State RegulationsVA specificDifficulty 2/5
An unlicensed office assistant in Virginia negotiates the terms of an insurance application with a customer, and the insurer wants to pay the assistant a commission for the sale. Which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Va. Code § 38.2-1812 bars an insurer from paying, directly or indirectly, any commission for services as an agent unless the person is then a duly appointed agent of that insurer and holds a valid license for the class of insurance involved at the time of the transaction. The mirror-image rule bars any person other than a duly licensed and appointed agent from accepting such compensation. Customer consent, reasonableness, or relabeling the payment cannot cure the defect, and the Virginia Bureau of Insurance enforces both sides of the prohibition.
Why the other options are wrong
- A) The customer's objection or consent is irrelevant; the statutory conditions run to licensing and appointment.
- B) Reasonableness and documentation do not substitute for the license-and-appointment requirement.
- D) Relabeling a commission as a bonus does not remove the statutory bar on paying unlicensed persons for sales activity.
Memory hook
No license, no appointment, no commission — for payer or receiver.