Hawaii Adjuster Practice Test

Correct answer: D. An independent contractor investigating auto claims for several insurers

HRS 431:9-105 defines an adjuster as an individual acting for an insurer or an insured as an independent contractor (or an independent contractor's employee) who investigates, reports or adjusts claims. The same section excludes salaried employees of insurers or insurer-owned adjusting firms, attorneys who adjust losses incidentally to their practice, marine loss adjusters and people acting for self-insurers. Only the independent contractor needs a license.

Reference: HRS 431:9-105, definitions of adjuster, independent adjuster and public adjuster

Correct answer: B. He may not, since his license lets him act only on behalf of insurers

HRS 431:9-226(a) limits an adjuster's authority to the license held: an independent adjuster may investigate, report or adjust only on behalf of insurers, and a public adjuster only on behalf of insureds. To represent the homeowner, Keoni would need a separate public adjuster license, which also requires a $10,000 bond. Insurer consent does not expand a license, and Hawaii licenses public adjusters, so this work is not reserved to attorneys.

Reference: HRS 431:9-226(a), powers conferred by an adjuster's license

Correct answer: C. She may not represent both insurer and insured in this transaction

HRS 431:9-224 lets one person hold separate independent and public adjuster licenses, paying the full fee for each, but HRS 431:9-226(b) bars a concurrently licensed adjuster from representing both the insurer and the insured in the same transaction. Holding both licenses does not cure the conflict, and the statute contains no waiver or approval exception.

Reference: HRS 431:9-224 and 431:9-226(b)

Correct answer: A. Complete a state-approved prelicensing course before testing

HRS 431:9-222(a) lists the qualifications: domicile in Hawaii or in a state that permits Hawaii residents to act as adjusters there; experience, special education or training in handling loss claims sufficient for competence; passing the required examination; and paying the license fees. Public adjusters also file a bond. No prelicensing course is required, and the Pearson VUE handbook says the Insurance Division requires no specific prelicensing education program.

Reference: HRS 431:9-222(a); Pearson VUE Hawaii Insurance Licensing Candidate Handbook (January 2026), Exam Eligibility

Correct answer: D. Pass the Hawaii adjuster licensing exam, just as residents must

The Insurance Division states there is no reciprocity for adjusters: residents and nonresidents alike must pass the Hawaii adjuster exam (crop adjusters excepted) before applying through NIPR, consistent with HRS 431:9-206 and 431:9-222. Emergency registration under HRS 431:9-201(b) applies only after a commissioner's declaration and only to that event's losses, so it cannot substitute for a license for year-round work.

Reference: HRS 431:9-206 and 431:9-222; Hawaii Insurance Division, Insurance Licenses and Registrations (Nonresident Adjuster)

Correct answer: B. Successfully pass a reexamination for the license

HRS 431:9-222.5 lets the commissioner issue a limited license to adjusters who handle only workers' compensation or crop claims, and subsection (b) allows the license to be extended biennially upon successfully passing a reexamination. The Insurance Division's renewal instructions repeat that workers' compensation adjusters must retake and pass the Hawaii exam to renew. The $10,000 bond is a public adjuster requirement.

Reference: HRS 431:9-222.5(b); Hawaii Insurance Division, Insurance Licenses and Registrations

Correct answer: B. $10,000

HRS 431:9-223 requires a $10,000 surety bond from an authorized corporate surety, conditioned on the public adjuster accounting to insureds for money or settlements received on their claims. The surety may cancel only on 60 days' advance written notice filed with the commissioner, and the adjuster may instead keep $10,000 in cash or approved securities on deposit with the commissioner.

Reference: HRS 431:9-223, public adjuster's bond

Correct answer: C. 8 years after the transaction is completed

HRS 431:9-229 requires adjusters to keep organized records of each investigation or adjustment, including any fee received, in the licensee's office and open to the commissioner during business hours. The retention period is five years after the transaction is completed, except eight years for workers' compensation claims. Five years is the answer for a property or auto claim, not this one.

