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Business Entity Frequently Asked Questions

Frequently Asked Questions


Name Approval Process

Application Process – Step by Step

Typical Business Entity License Application Errors

Making Changes to an Existing Business Entity

Mergers and Acquisitions

Business Entity Name Approval Process

Legal Names, Doing Business As, and Fictitious Names

1. What is a DBA and am I required to use one?


"DBA" stands for "Doing Business As". A DBA may be required for use to solicit insurance business in the State of California if the applicant's or licensee's true legal name of an individual or a business entity cannot be used.

If you are a business entity and the true legal name of the business entity does not meet California Insurance Code (Cal. Ins. Code), Section 1724.5 and the true name does not meet one of the four exemptions stated in Title 10, California Code of Regulations (10 Cal. Code of Regs.), Section 2052.4, the California Department of Insurance (CDI) will require the business entity to use a DBA name for all solicitation of insurance in the State of California.

If you are an individual licensed producer, you may request permission from CDI to use a DBA name for solicitation of insurance business in the State of California.

2. How does CDI review a proposed business entity's legal name or DBA name and approve that name?


CDI's Producer Licensing Bureau, Business Entity Unit will first review the legal business name and any proposed DBA names using the following criteria:

  • CDI reviews the application to determine if the applicant is conducting any business, other than insurance, which amounts to 80 percent or more of the total business conducted by the applicant.
  • If the business entity is performing other work more than 80 percent of the time, CDI determines if the business type meets one of four exemptions (10 Cal. Code of Regs,Section 2052.4). If the business entity qualifies for an exemption, the name of the business entity may be approved.
  • If the business entity does not meet one of the four exemptions, CDI then determines if the legal name of the business entity meets all of the required name approval criteria as stated in Cal. Ins. Code Section 1724.5 and 10 Cal. Code of Regs, Section 2050 et seq. 
    • The word "Insurance" must be included in the proposed name.
    • If the word "Insurance" is included the name, CDI then checks to make sure one of the six definitive words ("Agency," "Services," "Marketing," "Sales", "Center" or "Solutions") is also included in the name.
    • If one of the six definitive words is present, CDI then checks to see if any unacceptable words are included in the proposed name, or if any words or phrase are used improperly in the proposed name.
    • If the proposed name is free of prohibited words, CDI then checks to determine if the proposed name is unique based on at least the first two words of the name, ignoring any numbers or single letters that may precede the name.
    • Terms or phrases that are determined to be well-known and commonly-used (for example, "Best Buy") will not be approved for use as a business name. The name may not mislead the public in any respect. For example, a name cannot be the same as the name of well-known company or so similar as to imply affiliation with a well-known company.
    • Additionally, a business name that is too similar phonetically to another business name that is already in use will not be approved. (For example, "Flours Insurance Services" is too similar to "Flowers Insurance Services".)

3. If I have submitted a request for fictitious name (DBA), an online name reservation request, or an application how can I check on the status?

 

Please allow ten business days before contacting the Business Entity Unit at (916) 492-3069 for a status update for a pending name. This allows the Business Entity Analyst time to review and process your documents and contact you if there are any deficiencies. After the ten business days have elapsed, please leave a voice mail message that includes your name, telephone number, and the applicable information described below, as this will allow the Business Entity Analyst to better respond to your inquiry.

  • If you submitted an application for a business entity license, your message should specify whether the application was submitted online through CDI's website or by mail
  • Online Application Submission - If you submitted a name approval request online through the Sircon Business Entity Name Approval Request, your message should include the date your request was submitted and the reference number you received by email. 
  • Paper Application Submission - If you submitted a name approval request by mail using a Name Approval Request Form LIC 447-42A, your message should include the date your check was cashiered and the proposed name on the form.

4. How do I file for a fictitious (DBA) name?


If you are forming a new business entity that has not previously held an insurance license in the state of California, you may use Sircon's name approval request application. This service is designed for new business entities to have their names approved and reserved prior to submitting an application using Sircon's online business entity application.

5. As a sole proprietor, how would I obtain an approved DBA?


If you are an individual licensed producer who is seeking a Sole Proprietor DBA name, you are required to submit the Form LIC 447-42A with the appropriate fees. This form and fees must be submitted to CDI by mail. The mailing address is listed on Form LIC 447-42A.

