What is the term for the authority granted to an agent to sell insurance?

The term that refers to the authority granted to an agent to sell insurance is known as express authority. This type of authority is explicitly given to the agent through a contract or agreement. When an insurer designates an agent to sell its policies, it outlines the powers and limitations of that agent in the agreement, thus creating a clear understanding of what the agent is authorized to do.

Express authority is critical in the insurance field as it helps in establishing the relationship between the insurer and the agent, ensuring that all parties are aware of the specific duties and obligations involved. For instance, when an agent has express authority, they can bind the insurer to a contract by selling policies within the limits defined by the insurer.

In contrast, implied authority refers to the authority that is not explicitly stated but is assumed to be granted based on the actions and roles of the agent. Apparent authority occurs when a third party believes the agent has the authority to act on behalf of the insurer, based on the insurer's representations. Limited authority restricts the agent's power to perform only specific tasks. Understanding these distinctions is crucial in navigating the responsibilities and legal implications in the insurance industry.