Which pairing is correct for a given authority type and its definition?

• A. Express authority - powers NOT given by the agency agreement, but necessary to complete the functions allowed in the agency agreement
• B. Implied authority - powers given to the agent as part of the agency agreement
• C. Apparent authority - powers NOT given by the agency agreement, but that a reasonable person would presume the agent has
• D. Express authority - powers given to the agent as part of the agency agreement

Answer: (D)

The concept here is the different ways an agent’s authority is defined in an insurance relationship. Express authority is the powers the principal actually gives the agent, and this is laid out in the agency agreement. So the correct pairing is that express authority means the powers granted to the agent as part of the agency agreement—explicitly spelled out in the contract or job description.

Implied authority isn’t listed in the agreement as a stated power, but is inferred as necessary to carry out the express authority or to perform typical duties of the role. Apparent (or ostensible) authority arises when a third party reasonably believes the agent has authority based on the principal’s actions or representations, even if the agent wasn’t actually granted those powers in the contract.