6. Am I required to use the word "insurance" in my name"?


Yes, this is a requirement under 10 Cal. Code of Regs, Section 2052.4(c) . You must state insurance production within the name you wish to use for insurance business. In addition, the word "insurance" must be followed by one of the following definitive words: "agency", "services", "marketing", "sales", "solutions", or "center".

7. How do I know what words or phrases cannot be used in my name?


Please review CDI's Name Approval Criteria, including the list of Unacceptable Words/Phrases and list of words or phrases that may be disapproved if used improperly. (10 Cal. Code of Regs, Section 2052.4(e)(f))

Additionally, if you type "name approval criteria" into the search box on any of CDI's web pages, you will be directed to a search result page with information and links to areas on CDI's website that will help you select a name.

8. Can a business name or DBA name be approved over the telephone?


No. There are a number of variables involved in the name approval process which can take some time to properly research. As such, a name cannot be approved over the telephone.

9. Will a proposed name be automatically approved by CDI if the name has been registered with the California Secretary of State?


No. The Secretary of State's office and CDI are two separate departments. As such, each has its own set of laws and regulations that business entities must meet in order to conduct business in the State of California, including approval of a business name. Although CDI checks the Secretary of State's records to ensure that a business is registered and active. Filings are not cross-referenced between the two departments.

After your business name or DBA name is approved, contact the Secretary of State's office (SOS) to be registered. The SOS is located at 1500 11th Street, Sacramento, CA  95814. If you have questions, the SOS's general information telephone number is (916) 653-6814 and at the  SOS Website.

10. How do I change my approved fictitious (DBA) name?


You would complete and submit the Name Approval Request Form LIC 447-42A. This form must be submitted to CDI by mail with the proper fee. The mailing address is listed on Form LIC 447-42A.

11. How many fictitious (DBA) names can be approved?


Each licensed agent or business entity is allowed one approved fictitious (DBA) name. Any additional fictitious (DBA) name(s) requested would need to be "by right of purchase". This means you purchased the right to the use of the name that is approved for seller's use. (Cal. Ins. Code Section 1724.5(e)).

12. If I purchase a fictitious (DBA) name how do I notify CDI?


You need to submit the Name Approval Request Form LIC 447-42A to CDI with the proper fee. In addition to completing LIC 447-42A, you must include a signed statement from the seller that requests the cancellation of their fictitious (DBA) name and that the seller releases the name to the buyer. The mailing address is listed on form LIC 447-42A.

13. How do I notify CDI if I no longer wish to use my approved fictitious (DBA) name?


You need to submit a signed request to cancel your fictitious (DBA) name. If this fictitious name is in use by a business entity, the request must (1) be signed by an officer of the entity, (2) include the officer's title, and (3) include the date of the cancellation.

This request may be submitted by fax to CDI at (916) 327-6907, Attn: Business Entity Unit. Alternatively, it may be mailed to:

California Department of Insurance
Attn: Business Entity Unit
320 Capitol Mall
Sacramento, CA 95814

14. What California Insurance Code (CIC) sections and California Code of Regulations (CCR) govern CDI's approval process for legal names and DBA names?


All applicants and licensees must comply with Cal. Ins. Code Section 1724.5 of the CIC and 10 Cal. Code of Regs, Section 2050.1 et seq. 

15. How do I notify CDI if the legal name of a business entity has changed?


You would need to submit the Name Approval Request Form LIC 447-42A with the proper fee. Once CDI has reviewed the name for acceptability, a Business Entity Analyst will advise you if there are any additional items required to change the name (e.g., a copy of the amended Articles of Incorporation or Organization). The mailing address is listed on Form LIC 447-42A.

Other License Types – Name Approval Process

16. What name requirements and restrictions exist for registered administrators?


Cal. Ins. Code Section 1759.10 states, in part, a registered administrator business entity applicant must comply with the provision of Cal. Ins. Code Section 1724.5 of the CIC, which specifies that registered administrators must denote administration business within either the true legal name or a committed DBA. For more information regarding business entity administrator licenses or name requirements, please contact the Business Entity Unit at (916) 492-3069.

17. What name requirements and restrictions exist for adjusters?


Cal. Ins. Code Section 14042 and Cal. Ins. Code 15031 both state in part, an adjuster business entity applicant must comply with the provision of Cal. Ins. Code Section 1724.5, which specifies that adjusters must denote adjusting business within either the true legal name or a committed DBA. For more information regarding adjuster licenses or adjuster name requirements, please contact the Adjuster Unit at (916) 492-3085.

