California Insurance Code & EthicsQuestion 49 of 215
Which act by a P&C licensee best illustrates a violation of the premium trust statutes (§1733-§1734)?
a.Remitting net premium to the insurer within the time stated in the agency agreement
b.Maintaining a separate fiduciary account labeled "premium trust"
c.Depositing client premiums into the broker's personal checking account to pay rent
d.Returning unearned premium to the insured within 25 days of cancellation
Explanation
Sections 1733-1734 require premiums to be held in fiduciary trust and not commingled or converted. Depositing client premiums into the broker's personal account is the textbook example of commingling and conversion. The other choices describe lawful conduct.
Law Reference: Cal. Ins. Code §1733Practice all 215 questions free — no signup required.
Related questions on this topic
- Under Proposition 103, before a property and casualty insurer may use a new rate in California, the rate must be:
- An insurer routinely tells claimants that policy benefits are lower than they actually are, hoping to settle for less. Under §790.03(h), this conduct is best classified as:
- A friend offers to sell a homeowners policy on the side without ever applying for a license. Under §1631, transacting insurance without a license:
- Under the Fair Claims Settlement Practices Regulations, an insurer's claim adjuster must do which of the following at the beginning of the claim?
- A producer's license issued by the Insurance Commissioner is valid for what period before it must be renewed?
- Under the California Insurance Information and Privacy Protection Act, an insurer may generally disclose personal information collected from an applicant to a third party only if:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California Property & Casualty Insurance License Exam · How we review