State RegulationsCO specificDifficulty 2/5
A producer licensed in Colorado sells a policy issued by an insurer that is not authorized in Colorado, believing the sale is proper because the insurer is reputable in other markets. What is the producer's position under Colorado law?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Part 9 of article 3 of title 10, including C.R.S. § 10-3-904.5, reaches persons who sell, solicit, or negotiate coverage for unauthorized entities. The producer cannot avoid responsibility by pointing to the insurer's reputation or out-of-state standing; the Colorado Division of Insurance may pursue the producer directly for facilitating business with a nonadmitted insurer outside any lawful exception.
Why the other options are wrong
- B) The prohibitions apply to producers as well as insurers; selling for an unauthorized entity is itself a violation.
- C) The producer's own Colorado license does not launder business written for an unauthorized insurer.
- D) Timing of delivery is irrelevant; the absence of insurer authorization makes the transaction prohibited.
Memory hook
Your license is not a pass for someone else's missing one.