California Insurance Code & EthicsQuestion 36 of 474
An unlicensed assistant in a personal lines office quotes an auto policy premium to a walk-in customer and binds coverage by signing a temporary cover note. Under §1631, this conduct is:
a.Prohibited; transacting insurance without a license is unlawful
b.Allowed if the customer signs a written waiver
c.Allowed if a licensed broker reviews the file within 30 days
d.Allowed because cover notes are not formal policies
Explanation
Insurance Code §1631 prohibits any person from soliciting, negotiating, or effecting insurance contracts in California without a license. Quoting premiums and binding coverage are core licensed activities; after-the-fact review by a broker does not cure the violation.
Law Reference: Cal. Ins. Code §1631This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- A California personal lines broker-agent renewing a license for the second time must complete how many hours of continuing education during each two-year license period, including the ethics requirement?
- A personal lines broker-agent collects premium from a homeowner. Under §1733, those funds are held in what capacity?
- Under §1668, the Commissioner may deny a personal lines broker-agent license application for any of the listed grounds. Which of the following is NOT a statutory ground for denial?
- Which statement best captures the legal distinction between an 'insurance agent' and an 'insurance broker' under California law?
- For a claim to be payable on property covered by a California homeowners policy, at what point must the insured's insurable interest in that property exist?
- An insurer intends to non-renew a personal auto policy at the end of the term. Under §663, how much advance written notice must be sent to the named insured?
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review