West Virginia Property and Casualty Licensing Practice Exam

What type of authority is specifically granted to an agent, either verbally or in writing?

1. Implied authority

2. Express authority

3. Apparent authority

4. Actual authority

The correct answer is: Express authority

The correct answer is express authority, which refers to the specific powers granted to an insurance agent by the insurer either through a written contract or verbal communication. This authority clearly delineates what actions the agent is permitted to take on behalf of the insurer, such as binding coverage, soliciting applications, and collecting premiums. Express authority provides clarity and ensures that both the insurer and agent understand the extent of the agent's responsibilities and limits. In contrast, other types of authority, such as implied authority, occur when an agent takes actions that are necessary to fulfill their express authority, even if those actions are not explicitly outlined. Apparent authority is concerned with how third parties perceive the agent's authority based on the actions and representations of the insurer, which means it can exist without being formally granted. Actual authority encompasses both express and implied authority but does not focus solely on the explicit nature of the granted powers like express authority does. Therefore, express authority is specifically about what has been directly communicated or documented, making it the most fitting answer to the question.