Horizon Mutual Insurance officially terminates its agency agreement with producer Michael on September 1st due to a breach of contract. However, Horizon fails to demand the return of its proprietary application booklets, policy forms, and company signage. Furthermore, the company neglects to remove Michael's contact information from its official "Find an Agent" web directory. On September 15th, Michael meets with a prospective client at his office, which still displays the Horizon signage. He completes a homeowners application using the retained forms, collects a $1,200 annual premium in cash, and absconds with the funds. A week later, the client's home is destroyed by a covered peril. Under the principles of agency law, which of the following best describes Horizon Mutual's legal obligation regarding this claim?
- Horizon Mutual is legally bound to cover the loss because the insurer's failure to retrieve materials and update its directory vested Michael with apparent authority.Cevap
- BHorizon Mutual is not liable because Michael's express and implied authority to act on behalf of the company were legally severed on September 1st.
- CHorizon Mutual must pay the claim under the doctrine of waiver, as failing to remove Michael from the directory voluntarily surrendered their right to enforce the termination.
- DHorizon Mutual is not liable because valid consideration was never established, as the insurer itself never actually received the applicant's premium payment.