California Life-Only & Accident and Health AgentGeneral InsuranceMedium
An insurance company has delegated authority to its agents to bind coverage for certain types of policies immediately upon application, without prior approval from the insurer. This delegated power is an example of what type of agent authority?
- AApparent authority
- BAssumed authority
- CImplied authority
- DExpress authority
Show answer & explanationAnswer & explanation
Correct answer: D. Express authority
Express authority is the specific authority given to an agent in a written or oral agreement. When an insurance company explicitly delegates the power to 'bind coverage' to its agents, this is a clear example of express authority.
Why the other options are wrong
- A. Apparent authority is the authority a third party reasonably believes an agent has, based on the insurer's actions or inactions.
- B. Assumed authority is not a recognized legal term for agent authority in insurance.
- C. Implied authority is not explicitly granted but is necessary to carry out express authority, such as collecting premiums.
Express Authority
Express authority is the specific, explicit authority granted to an agent by the insurer, typically in writing within the agency contract.
- It is clearly communicated and defined.
- Examples include the power to bind coverage, collect premiums, or solicit applications.
- Forms the basis for an agent's legal actions on behalf of the insurer.
Memory trick: Express is written, implied is understood, apparent is perceived.