What Is a Broker Under California Insurance Code?


What is an insurance broker? How is one defined under California regulations? It’s fairly straightforward under the amendments effective as of January 1, 2019.

California Insurance Code says, “An insurance broker is a person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an admitted insurer.”

What is an insurance broker according to California or Nevada code?

To become a licensed insurance professional in California or Nevada, a broker has to:

  • select a license type
  • complete the required hours of pre-license training
  • undergo a background check and fingerprinting
  • pass the state exam
  • submit an application
  • secure Errors & Omissions (E&O) coverage
  • complete required Continuing Education (CE) courses to maintain your license

More information about becoming a licensed broker is listed below.

License Types

In California, there are more than two dozen license types; in Nevada, there are 18 license types. “Accident and Health Agent” and “Life Agent” are among the most popular licenses for California brokers. Most Nevada brokers choose a “Producer” license. Complete lists are available on the California Department of Insurance (CDI) website and the Nevada Division of Insurance (DOI) website.

Pre-License Training

California requires pre-license training. California requires 32 hours of education. That includes 12 hours in ethics and California insurance code plus 20 hours of education for your selected insurance field. Brokers who want to specialize in more than one type of product can take more course hours to cover two market niches. Information on pre-licensing education and providers is available on the  CDI website.

Nevada does not require pre-license education. However, individuals have a higher chance of passing the required exam by taking exam prep courses. To find approved pre-licensing courses, the state suggests you search on the Sircon web page. Sircon handles online license applications, license renewals, education courses, transcripts, and related inquiries for Nevada. Training is also available through resources like Kaplan Financial Education and others.

Background Check

Background checks and fingerprint impressions are required for unlicensed applicants. The fingerprints may be taken in advance of the license exam. That minimizes potential delays in licensing, while awaiting FBI background check results.

Visit the California Resident Licensing Fingerprint Requirements page on the CDI website for more information.

For Nevada’s Digital Fingerprints requirements, visit the Online Resources page and the Individual Producers page for Resident Individuals.

State Exam

In California, PSI Services, LLC handles exam scheduling for individuals. Instructions for scheduling examinations are posted on PSI’s Examination Scheduling Service web page. Individuals may schedule examinations with PSI either online or by telephone.

The state of Nevada uses Pearson VUE for its license exam. You can download the Candidate Handbook and get Content Outlines on the DOI website. You can also get information about education providers and search provider and course listings. A practice exam is available for a fee.

Submit Your Application

California requires Individual Resident License applicants to apply online Sircon Online Services or the National Insurance Producer Registry. The state says, “no application for a license shall be deemed filed unless the document has been submitted by a means of electronic service approved by the commissioner.”

Residents of Nevada should apply electronically using Sircon. The Nevada fee is $185. Additional transaction fees may apply in addition to the state licensing fee.

E&O Coverage

To protect yourself and your business, Errors & Omission (E&O) insurance is encouraged for all licensed brokers. Some states require a broker surety bond of $10,000. However, E&O insurance is more comprehensive and offers greater protection.

E&O goes beyond traditional liability insurance. It protects you and your business from claims if you are sued for inadequate work or negligent acts. Most E&O policies cover judgements, attorney fees, court costs, and settlements up to the limits specified in your contract.

The Investopedia website offers additional information on E&O. Multiple insurers are active in the E&O marketplace. You can look for quotes on the Insureon website.

Continuing Education Requirements

To maintain a broker license in California or Nevada, you need to earn Continuing Education (CE) hours.

California brokers need 24 hours of CE during each two-year license term. That includes at least three hours of ethics training. For more information, visit the CDI web page on California’s Continuing Education Program Requirements,

Nevada requires 30 hours of CE every three years, including three hours of ethics training. Visit Sircon’s website for information concerning courses related to your chosen license type.

More Info from W&B

Word & Brown offers many valuable resources to brokers – new and experienced. Our product and service portfolio is paralleled. We deliver tools and technology to help you do your job more efficiently and serve the best interests of your customers. Ask your W&B representative for details. If you’re not yet doing business with us, ask about our career kick-starter, A Six-Step Guide to Getting a Health Insurance License. Contact one of our six regional offices in California and Nevada to get started.

How Much Can You Earn as an Insurance Broker?

Find out what you can be earning as an insurance agent in our handy, up-to-date salary guide. Produced by our in-house experts, this resource is bound to help you in advancing your career.

Word & Brown Salary Guide