State RegulationsFL specificDifficulty 2/5
A Miami agent collects the initial premium and gives the applicant a binding receipt, but never forwards the money, and the policy is issued as applied for. If a covered loss occurs, the insurer
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Chapter 626, Florida Statutes, because the agent is the insurer's agent for collection, premium received by the agent is deemed received by the insurer. The insurer must therefore honor the policy, and its remedy lies against the defaulting agent - misappropriating premiums exposes the agent to revocation and prosecution by DFS.
Why the other options are wrong
- A) Nonpayment cannot be asserted against the insured when the insurer's own authorized agent collected the money.
- C) The insured already paid once through the insurer's agent; a second demand for the same premium is not permitted.
- D) DFS regulates and disciplines agents; it does not step in to pay insurers' claims.
Memory hook
The insurer answers for its agent's sticky fingers.