1. When an agent is contracted to work for an insurer, he has the authority to conduct business on behalf of that insurer. There are three types of authority granted in agency relationships. These are:
Express Authority,
Implied Authority,
and Apparent Authority
Types of Authority

2. Types of Authority Implied Authority
The authority that the public reasonably believes the agent to have, based on the agent’s representations
These representations include:
Portraying oneself as a representative
Wearing a name tag with company logo
Handing out company business cards
Words and actions that go ‘hand-in-hand’ with express authority and are usual in order to perform an agent’s duties
For example, if you're wearing a name tag bearing the XYZ insurer logo, a member of the public assumes you are acting as a representative of XYZ Insurance. As a contracted agent of XYZ Insurance, your words and actions represent those of XYZ Insurance. When an agent of insurer XYZ says he can write you an insurance contract for $500, any member of the public will believe the agent because he acts as a representative of the company.
The agent has the implied authority to write that contract whether or not he has the express authority to do so, and his actions bind the insurer to his decision.
Types of Authority
Express Authority
Implied Authority
Apparent Authority

3. Agent Authority Express Authority Apparent Authority Implied Authority
Don is wearing an ABC Insurance jacket and has an ABC Insurance sign over his rented office. The walk-in customer could reasonably believe that he has the authority to write an insurance contract because of his:

4. REVIEW of Authority
Remember, authority is given to agents both directly and indirectly. The three types of Authority are: express authority, implied authority, and apparent authority. The insurer directly or indirectly gives its agents authority to act on its behalf.
Express authority - is specifically granted in writing within the agents contract where the agent receives the authority to act on its behalf.
Implied authority - is authority granted to do the usual and proper activities that are reasonable for the public to believe the agent has, even if it is not expressly granted in writing.
Apparent authority - refers to when the insurer is bound by the agent’s actions and judgment, even when the agent has made a mistake.
Express Authority Implied Authority Apparent Authority

5. Implied Authority

6. Apparent Authority Full Authority Implied Authority Express Authority
James signed a contract with Drew Insurance that enables him to sell insurance policies and collect premiums on their behalf. What authority has James been granted?

7. Types of Authority Express Authority
Authority that is directly granted to the agent in writing via the agent’s contract
Agents usually have express authority to:
Sell policies
Collect premiums
Issue binders
Offer discounts (ex bundled policies)
Cancel insurance
Let's say Sarah decides to visit her local XYZ Insurance office. She meets with Jack, who sells her a new automobile insurance policy.
Jack helps Sarah select all the coverages available with her new policy, collects a check from Sarah for her premium payment, and issues Sarah a binder.
Jack then explains that he can offer her a discount on her homeowners’ policy, because XYZ Insurance discounts premiums for consumers who package all their insurance needs with XYZ Insurance.
These are all examples of Jack's express authority. Jack's contract specifically grants, in writing, that he can sell policies, establish premiums within certain limits, and offer discounts for purchasing multiple insurance policies.
Types of Authority
Express Authority
Implied Authority
Apparent Authority

8. Express Authority

9. Express Authority Apparent Authority Agency Authority Expert Authority
After her business suffered damage in a fire, Jane filed a claim with Cocoa Insurance, which dispatched Bob to adjuster it, even though he was not allowed to adjust commercial claims. He investigated Jane’s losses and submitted his estimate to Acme Insurance, which issued her a settlement check based on that estimate. Bob had ______ because Coco Insurance accepted his estimate and paid Jane’s claim.

10. Types of Authority Apparent Authority
Indirect authority that is granted when the insurer does not correct its agent, even though the agent may be acting in error
Granted when the insurer does NOT act
By not correcting the agent, the insurer implies consent
For example, let's say an agent writes an insurance policy for automobile coverage on a Ferrari and takes a premium payment from the consumer. However, in the agent's contract with the insurer, he was expressly not allowed to write insurance contracts on exotic cars such as a Ferrari. The insurer temporarily overlooks this fact, and cashes the premium check the client wrote for coverage on his Ferrari. When the insurer cashes the premium check, it automatically grants apparent authority to the agent. And by cashing the premium check, the insurer has become complicit in the authority of the agent to grant an insurance contract for the Ferrari owner.
Types of Authority
Express Authority
Implied Authority
Apparent Authority

11. Apparent Authority

12. 1. Represent the insured if a claim goes to court 2
1. Represent the insured if a claim goes to court 2. Provide Dove insurance with complete claim documentation 3. Always use reasonable care and judgement 4. Adhere to the terms of his contract
Don works as an adjuster for Dove Insurance. Which of the following is most likely Not one of Don’s responsibilities?

13. Represent the Insured if a claim goes to Court

14. Express Authority Apparent Authority Contract Authority Implied Authority
__________ is what the public or community reasonably believes the agent has, based on the agent’s representations.

15. Implied

16. Which of the following statements is NOT true of an insurance adjuster?
An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake An insurance adjuster is an agent an insurance adjuster must always use reasonable judgement for both the insurer and the claimant.

17. 1.

18. No; Jake was unaware of the policy’s hail coverage exclusion No; jack had no authority to promise coverage that was listed in Olivia’s policy Yes; Jack exercised implied authority when he wrote that Olivia had hail coverage Yes; hail coverage is standard in property policies, and the insurer should have included it in the first place.
Jake is selling insurance policies for XYZ Insurance. Olivia buys a homeowners policy from Jake and asks him to write down on a separate piece of paper all the perils the policy covers so she can show her husband. Jake writes “hail”, but when Olivia house is damaged by hail, the adjuster says “hail isn’t covered in your policy”. Olivia produces the piece of paper and threatens to sue Haul insurance if they don’t pay. Does she have grounds for a lawsuit?

