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Difficulty: EasyProducer Authority and Agency Law

An insurance producer's written contract explicitly authorizes them to sell commercial auto insurance policies on behalf of an insurer. The written agreement does not specifically mention printing temporary proof of insurance cards. However, the producer routinely issues these temporary cards because it is a standard, essential task required to complete the authorized sales process. Under agency law, what type of authority permits the producer to perform this action?

  1. Implied authorityAnswer
  2. B
    Express authority
  3. C
    Apparent authority
  4. D
    Waiver and estoppel

Answer

Implied authority
The correct answer is implied authority because it represents the power that is not explicitly written in the contract, but is naturally assumed to be necessary to conduct the business that is expressly authorized. Printing a temporary insurance card is a necessary administrative step to fulfill the express authority of selling the auto policy.

Step-by-Step Solution

1
Identify the primary source of the producer's power in the scenario.
The producer has a written contract to sell auto insurance (express authority).
Establishing the baseline express authority is necessary to determine what other authority naturally follows.
2
Analyze the specific action in question (printing temporary cards).
The action is not written in the contract, but it is an essential and standard part of executing the written duties.
This distinction separates implied authority (unwritten but necessary) from express authority (written).
3
Match the scenario's characteristics to the definitions of agent authority.
Authority that is unwritten but assumed necessary to perform express duties is defined as implied authority.
This directly applies the principles of agency law to the producer's actions.

Key Concept

Types of Agent Authority (Express, Implied, Apparent)
Estimated Time:1m 0s
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Topics

Producer Authority and Agency Law

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