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CA Department of Insurance

Business Entity Frequently Asked Questions

Frequently Asked Questions

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

CDI follows the following steps when reviewing a proposed name for approval:

  • When a business entity application form LIC 441-11 is received, CDI reviews the application to determine if there is any other business (amounting to 80 percent or more) being 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. If the business entity meets an exemption, the name is approved.
  • If the business entity does not meet one of the four exemptions, CDI checks to determine if the word "Insurance" is included in the proposed name.
  • If the word "Insurance" is in 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 prohibited words are included 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.

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 that the name has not been approved, reasons the name failed to be approved, and the remedial action the applicant will have to take to get a name approved. The application is then suspended to provide the applicant time to take the necessary steps to offer an alternate name for consideration.

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

You may access the prohibited word and misused word list on our website. By keying "name approval criteria" in the search box on any of our pages you will receive a search result page with information and links to different areas on our website to help you select a name.

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

Yes, this is a requirement under California Code or Regulations section 2052.4(c). You must denote insurance production within the name you wish to use for insurance business.

4. What is a DBA and why do I have to use it?

A DBA is a name, other than the true legal name, which may be required for use to solicit insurance business. The use of a DBA would be required for insurance solicitation if the true legal name of the business entity does not meet one of the four exemptions and the name does not meet insurance regulations.

5. How do I file for a fictitious (dba) name?

You would complete and submit the name approval request form LIC 447-42A. The licensee would complete the request and submit to our department with the proper fee.

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

  • Merger: CDI requires a letter signed by an officer, member, manager or all partners informing CDI of a merger and completion of form LIC BED-1 to inform CDI of any changes in officers, managers, members, partners and stockholders.
  • Acquisition: CDI requires a letter signed by an officer, member, manager or all partners informing CDI of an acquisition and completion of form LIC BED-1 to inform CDI of any changes in officers, managers, members, partners and stockholders.

7. How do I change my approved fictitious (dba) name?

You would complete and submit the name approval request form LIC 447-42A. The licensee would complete the request and submit to our department with the proper fee.

8. How many fictitious (dba) names can have approved?

Each licensee 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.

9. If I purchase a fictitious (dba) name how do I notify the department?

You would complete and submit the name approval request form LIC 447-42A.  The licensee would complete the request and submit to our department with the proper fee. The seller will need to request the cancellation of their fictitious (dba) name with release of the name to the buyer. 

10. How do I notify the department if I no longer wish to use my approved fictitious (dba) name?

You would need to submit a signed request to cancel your fictitious (dba) name.

11. What code sections, regulations, etc. govern the department's approval process?

All licensees must comply with the California Insurance Code Section 1724.5 and Title 10 of the California Code of Regulations (Section 2050. et. seq.).

12. How do I notify the department of a business entity name change?

You would need to submit the name approval request form LIC 447-42a, with the $40.00 fee. Once the department reviews the name for acceptability we will advise you of the additional items needed to change the name

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

Per Section 1759.10 of the California Insurance Code (CIC), the registered administrators must comply with the provision of Section 1724.5 CIC, which means registered administrators must denote administration business within either the true legal name or a committed DBA.

14.  What name requirements and restrictions exist for registered adjusters?

Per Section 14042 and Section 15031 of the California Insurance Code (CIC), the registered adjusters must comply with the provision of Section 1724.5 CIC, which means registered adjusters must denote adjusting business within either the true legal name or a committed DBA.

15. Are fingerprints required for business entity applicants?

The named endorsee must either be currently licensed in California or in compliance with the fingerprint requirement. In the case of a registered administrator, at least one officer listed in Section 5 of form LIC 441-12 (Application for Administrator's Certificate [RA]) must be fingerprinted or currently licensed in California.   

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

No.

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

No.

