State RegulationsCO specificDifficulty 2/5
A Colorado producer is asked by a client to place a commercial liability policy with an insurer that does not hold a certificate of authority from the Colorado Division of Insurance. How should the producer proceed?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-3-903 and its companion provisions bar transacting the business of insurance in Colorado without a certificate of authority issued by the Colorado Division of Insurance. A producer who places coverage with an unauthorized entity participates in that violation and leaves the client without the protections of Colorado's admitted-market framework, so the placement must be declined.
Why the other options are wrong
- A) Disclosure to the client does not cure the statutory prohibition; the act of placing business with an unauthorized entity is itself the problem.
- C) Who pays the premium is irrelevant; direct payment to the insurer does not authorize the transaction.
- D) After-the-fact reporting does not legalize a placement made with an unauthorized entity in the first place.
Memory hook
No certificate of authority means no Colorado placement — decline and move on.