State RegulationsCO specificDifficulty 2/5
To simplify cash management, a Denver producer briefly deposits client premium checks into his personal operating account before transferring the funds to the agency's premium trust account. Under C.R.S. § 10-2-704(3), how is this practice characterized?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
C.R.S. § 10-2-704(3) directs that premiums collected by a licensee are held in a fiduciary capacity and must never be commingled with the licensee's personal funds. Depositing client premium checks into a personal account is commingling when it occurs, and no interest convenience or later transfer excuses it; the Division of Insurance enforces this fiduciary standard.
Why the other options are wrong
- A) Meeting a later remittance deadline does not authorize commingling; the funds may never be mixed with personal money.
- B) The absence of interest is irrelevant; the prohibition targets the mixing of fiduciary and personal funds itself.
- D) The insurer's position is immaterial; the commingling prohibition is enforced by the Division of Insurance under C.R.S. § 10-2-704(3).
Memory hook
Client money and your money never share an account.