P&CNationalmedium
An insurer terminated Agent A's appointment last month, but did not retrieve the agency's signage, business cards, or rate manuals. A new customer walked into the office, signed an application, and paid the first premium. The customer believed Agent A still represented the insurer. The insurer is most likely bound under which doctrine?
AExpress authority, granted explicitly to the agent in the written agency agreement
BImplied authority, reasonably necessary for the agent to carry out the assigned express duties
Apparent authority, arising from the principal's failure to retrieve the indicia of agency
DRatification, the insurer's later acceptance of an unauthorized act by the agent
Why this is the answer
Apparent authority exists when the principal's own conduct or failure to act causes a third party to reasonably believe the agent has authority, regardless of whether actual authority exists. Here, the insurer's failure to retrieve signage, cards, and rate manuals constitutes a manifestation to the public that the agency still represented the insurer. The customer's reasonable reliance binds the insurer to the application and premium.
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