California Insurance Code & EthicsQuestion 53 of 716
Premiums collected by an agent from a policyholder, before being remitted to the insurer, are held by the agent in what capacity?
a.As an unsecured personal loan to the insurer
b.Joint capacity with the policyholder's funds
c.Fiduciary capacity, in a premium trust fund
d.Personal capacity, with no special duty
Explanation
§1733-1734 require licensees to hold all funds received from premiums in a fiduciary capacity, typically in a separately identifiable premium trust fund. Commingling with personal funds is grounds for license discipline.
Law Reference: Cal. Ins. Code §1734This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)