2 The Agent Of Authority

Question 1

Agency Authority

Answer 1

The agent’s authority to act on behalf of someone else (the principal), usually an insurer. The authority is derived from the agent’s contract with the principal. It can be apparent, express, or implied

Question 2

Apparent Agency Authority

Answer 2

Indirect authority that the agent can reasonably be assumed to have, bad on appearances, if an adjuster is equipped to represent an insurer (with the insurer’s permission), then an individual can assume that the adjuster has the authority to act on the insurer’s behalf

Question 3

Express Agency Authority

Answer 3

Authority that is expressly given to the agent in writing. Allows the agent to act on behalf of the principal.

Question 4

Implied Agency Authority

Answer 4

Authority that an agent possesses by implication of her behavior, regardless of whether this authority is granted in writing. For example, a person portraying herself as a representative for an insurance company, event though she is not employed by that company.

Question 5

Agent (Insurance)

Answer 5

Someone who has received authority from an insurer to sell or service insurance policies.

Question 6

Power to Bind

Answer 6

One manifestation of the authority given to insurance agents by the principal. The principal is bound by, or must adhere to, the guarantees and statements made by its agent.

Question 7

Principal

Answer 7

The principal refers to an agent’s employer (usually an insurance company, but it could also mean anyone who contracts the agent to work on their behalf and gives her the authority to do so). In a surety bond or suretyship, the principal (obligor) is the party that first agrees to fulfill an obligation, and is the one who purchases the bond.