18. What name requirements and restrictions exist for bail agents?


Cal. Ins. Code Section 1724.5, states in part, that a bail agent business entity applicant must comply with the provision of 10 Cal Code of Regs., Section 2052.4(c), which specifies that bail agents must denote bail business within either the true legal name or a committed DBA. For more information regarding bail licenses or bail name requirements, please contact CDI's Bail Unit at (916) 492-3035.

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The Application Process

What are the steps to complete a business entity application?


Please follow the steps below to file for a business entity license:

Step 1 - Submit a Business Entity Name Approval Request at sircon.com

Step 2 – After the business entity name is approved, the applicant must submit an application using the Sircon's business entity license application. However, if the applicant submits a paper Business Entity License Application Form LIC 441-11 the name must first be approved before the Business Entity Analyst can complete the review of the application.

Step 3 – Endorse an individual agent. During the application process, the business entity must name at least one natural person who is applying for an individual insurance license or holds an individual insurance license with CDI.

Endorsees should be named on the Business Entity Application during the initial business entity application filing. After the business entity receives the license, additional agents must be endorsed to the license. Specifically, Cal. Ins. Code Section 1656 states that ALL licensed persons who will be exercising the power and performing the duties under the business entity license must be endorsed on the license.

The business entity endorsement must be submitted online at Sircon's Maintain Agency Associations (i.e., adding individual licensees who are to transact insurance under authority of its license) (Cal. Ins. Code Section 1661). The business entity may also terminate an agent who is no longer authorized to transact under the business entity license (Cal. Ins. Code Section 1661).

Note: Non-resident business entities are able to endorse California resident individuals on their license, as long as they, first, endorse at least one California non-resident individual. Also, non-resident business entities are not required to endorse an individual from the business entity's resident state. However, the business entity needs to endorse at least one individual from a state other than California (Cal. Ins. Code Section 1656). This link will provide more information about individual filing requirements: Applying for a License.

Step 4 - Fees:

The license filing and business entity endorsement fees are stated on the Producer Licensing Fees chart on CDI's website.

Step 5 – Review the Checklist Page

If the business entity application is submitted using the Online Application Services, please print a copy of the application. The Checklist page of the application will advise if any additional documents are needed to process the business entity application.

Please note the financial security Requirements for Limited Liability Companies:

Limited Liability Companies (LLCs) are required to provide proof of satisfying the security requirements of Cal. Ins. Code Section 1647.5 when applying for an insurance license and once licensed, must also file with the Commissioner an annual Certification of Coverage for Limited Liability Companies form (LIC CC1), confirmation of coverage to demonstrate continued compliance with the financial security requirements. For additional LLC application filing information, annual certification of coverage information, and links to forms that can be used as proof of fulfilling the security requirements, please visit the following link: Business Entity Limited Liability Company Requirements.

The business entity is not required to have an appointment to have the license issued. Upon application approval the license can be downloaded or printed by using Sircon's Print or Download Your License service. However, the business entity licensee may not transact, solicit, or negotiate the sale of insurance until an Action Notice of Appointment is completed by the sponsoring insurance company admitted to California. Pursuant to 10 Cal Code of Regs., Section 2190.22, the Action Notice of Appointment must be submitted electronically. To submit appointments electronically contact the National Insurance Producer Registry (NIPR) and its authorized business partners for a list of approved partners. Please review the Producer Licensing Fees chart for the filing fees that are to be submitted with each Action Notice of Appointment.

Step 5 - To obtain an update on your license application, please allow ten business days for processing prior to contacting the Business Entity Unit at (916) 492-3069 for a status update. This allows the Business Entity Analyst time to review and process your documents and contact you if there are any deficiencies. After the ten business days have elapsed, please leave a voice mail message that includes your name, telephone number, and applicable information described below, as this will allow the Business Entity Analyst to better respond to your inquiry.

  • If you submitted an application for a business entity license, your message should specify whether the application was submitted online through CDI's website or by mail.
  • Online Application Submission - If you submitted a name approval request online through Sircon.com - Business Entity Online Application, your message should include the date your request was submitted and the reference number you received by email.
  • Paper Application Submission - If you submitted a name approval request by mail using a Name Approval Request form (LIC 447-42A), your message should include the date your check was cashiered and the proposed name on the form.

