State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 703, a licensed California agent may place business with a nonadmitted insurer only:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Section 703 prohibits agents and brokers from negotiating or placing insurance with nonadmitted insurers, subject to the surplus line exception. When coverage is not available from admitted insurers, a licensed surplus line broker may lawfully place the risk with a nonadmitted insurer in accordance with surplus line law. This protects consumers because nonadmitted insurers are not covered by California's guaranty fund and are less regulated.
Why the other options are wrong
- A) There is no fee-and-waiver pathway for a standard agent to use a nonadmitted insurer; surplus line licensing and procedures are required.
- B) The prohibition has a surplus line exception, so placement is not absolutely forbidden.
- D) Domicile in another state does not cure nonadmitted status; the insurer must be admitted in California or placed via surplus lines.
Memory hook
Nonadmitted = off-limits to agents. Surplus line brokers are the only door, and only when admitted markets will not write it.