State RegulationsNY specificDifficulty 1/5
Under N.Y. Ins. Law §2120, when a New York agent collects a premium from an applicant, the agent must:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §2120, premiums and other fiduciary funds an agent receives belong to the insurer or the insured, and the agent holds them in trust — deposited so that they are segregated from the agent's personal funds. Misuse of these funds is a breach of fiduciary responsibility that can cost the agent a license and more.
Why the other options are wrong
- A) Premiums go to the insurer through ordinary remittance channels, not personally to one of its executives.
- C) Mixing premium money with the agent's personal account is commingling — the very evil §2120 exists to prevent.
- D) The applicant has paid for coverage; the agent's duty is to safeguard and remit the money, not to return it.
Memory hook
Premium money is trust money — never personal money.