State RegulationsCO specificDifficulty 1/5
Under C.R.S. § 10-2-704, premiums collected by a Colorado producer are held in a fiduciary capacity, which means the producer:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-2-704(1) makes the producer a fiduciary with respect to collected premiums, and § 10-2-704(3) provides that fiduciary funds may never be commingled with the producer's personal funds. The money belongs to the transaction, not to the producer, so borrowing from it or blending it with personal accounts is prohibited outright.
Why the other options are wrong
- A) Fiduciary funds may not be borrowed regardless of repayment speed; commingling with personal funds is prohibited without exception.
- C) As a fiduciary, the producer holds the premiums in trust for the transaction; the producer does not own them pending issuance.
- D) Keeping premiums in a personal checking account is precisely the commingling that C.R.S. § 10-2-704(3) forbids.
Memory hook
Fiduciary funds stay separate — never borrow, never blend.