State RegulationsCO specificDifficulty 2/5
An Aurora producer promises every applicant who buys a policy this month a valuable flat-screen television, a benefit nowhere mentioned in the policy. How should this be characterized?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
C.R.S. 10-3-1104(1)(g) prohibits giving any valuable consideration as an inducement that is not specified in the policy contract. A television offered to purchasers functions exactly like a cash rebate, and the fact that it is merchandise rather than premium money does not save it under Colorado law.
Why the other options are wrong
- B) The prohibition reaches valuable consideration of any kind, not merely returns of premium.
- C) The wrong is the out-of-contract inducement, not a statement about the policy's own benefits.
- D) No loan condition or debtor relationship exists; C.R.S. 10-3-1105 does not apply here.
Memory hook
A TV with the policy is a rebate in a box.