State RegulationsFL specificDifficulty 2/5
A Tampa agent collects a client's monthly premium. Until the funds are forwarded to the insurer, the agent holds them
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 C is correct
Under Chapter 626, Florida Statutes, and DFS rules governing agent conduct, premiums collected by an agent are fiduciary funds. The agent holds them in trust for the insured and the insurer, must keep them accounted for, and may never convert them to personal use; doing so is misappropriation and grounds for license revocation.
Why the other options are wrong
- A) Commission becomes payable only under the agent's compensation arrangement with the insurer - collecting a premium does not earn it.
- B) The funds are entrusted, not lent; the agent has no right to use them now and repay later.
- D) DFS does not hold premium funds in escrow; accountability rests personally with the agent as fiduciary.
Memory hook
The client's premium is never the agent's money.