19. Yes; Jake exercised implied authority when he wrote that Olivia had hail coverage

20. Section 2 – Adjusting Practices and Common Policy Provisions

21. 4 Types of Sales Agent Insurer employ four types of sales agents
Independent Insurance Sales Agent
Exclusive Agent
General Agent
Direct Writer
Each sales agent plays a different role in the company
4 Types of Sales Agent

22. 4 Types of Sales Agent Independent Insurance Sales Agent:
Self-employed
Offer insurance from more than one company at the same time
They can compare and give rate quotes from different companies
Find a policy that best suits the customer
4 Types of Sales Agent
Independent Insurance Sales Agent
Exclusive Agent
General Agent
Direct Writer

23. 4 Types of Sales Agent Exclusive Agent: Also called Captive Agent
Commissioned
Represents only one insurer and only their policies
4 Types of Sales Agent
Independent Insurance Sales Agent
Exclusive Agent
General Agent
Direct Writer

24. 4 Types of Sales Agent General Agent: Works for one insurance company
Supervises other exclusive agents
Trains other agents
4 Types of Sales Agent
Independent Insurance Sales Agent
Exclusive Agent
General Agent
Direct Writer

25. 4 Types of Sales Agent Direct Writer: Salaried Employee
Works for only one company
The Direct Writer is similar to an Exclusive Agent in that she works for only one company, selling insurance directly to customers.
But unlike Exclusive Agents, who work mainly for commission, Direct Writers are salaried employees.
4 Types of Sales Agent
Independent Insurance Sales Agent
Exclusive Agent
General Agent
Direct Writer

26. Captive Agent Direct Writer Independent Sales Agent General Agent
Susan calls herself an insurance broker. She sells multiple lines of insurance from a variety of insurance companies. What type of agent is Susan?

27. Independent Sales Agent

28. Types of Sales Agent
Independent Agent
Works for many insurance once
Sells insurance products from many insurers
Commission
Exclusive Agent/Captive Agent
Works for 1 insurer
Mainly sells employer’s insurance products
General Agent
Trains agents for employer
Salary
Direct Writer
Sells employer’s insurance products
Here is a summary of the four types of sales agent: the Independent Agent, the Exclusive (or Captive) Agent, the General Agent, and the Direct Writer.
Now that you have an idea of the different roles that sales agents can fill, let's go over their typical activities and responsibilities, as well as what it takes to become licensed as an agent.

29. Which of the following is NOT a duty of a captive agent?
Selling insurance policies
Servicing policies
Negotiating settlements
Representing the insurer

30. Negotiate Settlements

31. General Agent Independent Agent Captive Agent Direct Writer
Tom is looking for a job in the insurance industry. He wants to work for only one insurance company, selling policies on commission basis. Which type of insurance agent position best fits what Tom is looking for?

32. Captive Agent

33. Sam works on commission only, selling only insurance product from XYZ Insurance. What type of agent is Sam?
Direct Writer
General Agent
Exclusive Agent
Independent Sales Agent

34. Exclusive Agent

35. This Agent works for only one insurer and is paid commission
Independent Agent
General Agent
Exclusive Agent
Independent Adjuster

36. Exclusive

37. This agent works for only one insurer, and supervises and trains other agents
General Agent
Direct Writer
Captive Agent
Exclusive Agent

38. General Agent

39. Which of the following statements is FALSE?
An agent is authorized to act as a representative of another party
An agent may represent more than one party
An agent always has a fiduciary duty to defend the claimant
An agent’s action are construed as those of the party she represents

40. An agent always has a fiduciary duty to defend the claimant

41. Example – Agent’s Apparent Authority
For example, let's say an agent writes an insurance policy for automobile coverage on a Ferrari and takes a premium payment from the consumer.
However, in the agent's contract with the insurer, he was expressly not allowed to write insurance contracts on exotic cars such as a Ferrari.
The insurer temporarily overlooks this fact, and cashes the premium check the client wrote for coverage on his Ferrari.
When the insurer cashes the premium check, it automatically grants apparent authority to the agent. And by cashing the premium check, the insurer has become complicit in the authority of the agent to grant an insurance contract for the Ferrari owner.
Agent’s contract forbids the agent from selling insurance on exotic cars
Agent sells insurance for exotic car anyway
Insurer ignores the mistake and cashes the check.
Apparent Authority is granted

42. Review of Agents
Let's review the different types of insurance agent. Recall that an agent is one who receives the authority to act on behalf of another. Insurance companies employ sales agents and adjusters.
An agent has three major responsibilities. First, he must adhere to his contract at all times. Second, he must utilize reasonable judgment when conducting insurance transactions. And, third, he must supply all pertinent information regarding a potential client or case to the insurer.
There are four kinds of insurance agents. These are: Independent Insurance Sales Agent, Exclusive Agent, General Agent, and Direct Writer.
Agent
Receives the authority to act on behalf of another
Responsibilities of an Agent
Adhere to contract at all times
Use reasonable judgment
Supply all pertinent information to the insurer
Independent Agent
Self-employed: sells insurance from many insurers
Exclusive Agent (Captive Agent)
Commissioned; offers products from only one insurer
General Agent
Trains and supervises exclusive agents for an insurer
Direct Writer
Salaried employee; works for one company