Module 2-A - The Agent and Authority

Question 1

Agency Authority

Answer 1

The agent’s authority to act on behalf of someone else (the principal), usually an insurer.

Question 2

Agency Authority - Apparent

Answer 2

Indirect authority that is granted when the insurer does not correct its agent even though the agent may be acting in error
Granted when the insurer does not act
By not correcting the agent, the insurer implies consent

Question 3

Agency Authority - Express

Answer 3

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

Question 4

Agency Authority - Implied

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, even though she is not employed by that
company.

Question 5

Insurance Agent

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

An agents employer, usually an insurance company