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Typical Business Entity License Application Errors

1. What errors typically delay the issuance of a business entity license?


The typical errors for corporations, agencies, limited liability companies and partnerships/limited partnerships/limited Liability Partnerships are as follows:

  • Application is not signed, dated, or the applicant fails to list the city and state in which the application is executed.
  • Officer/Stockholder section of the application is not completed.
  • Officer titles are incorrect on the application (i.e., authorized officer titles for Corporations are: Chief Executive Officer, Chairman of the Board, President, Vice President, Secretary, Treasurer, Controller, Chief Financial Officer, and Chief Operating Officer).
  • Fees are not submitted for the license application or the designated/responsible licensed producer(s).
  • Federal Employer Identification Number (FEIN) is not included or is not correct. 
  • In addition, Limited Liability Companies are to provide the following:
  • Evidence of security requirements for financial responsibility for Errors and Omissions (E&O) Liability Coverage. The Certification of Coverage for Limited Liability Companies Form (LIC CC1) must be completed and signed by a representative of the surety company providing the E&O policy for the Limited Liability Company applicant. CDI will not accept any other form in lieu of the LIC CC1.
  • A statement of the number of licensees rendering professional services on behalf of the LLC (e.g., the number of licensed persons who will solicit insurance on behalf of the LLC).

Similarly, General Partnerships are to provide the following:

  • A copy of the Partnership Agreement, signed by all partners. This is a requirement for California resident partnerships only.

2. Are fingerprints required for business entity applicants?


The designated/responsible producer (also called an endorsee) must either be currently licensed in California or applying for a license which requires the fingerprint results to be cleared before that individual's license can be issued. In the case of a registered administrator, at least one officer listed in Section 5 of the Application for Administrators Certificate (RA) Form (LIC 441-12) must be fingerprinted or currently licensed by CDI.

3. Do the officers of a business entity have to be licensed?


No.

4. Does CDI require business entities to register with the City or County in which it will conduct business?

No.

5. Does a non-resident business entity need to register with the California Secretary of State before being licensed by CDI?


No. However, non-resident business entities should check with California's Secretary of State office to determine which requirements, if any, might apply to the business entity. The applicant may also consider consulting with a tax advisor to determine if there are any benefits of registering with the California Secretary of State.

6. Does CDI accept a certificate or binder for proof of Errors and Omissions liability insurance coverage (E & O)?

 

No, CDI only accepts the Certification of Coverage for Limited Liability Companies form (LIC CC1).

7. Does an appointment with an insurer need to be filed with the application?


An appointment must be filed with the application for the following license types: Credit Insurance, Rental Car Agent, Self-Service Storage, and Portable Electronics.

For all other license types, an applicant can be issued a license upon application approval without an active appointment. However, the licensee may not transact, solicit, or negotiate the sale of insurance until an action notice of appointment is completed by the sponsoring insurance company and submitted with the proper fee to CDI.

8. What criteria does CDI look at when reviewing a business entity application for approval?

 

As stated in question 2 in the Legal Names, Doing Business As, and Fictitious Names section above, when CDI receives an application for a business entity license, the Business Entity Analyst first reviews the legal business name and any proposed DBA names using the following criteria:

  • If the applicant is conducting any business, other than insurance, which amounts to 80 percent or more of the total business conducted by the applicant.
  • Is the business entity is performing other work more than 80 percent of the time, the Business Entity Analyst determines if the business type meets one of four exemptions. If the business entity qualifies for an exemption, the name of the business entity may be approved.
  • If the business entity does not meet one of the four exemptions, the Business Entity Analyst then determines if the legal name of the business entity meets all of the required name approval criteria, per Cal. Ins. Code Section 1724.5 and 10 Cal. Code of Regs., Section 2050 et seq.

    • The word "Insurance" must be included in the proposed name.
    • If the word "Insurance" is included the name, CDI then checks to make sure one of the six definitive words ("Agency," "Services," "Marketing," "Sales", "Center" or "Solutions") is also included in the name.
    • If one of the six definitive words is present, CDI then checks to see if any unacceptable words are included in the proposed name, or if any words or phrase are used improperly in the proposed name.
    • If the proposed name is free of prohibited words, CDI then checks to determine if the proposed name is unique based on at least the first two words of the name, ignoring any numbers or single letters that may precede the name. 
    • Terms or phrases that are determined to be well-known and commonly-used (for example, "Best Buy") will not be approved for use as a business name. The name may not mislead the public in any respect. For example, a name cannot be the same as the name of well-known company or so similar as to imply affiliation with a well-known company.
    • Additionally, a business name that is too similar to another business name that is already in use will not be approved. (For example, "Flours Insurance Services" is too similar to "Flowers Insurance Services".)

