California Property & Casualty Broker-AgentCalifornia LawHard
An insurance producer is preparing to submit a premium payment to an insurer on behalf of a client. The client paid the producer with a check, and the producer deposited it into a premium trust account. According to California law, how soon must the producer remit these funds to the insurer or the person entitled to them?
- AWithin 15 calendar days of receipt
- BWithin 24 hours of receipt
- CWithin 30 calendar days of the policy effective date
- DWithin 7 calendar days of receipt
Show answer & explanationAnswer & explanation
Correct answer: A. Within 15 calendar days of receipt
Unless otherwise specified in a written agreement with the insurer, an insurance producer in California must remit premiums to the insurer or the person entitled to them within 15 calendar days after their receipt. This ensures timely transfer of funds.
Why the other options are wrong
- B. 24 hours is generally too short for the standard remittance period.
- C. The remittance period is tied to the receipt of funds, not the policy effective date.
- D. 7 days is a common period in some states or for specific transactions, but not the standard for premium remittance in CA.
Premium Remittance Period
The maximum time allowed for an insurance producer to forward collected premiums to the insurer or other entitled party.
- Standard period is 15 calendar days in California.
- Period starts from the date of receipt by the producer.
- Can be modified by a written agreement with the insurer.
Memory trick: Fifteen days to send the dough, or trouble will grow.