An agent accepts the initial premium with the sale of a policy and then forwards it on to the company. If there is nothing in the agent's contract about continuing to accept premium payments, what type of authority does this agent have?

Question

Quizplus · Accepted Answer

When an agent accepts the initial premium with the sale of the policy but is not contracted to continue to accept premium payments the agent has implied authority. If an agent has implied authority, they can accept premium payments because they have an actual authority to transact business for the principal. The contract the agent has with the principal does not give express authority, or a definite agreement, for the agent to receive payments but the implied authority is that the agent can do so in accordance with the general business practices of the principal.

An Agent Accepts the Initial Premium with the Sale of a Policy