General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
An insurance agent's authority that the public reasonably believes the agent has, based on the insurer's conduct, is known as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Apparent (ostensible) authority is the authority a third party reasonably believes the agent has because of the insurer's words or conduct — for example, issuing a binder that the insurer honors. Express authority is granted in writing or orally; implied authority is incidental authority needed to carry out express authority.
Why the other options are wrong
- B) Express authority is specifically granted to the agent by the insurer, usually in writing — not inferred from the insurer's conduct toward third parties.
- C) Implied authority is the incidental power needed to perform express duties — it exists between agent and insurer, not in the public's perception.
- D) Fiduciary duty describes the agent's obligation to handle premiums and client money faithfully; it is not a category of authority.
Memory hook
Apparent = what the public thinks the agent can do, because the insurer acted like it. Express = written. Implied = necessary side effects.