Agency Law: Insurance Applications

Question 1

General agent

Answer 1

Agent that transacts all of a principal’s business of a particular kind or in a particular place

Question 2

Special agent

Answer 2

Employed to act in a specific transaction or only for a particular purpose or class of work

Question 3

Soliciting agent

Answer 3

Producer whose authority is limited by contract to soliciting applications for insurance and performing other acts directly incident to those activities

Question 4

Apparent authority

Answer 4

Appearances may lead a third party to believe that a producer has authority

Question 5

Broker’s typical duties

Answer 5

Procure insurance

Select insurer

Arrange payment of premiums

Cancel and receive unearned premiums

Obtain new policy upon cancellation

Question 6

Imputed knowledge

Answer 6

Court typically holds that the insurer knew what the agent knew

Question 7

If evidence does not reveal the producer selected an insurer

Answer 7

Contract is not bound to any insurer

No coverage exists

Insured can sue agent for errors and omissions

Question 8

Five duties producers owe customers

Answer 8

Follow instructions

Procure insurance

Maintain coverage

Place insurance with a solvent insurer

Advise

Question 9

Producers’ defenses to liability

Answer 9

Producer assumed no duty to customer

Producer did not breach contract

Insurance customer at fault

Customer failed to read the policy

Insurance was unavailable

Question 10

Four duties producer owes insurer

Answer 10

Disclose risks

Follow instructions

Loyalty/accounting

Transmit information properly