State RegulationsFL specificDifficulty 2/5
An insured asks her agent in writing to cancel a policy before its expiration date. Under Florida's rules on premium accountability, the agent must
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 626, Florida Statutes, an agent's fiduciary accountability covers not only forwarding premiums to insurers but also returning funds that belong to the insured. When a policy is cancelled mid-term, the agent must account for and promptly remit any unearned premium or refund held in trust; converting it is misappropriation subject to DFS discipline.
Why the other options are wrong
- A) The agent is accountable directly to the insured for funds held in trust and cannot deflect that duty to the insurer.
- B) Unearned premium is the insured's money; the agent's compensation comes only from the commission arrangement with the insurer.
- D) DFS does not act as a distributor of refunds; the fiduciary agent owes that duty personally.
Memory hook
Refunds flow back the way the premium came in - through the fiduciary.