Reference: HRS 431:9-229(b), records of adjuster

Correct answer: A. The client, unless the client gives prior written consent

HRS 431:9-230 makes every licensed adjuster a trustee for funds received. Funds must be remitted or held in a federally insured account in Hawaii, separate from the adjuster's own money, and return funds go back within 30 days unless the entitled person directs otherwise in writing. If the account earns interest, the adjuster may not keep it without the prior written consent of the person entitled to the funds.

Reference: HRS 431:9-230, reporting and accounting for funds

Correct answer: D. In writing, within 30 days of the arraignment

HRS 431:9-234.5(b) requires a licensee to report in writing any criminal prosecution in any jurisdiction within 30 days of arraignment, and subsection (c) requires a copy of the complaint or indictment and other relevant documents. Civil or administrative actions are reported within 30 days of final disposition under subsection (a). Waiting for a conviction or for renewal would miss the deadline.

Reference: HRS 431:9-234.5, reporting of actions

Correct answer: C. $270

HRS 431:9-232(b) lets an adjuster reinstate a license inactivated for nonpayment without a written exam if, within 12 months of inactivation, the adjuster pays the unpaid fee plus a penalty of double that fee and complies with chapter 431. That is $90 + (2 x $90) = $270, matching the Insurance Division's $270 fee to reapply within one year of nonrenewal. After a year she would apply as a new applicant.

Reference: HRS 431:9-232(b); Hawaii Insurance Division fee schedule for individual applicants

Correct answer: A. The firm must file her details on its letterhead within 3 working days

After a commissioner's declaration, HRS 431:9-201(b) waives the Hawaii license if the nonresident provides a certified copy of a current license from a state with substantially similar requirements and, within three working days after work begins, the insurer, adjusting company or producer using her files her name, addresses and phone numbers on its letterhead. Registration lasts up to 120 days or a shorter period set by the commissioner.

Reference: HRS 431:9-201(b); Hawaii Insurance Division, Nonresident Emergency Independent Adjuster Registration FAQ

Correct answer: B. The rescission is valid; the $500 is due back within 15 business days

HRS 431:9-244(f) gives the insured the right to rescind a public adjuster contract within three business days after signing, in writing mailed or delivered to the adjuster's address in the contract. Wednesday is within that window. Under subsection (g), anything of value the insured gave under the contract must be returned within 15 business days after the adjuster receives the cancellation notice.

Reference: HRS 431:9-244(f) and (g), contracts between public adjuster and insured

Correct answer: D. Reasonable pay for time spent and expenses, but no percentage

When an insurer, no later than 72 hours after the loss is reported, pays or commits in writing to pay the limits of applicable coverage, HRS 431:9-244(d) bars the public adjuster from taking a percentage commission. The adjuster must tell the insured the recovery might not be increased and is entitled only to reasonable compensation based on time spent and expenses incurred. Here the commitment came 54 hours after the report.

Reference: HRS 431:9-244(d), contracts between public adjuster and insured

Correct answer: C. The exact percentage of the settlement the adjuster will receive

HRS 431:9-244(c) says that if compensation is based on a share of the settlement, the exact percentage must be specified in the contract, which must also be titled "Public Adjuster Contract" and contain the other items listed in subsection (a). Subsection (b) prohibits terms requiring checks payable only to the public adjuster, imposing collection costs or late fees, or precluding the insured from pursuing civil remedies.

Reference: HRS 431:9-244(a) to (c), contracts between public adjuster and insured

Correct answer: A. A reply addressing her concerns within 15 working days

HRS 431:13-103(a)(11)(B) makes it an unfair claim settlement practice, when done as a general business practice, to fail to respond with reasonable promptness, and in no case more than 15 working days, to communications from policyholders, other persons including the commissioner, or another involved insurer. The response must be more than an acknowledgment that the communication was received and must adequately address the concerns raised.

Reference: HRS 431:13-103(a)(11)(B), unfair claim settlement practices

Correct answer: B. 30 calendar days of affirming liability

HRS 431:13-103(a)(11)(F) lists failing to offer payment within thirty calendar days of affirmation of liability, when the claim amount has been determined and is not in dispute, as an unfair claim settlement practice when it is a general business practice. The 15 working day limit in item (B) applies to responding to communications, not to paying claims.