If the proposed name meets all of the aforementioned criteria, and all other provisions of the application are also complete, the name will likely be approved. If the proposed name fails to meet any one of the approval criteria, the name will not be approved and the applicant will be notified in writing (via email) that the name has not been approved, the reason(s) the name failed to be approved, and the remedial action the applicant will have to take to get a legal business name or a DBA name approved. The application will remain in pending status for up to one calendar year to provide the applicant time to take the necessary steps to offer an alternate name for consideration.

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Making Changes to an Existing Business Entity

1. How do I add a new license line of authority to a current license?


Register to use Sircon.com - Business Entity Online Application, complete, submit, and pay for an application to add the additional line of authority.

2. How do I notify the CDI of a change of ownership for a licensed entity?


Per Cal. Ins. Code Section 1656.1, CDI requires the Business Entity Disclosure Form (LIC BED-1) to be completed and submitted to CDI, along with a cover letter providing details about the change of ownership. These documents may be submitted by fax to CDI at (916) 327-6907, Attn: Business Entity Unit. Alternatively, the form LIC BED-1 form may be mailed to:

California Department of Insurance
Attn: Business Entity Unit
320 Capitol Mall
Sacramento, CA 95814

3. What is the procedure to notify CDI that a business entity has new officers, directors, managers, members, stockholders?


CDI requires the Business Entity Disclosure form (LIC BED-1) to be completed and submitted to notify CDI of these changes. These documents may be submitted to CDI at the fax number or mailing address listed above. (Cal. Ins. Code Section 1656.1) 

4. How do I change a business entity from a LLC to a corporation, etc.?


Due to the complexity of this issue, please contact the Secretary of State's office for guidance. Once you have completed the process with the Secretary of State's office, you may submit a Name Approval Request form (LIC 447-42A) to CDI.

5. How do I notify CDI that I no longer wish to conduct business under my licensed entity, corporation, partnership, etc.?


You will need to submit a License Cancellation Request Form (LIC CC2) to request the cancellation of the license. This form must be signed by an officer, for a corporation; by all partners for a partnership; and, for limited liability companies, by an officer, manager or member for a limited liability company. Please include the printed name of the officer, partner(s), manager or member who is requesting the cancellation of the license.

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Mergers and Acquisitions

1. What is required for a "general" merger or acquisition?


Simple Merger - The surviving entity must submit a letter informing CDI of the merger. The letter must: 

  • Be signed by officer, member, manager or all partners of the surviving entity;
  • Include the non-survivor's business name and license number; and,
  • Request that the non-survivor license be canceled;
  • Include a copy of the approved articles of the merger from the Secretary of State's office in the resident state.
  • Changes –
    • Officers, managers, members, partners and stockholders - If there are changes in the officers, managers, members, partners and stockholders of the surviving entity must submit the Business Entity Disclosure Form LIC BED-1 to inform CDI.
    • Legal Name - If the surviving entity is changing their legal name due to the merger then the surviving entity must submit a Name Approval Request Form LIC 447-42A. The $58 filing fee must be included and the Form LIC 447-42A must be signed by officer, member, manager, or partner.
    • Federal Employer Identification Number (FEIN) - If the surviving entity's FEIN is changing due to the merger; the surviving entity is required to submit a new business entity application and filing fees to obtain a new business entity license.
  • Purchase of Name or Simple Change of Name
    • If the surviving entity is changing their legal name due to the merger then the surviving entity must submit a Name Approval Request Form LIC 447-42A.
      • Submit $58 filing fee;
      • Must be signed by officer, member, manager, or partner; and,
      • Submit a copy of the approved articles of the name change from the Secretary of State's office in the resident state.

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If you need further assistance, please call CDI's Business Entity Licensing Inquiry line at (916) 492-3069. You may also send an e-mail to the Producer Licensing Bureau. Please be sure to include your name, telephone number, license number and e-mail address in all correspondence with the CDI.

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