An insurer is not admitted to transact insurance in California. Under California Insurance Code Section 703, a licensed agent who helps this insurer sell policies in California:
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 A is correct
Section 703 generally prohibits any person from acting as an agent or broker for a nonadmitted insurer — an insurer not authorized to transact insurance in California — subject to the surplus line exception. A licensed surplus line broker may place coverage with a nonadmitted insurer only when the coverage is not reasonably available in the admitted market and the requirements of the surplus line law are satisfied. Being domiciled in another state, maintaining a California office, or holding an agent's license does not cure the illegality; the insurer itself must be admitted or the placement must go through the surplus line channel.
Why the other options are wrong
- B) Domicile in another state does not make the insurer admitted in California; unless the insurer is admitted or the coverage is placed through the surplus line market, the transaction is prohibited.
- C) Maintaining an office in California does not constitute admission to transact insurance; the insurer must hold a valid California certificate of authority.
- D) The agent's license does not authorize representing a nonadmitted insurer; Section 703 restricts the agent's activity based on the insurer's admitted status.
Memory hook
Nonadmitted insurer = no California business through agents, unless a surplus line broker. Admitted first, agents later.