PLNew Yorkmedium
A New York personal-lines broker collects $4,800 in premium from a homeowner client to forward to the insurer. Under NY Ins. Law § 2120, how must the broker hold those funds?
AIn the broker's general operating account, since premium fully earned is the broker's property
In a fiduciary capacity as trust funds, separately identifiable and not commingled with the broker's personal or business funds
CIn a personal money-market account titled in the broker's individual name
DIn escrow with the New York State Comptroller until the policy is bound
Why this is the answer
Section 2120 of the New York Insurance Law provides that every agent, broker, or other producer who receives any funds representing premium acts in a fiduciary capacity. The funds must be held as trust funds, not commingled with the producer's personal or business operating funds, and must be remitted to the insurer (or returned to the insured) according to the producer's contractual schedule. Violation is grounds for license discipline under § 2110 and can constitute conversion. A trust or fiduciary account at a NY bank — not the operating account — is the appropriate place to deposit premium pending remittance.
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