Denny Crane was an agent for Mutual of Florida Insurance, but his agency contract was recently revoked. One of his clients, Shirley Schmidt, has not yet been informed that he no longer represents Mutual of Florida. She drops by his office to deliver a premium payment, which he accepts and deposits into his own account. When Mutual of Florida does not receive Shirley Schmidt's premium, it sends her a cancellation notice. Before receiving her cancellation notice, she suffers a loss and expects Mutual of Florida to pay her claim. What will likely happen in this scenario?

Question

Quizplus · Accepted Answer

Mutual of Florida will likely have to pay the claim because Denny Crane was acting in the capacity of their agent when he accepted the premium payment, and Shirley Schmidt was not aware that he no longer represented the company. This situation could be seen as an apparent authority issue, where the insurer might still be liable for the actions of their former agent, especially since the client was unaware of the agent's change in status.

Denny Crane Was an Agent for Mutual of Florida Insurance