Insurance Agents and Producers

Question 1

Law of agency

Answer 1

Relationship b/w two parties where one party, the agent or producer acts on behalf of the other party, the principal (insurance company)

Question 2

Express authority

Answer 2

is written into the producer’s agency contract. It details specific activity regarding the producer’s ability to transact business on behalf of the principal.

Question 3

Implied authority

Answer 3

is not specifically stated in the contract, but is necessary, reasonable, and usual for the producer to perform stated duties. Since not all duties can be spelled out in the contract, incidental duties are assumed by the agent as appropriate to carry out the express authority granted by the principal.

Question 4

Apparent authority

Answer 4

is created when the producer exceeds the authority expressed in the agency contract. It is authority the public (or a third-party) is falsely led to believe the agent has and the principal does nothing to counter the public impression that such authority exists.

Question 5

Implied authority

Answer 5

is not specifically stated in the contract, but is necessary, reasonable, and usual for the producer to perform stated duties. Since not all duties can be spelled out in the contract, incidental duties are assumed by the agent as appropriate to carry out the express authority granted by the principal.

Question 6

Who has the source of the authority

Answer 6

The insurer

Question 7

Broker

Answer 7

A licensed individual who negotiates insurance contracts with insurers on behalf of the applicant. A broker represents the applicant or insured’s interests, not the insurer, and does not have legal authority to bind the insurer. Broker licenses are not applicable in all states.