State RegulationsCO specificDifficulty 2/5
During a Division of Insurance examination, a Colorado producer's records show that premium funds collected from insureds were deposited into the producer's personal checking account and used to pay household expenses, with the amounts later replaced. What rule has the producer violated?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
C.R.S. § 10-2-704(3) prohibits a producer from commingling premium funds with personal funds. Premiums are held in a fiduciary capacity under C.R.S. § 10-2-704(1), and depositing them into a personal account — even briefly or with later repayment — is a violation the Colorado Division of Insurance can sanction.
Why the other options are wrong
- A) Repaying the funds does not undo the commingling; C.R.S. § 10-2-704(3) prohibits the act itself, not merely a shortfall.
- B) The violation is the mixing of fiduciary and personal money, not the identity of the insurer receiving remittance.
- C) No rule requires insureds' advance notice; the duty runs to the Commissioner of Insurance and concerns fiduciary handling.
Memory hook
Personal account + premium dollars = commingling, even if you pay it back.