State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
A California-licensed agent places a client's life policy with an insurer that is NOT admitted to transact business in California, without using a surplus line broker. This action is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 703 prohibits any person from acting as an agent for a nonadmitted insurer in California, with a limited exception for surplus line brokers transacting in accordance with the surplus line law. A life agent placing coverage with an unadmitted carrier is therefore acting without authority and is subject to penalties. 'Admitted' means the insurer holds a California certificate of authority.
Why the other options are wrong
- B) Client disclosure cannot cure a statutory prohibition; Section 703's bar applies regardless of consent.
- C) A lower premium is not an exception; the surplus line process, not price, governs lawful access to nonadmitted markets.
- D) Being licensed in another state does not make an insurer admitted in California; admission requires a California certificate of authority.
Memory hook
Nonadmitted + no surplus line = no business. Section 703 closes that door.