid
in full with an annual premium. Under standard policy conditions, what type of refund is
typically required?
A) Short-rate refund.
B) Pro-rata refund.
C) No refund is required.
D) Flat rate refund.
CORRECT ANSWER: B
EXPERT RATIONALE: When an insurer cancels a policy, a pro-rata refund is typically
required, meaning the unearned premium for the remaining time period is returned to
the insured.
QUESTION 6
In a mutual insurance company, the policyholders are considered:
A) Customers.
B) Owners.
C) Creditors.
D) Third-party beneficiaries.
CORRECT ANSWER: B
, 4|Page
EXPERT RATIONALE: A mutual company is owned by its policyholders, who have
voting rights and may receive policy dividends as a return of surplus.
QUESTION 7
A producer submits an application to an insurer but has not yet received the policy. The
producer then gives the applicant a document stating coverage is in force immediately.
This document is known as a(n):
A) Endorsement.
B) Binder.
C) Declaration page.
D) Warranty.
CORRECT ANSWER: B
EXPERT RATIONALE: A binder is a temporary, written evidence of coverage that
provides immediate protection until the actual policy is issued by the insurer.
QUESTION 8
A business owner leaves an oily rag on the floor of a woodworking shop, increasing the
chance of a fire. This is an example of what type of hazard?
A) Morale hazard.
B) Physical hazard.
C) Moral hazard.
D) Legal hazard.
CORRECT ANSWER: B
EXPERT RATIONALE: A physical hazard arises from the tangible condition or use of the
property itself, such as an oily rag that increases the chance of fire.
QUESTION 9
Which statement best describes the function of the Law of Large Numbers in insurance?
