A company entering the Colorado market is documenting rules for financial responsibility. Which statement is accurate?
Correct Answer
C) Colorado individual E&O coverage must be at least $100,000 per covered claim with at least a $300,000 annual aggregate and a deductible no greater than $1,000, or $20,000.
Colorado individual E&O coverage must be at least $100,000 per covered claim with at least a $300,000 annual aggregate and a deductible no greater than $1,000, or $20,000 for policies primarily insuring reverse mortgage transactions.
Why This Is the Correct Answer
Colorado individual E&O coverage must be at least $100,000 per covered claim with at least a $300,000 annual aggregate and a deductible no greater than $1,000, or $20,000. This is correct because Colorado individual E&O coverage must be at least $100,000 per covered claim with at least a $300,000 annual aggregate and a deductible no greater than $1,000, or $20,000 for policies primarily insuring reverse mortgage transactions.
Why the Other Options Are Wrong
Option A: Temporary authority automatically removes Colorado-specific application, background-check, bond, and E&O requirements.
Temporary authority automatically removes Colorado-specific application, background-check, bond, and E&O requirements. is not correct because it does not match the Colorado rule applied in this scenario.
Option B: A temporary Colorado MLO may continue indefinitely if the sponsor approves an extension.
A temporary Colorado MLO may continue indefinitely if the sponsor approves an extension. is not correct because it does not match the Colorado rule applied in this scenario.
Option D: Inactive Colorado license status still allows origination if E&O coverage is current.
Inactive Colorado license status still allows origination if E&O coverage is current. is not correct because it does not match the Colorado rule applied in this scenario.
Memory Technique
CO -> state mortgage compliance
Exam Tip
Identify the Colorado state requirement first, then choose the answer that preserves licensing, disclosure, record, supervision, or enforcement compliance.
Common Mistakes to Avoid
- -Using a generic national rule when the Colorado state requirement controls
- -Treating Colorado licensing, reporting, advertising, records, or enforcement duties as optional
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