A friend offers to sell a homeowners policy on the side without ever applying for a license. Under §1631, transacting insurance without a license:
a.Is permitted as long as no commission is taken
b.Is allowed for one transaction per year
c.Is unlawful and subject to civil and criminal penalties
d.Is allowed for non-admitted insurers only
Explanation
Section 1631 expressly prohibits any person from soliciting, negotiating, or effecting contracts of insurance unless that person holds a valid license. The penalty includes fines, restitution, and potential criminal prosecution. Lack of commission, one-off transactions, and non-admitted insurer status are not defenses.
Law Reference: Cal. Ins. Code §1631This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
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