In California, when a broker solicits a life insurance policy, the broker acts as the agent of:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In California, life and health insurance is transacted by agents, and when a broker solicits a life insurance policy, the broker acts as the agent of the insurer for that transaction. The general common-law distinction, that an agent represents the insurer while a broker represents the insured, is adjusted in life insurance because the entire transaction is conducted on the insurer's behalf. This matters for authority and liability: the broker's acts in soliciting the policy are attributed to the insurer, consistent with the way life insurance business is structured in California. The identity of the policyowner does not change which party the broker represents, and the Department of Insurance is a regulator, not a principal.
Why the other options are wrong
- B) In California life insurance, the broker's authority in the solicitation transaction runs to the insurer, not to the insured. The general rule that a broker represents the insured is modified for life insurance, where the broker acts as the insurer's agent.
- C) The identity of the policyowner, whether it is the insured or another person, does not change which party the broker represents in the transaction. The broker's role as the insurer's agent is fixed by the nature of the life insurance solicitation.
- D) The Department of Insurance regulates licensing and market conduct; it is not a principal represented by the broker. The broker's principal in a life insurance solicitation is the insurer, not the regulatory agency.
Memory hook
In life business, even the broker stands on the insurer's side.