State RegulationsCO specificDifficulty 2/5
A Colorado resident who owns commercial property asks a licensed producer to obtain coverage from an insurer that is not authorized to do business in Colorado. How does Colorado law treat this transaction?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under part 9 of article 3 of title 10, including C.R.S. § 10-3-903, insurance business in Colorado may be transacted only by entities authorized by the Colorado Division of Insurance through properly licensed producers. Placing coverage with an unauthorized entity is a prohibited transaction and exposes both the entity and the producer to enforcement action by the Division, regardless of any waiver the insured might sign.
Why the other options are wrong
- A) An insured's waiver cannot cure a violation of the unauthorized-entity prohibitions; the statute protects the regulatory system, not just the individual insured.
- C) Direct payment of premium does not legalize the transaction; the prohibition reaches the placement itself, not merely the flow of money.
- D) Colorado draws no commercial-versus-personal exception to the requirement that insurance be transacted through authorized entities.
Memory hook
No Colorado license, no Colorado sale — waivers and wire transfers change nothing.