Reference: HRS 431:13-103(a)(11)(F), unfair claim settlement practices

Correct answer: C. Once it remains unresolved 30 days after the report

HRS 431:13-103(a)(11)(G) requires insurers to give the insured, or the beneficiary when applicable, a reasonable written explanation for any delay on every claim that remains unresolved for thirty calendar days from the date it was reported. Waiting for an expert's report does not excuse the explanation, and the duty does not depend on a complaint being filed.

Reference: HRS 431:13-103(a)(11)(G), unfair claim settlement practices

Correct answer: D. Prohibited, since more benefits are probable under the policy

HRS 431:13-103(a)(11)(Q) prohibits indicating on a payment draft, check or accompanying letter that a payment is "final" or a release of any claim when additional benefits are probable under the policy, unless the policy limit has been paid or there is a bona fide dispute over coverage or amount. Contents benefits are still pending, so the wording is improper. Item (L) also requires stating the coverage each payment is made under.

Reference: HRS 431:13-103(a)(11)(L) and (Q), unfair claim settlement practices

Correct answer: A. Three or more written complaints in 12 months citing separate violations

Each unfair claim settlement practice in HRS 431:13-103(a)(11) must be committed with such frequency as to indicate a general business practice. Subsection (c) provides that three or more written complaints received by the commissioner within any twelve-month period, charging separate violations, create a rebuttable presumption of a general business practice. Under subsection (d), complaint numbers alone do not establish a violation if the insurer rebuts the presumption.

Reference: HRS 431:13-103(c) and (d)

Correct answer: B. $50,000

HRS 431:13-201(a)(1) allows a fine of up to $1,000 per violation, capped at $10,000, but when the person knew or reasonably should have known of the violation the limit rises to $5,000 per violation, not to exceed $50,000 in any six-month period. Fourteen violations x $5,000 = $70,000, which exceeds the cap, so the maximum is $50,000. Knowing violations can also lead to license suspension or revocation.

Reference: HRS 431:13-201(a), cease and desist and penalty orders

Correct answer: C. An unfair claim practice that delays investigation or payment

Item (N) of HRS 431:13-103(a)(11) lists delaying the investigation or payment of claims by requiring an insured, a claimant, or the physician or advanced practice registered nurse of either, to submit a preliminary claim report and then formal proof of loss forms when both contain substantially the same information. The item sits in the general claim settlement list, so it is not limited to health claims.

Reference: HRS 431:13-103(a)(11)(N), unfair claim settlement practices

Correct answer: D. $300,000

HRS 431:16-108(a)(1) obligates the Hawaii Insurance Guaranty Association to pay covered claims up to $300,000 per claim, and never more than the policy limit, except that workers' compensation benefits are paid in full and unearned premium refunds are capped at $10,000 per policy. The $420,000 judgment exceeds the cap, so the association pays $300,000; the remaining $120,000 is not paid by the association.

Reference: HRS 431:16-108(a)(1), powers and duties of the association

Correct answer: B. Workers' compensation benefits owed to an injured worker

Under HRS 431:16-108(a)(1), the association pays the full amount of covered workers' compensation claims, up to $10,000 per policy for return of unearned premium, and up to $300,000 per claim for all other covered claims. Under HRS 431:16-105, covered claims never include punitive damages, interest, or first-party claims by insureds with a net worth above $25 million, and HRS 431:16-112 requires claimants to exhaust other applicable insurance first.

Reference: HRS 431:16-105, 431:16-108(a)(1) and 431:16-112

Correct answer: C. New York's 1943 standard fire policy or its approved equivalent

HRS 431:10-210(a) adopts as Hawaii's standard the fire policy authorized and in effect in New York on December 31, 1943, or an approved equivalent whose fire coverage, viewed as a whole, is substantially equivalent or more favorable to the insured. Fire policies must use that form or an approved equivalent; the section does not apply to inland marine, motor vehicle or aircraft policies.

Reference: HRS 431:10-210(a), standard form fire insurance policy