18. 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 the California Department of Insurance are two separate organizational agencies. As such, each has its own set of applicable laws and requirements that businesses must meet to conduct business in the State of California, including approval of a business name. Although CDI checks with the Secretary of State's office to ensure a business is registered, filings are not cross-referenced between the two departments. The Secretary of State's Web site can be reached at www.ss.ca.gov. The mailing address is 1500 11th Street, Sacramento CA 95814 and its general telephone number is (916) 653-6814. 

www.ss.ca.gov

19. 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 the California Secretary of State's office to determine which requirements, if any, might apply or discuss with a tax advisor the benefits of registering with the California Secretary of State.

20. Can a business name be approved over the telephone?

No. Because there are a number of variables involved in approving a business entity name which takes some time to research, a name cannot be approved over the telephone. 

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

No, we only accept the Certification of Coverage for Limited Liability Companies form LIC CC1.

22. Does the appointment need to be filed with the application?

No. 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 the California Department of Insurance.

23. What is the procedure when a change of ownership occurs?

We require form LIC BED-1 to be completed and submitted to the department.

24. How do I notify the department of new officers, directors, managers, members, stockholders, etc.?

We do have a form on our website to notify the department of these changes. The form is business entity disclosure LIC BED-1.  

25. What is the code section for this requirement?

The insurance code section is 1656.1.

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

It all depends on the manner of the change. If the current business entity is converted to another entity and this change has been approved by the Secretary of State, this is handled as a business entity name change.

If you cancel, dissolve or merge the licensed business out, the new entity will be required to submit all forms and fees to become licensed under the new entity.

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

You can register to use our Business Entity Online Application Service and then submit and pay for the additional line of authority.

28. How do I notify the department if I no longer wish to conduct business under my licensed entity, corporation, partnership, etc.?

You will need to submit a request to cancel the license signed by an officer, for a corporation, all partners, for a partnership, and by an officer, manager or member, for a limited liability company.

29. What errors are made on the business entity application that typically delay issuance of a license?

A.  For Corporations: 

  • The application is not signed, not dated, or fails to list the city in which the application is executed. 
  • The Officer/Stockholder section of the application is not completed. 
  • Incorrect officer titles are listed (authorized officer titles are: Chief Executive Officer, Chairman of the Board, President, Vice President, Secretary, Treasurer, Controller, Chief Financial Officer, and Chief Operating Officer). 
  • Proper fees are not submitted for the license, endorsee, or appointment. 
  • Federal Employer Identification Number (FEIN) is not included. 

B. For Limited Liability Companies. 

  • The application is not signed, not dated, or fails to list the city in which the application is executed. 
  • The Officer/Stockholder section of the application is not completed. 
  • Incorrect officer titles are listed (authorized officer titles are: Chief Executive Officer, Chairman of the Board, President, Vice President, Secretary, Treasurer, Controller, Chief Financial Officer, and Chief Operating Officer). 
  • Proper fees are not submitted for the license, endorsee, or appointment. 
  • Federal Employer Identification Number (FEIN) is not included. 
  • Evidence of security requirements for financial responsibility for Errors and Omissions (E&O) Liability Coverage is not provided. 
  • A statement of the number of licensees rendering professional services on behalf of the LLC (i.e., the number of licensed persons who will solicit insurance on behalf of the LLC) is not provided.

C. For Partnerships/Limited Partnerships/Limited Liability Partnerships: 

  • The application is not signed, not dated, or fails to list the city in which the application is executed. 
  • The Partner section of the application is not completed. 
  • Incorrect officer title is listed (authorized officer titles are Partner, Limited Partner, and General Partner). 
  • Proper fees are not submitted for the license, endorsee, or appointment. 
  • Federal Employer Identification Number (FEIN) is not included. 
  • Limited Partnerships/Limited Liability Partnerships are not registered with home state Secretary of State's office. 

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

You may contact the name approval unit at (916) 492-3069. When you leave your message please give the date your request was submitted or the date your check was cashed, whether or not the request was for a fictitious (dba), give license number, or a new business application and if you are requesting status for an on line reservation leave the reference number. A staff member will return your call the next business day.

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If you have any questions about this form or the license information you retrieved, please see the most commonly asked questions in our License Questions and Answers section. If you need further assistance, please call our 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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