All the following statements about conflicts with an unlicensed or unauthorized insurer are correct EXCEPT:

• A. Contracts may be enforceable by the policyowner.
• B. Litigation against the insurer should be initiated in the state of the insurer's domicile.
• C. Litigation against an out-of-state insurer may be coordinated through the policyowner's own state insurance regulator.
• D. Litigation against the insurer may be initiated and tried in the state of the policyowner's domicile.

Answer: (B)

When dealing with a dispute with an unlicensed or unauthorized insurer, the emphasis is on ensuring the policyowner can obtain the benefits of the contract and that regulators across states work together to protect consumers. Even if an insurer is not licensed in a state, the policy itself often remains enforceable because it’s a contract the policyowner relied on and paid premiums for. The unlicensed status mainly affects regulatory action against the insurer and the availability of state guaranty protections, not necessarily the validity of the existing contract.

The idea of suing in the insurer’s domicile isn’t the typical or required approach. You don’t have to go to the insurer’s home state to pursue remedies; in fact, it’s common and practical to proceed in the policyowner’s state, where the contract was delivered and where the policyholder resides. The policyowner’s regulator can coordinate with regulators in the insurer’s state to handle cross-state issues, making sure protections and remedies are accessible without forcing the policyowner to travel or sue in a distant forum.

Thus, the statement that litigation should be initiated in the insurer’s domicile is not correct, which is why this option is the exception. The other points reflect the ways the system accommodates unlicensed insurers through enforceable contracts, regulator coordination across states, and possible venue in the policyowner’s domicile.