AINS 21 Chapter 4 Terms Exam
UPDATEDACTUAL QUESTIONS AND
CORRECT ANSWERS
Producer - CORRECT ANSWER Any of several kinds of insurance personnel who
place insurance business with insurers and who represent either insurers or insureds, or both.
Agent - CORRECT ANSWER In the agency relationship, the party that is authorized
by the principal to act on the principal's behalf.
Agency - CORRECT ANSWER A legal, consensual relationship that exists when one
party, the agent, acts on behalf of another party, the principal.
Principal - CORRECT ANSWER The party in an agency relationship that authorizes
the agent to act on that party's behalf.
Implied Authority - CORRECT ANSWER The authority implicitly conferred on an
agent by custom, usage, or a principal's conduct indicating intention to confer such authority.
Express Authority - CORRECT ANSWER The Authority that the principal specifically
grants to the agent.
Actual Authority - CORRECT ANSWER Authority (express or implied) conferred by
the principal on an agent under an agency contact.
Binding Authority - CORRECT ANSWER An insurance agent's authority to effect
coverage on behalf of the insurer.
Apparent Authority - CORRECT ANSWER A third party's reasonable belief that an
agent has authority to act on the principal's behalf
UPDATEDACTUAL QUESTIONS AND
CORRECT ANSWERS
Producer - CORRECT ANSWER Any of several kinds of insurance personnel who
place insurance business with insurers and who represent either insurers or insureds, or both.
Agent - CORRECT ANSWER In the agency relationship, the party that is authorized
by the principal to act on the principal's behalf.
Agency - CORRECT ANSWER A legal, consensual relationship that exists when one
party, the agent, acts on behalf of another party, the principal.
Principal - CORRECT ANSWER The party in an agency relationship that authorizes
the agent to act on that party's behalf.
Implied Authority - CORRECT ANSWER The authority implicitly conferred on an
agent by custom, usage, or a principal's conduct indicating intention to confer such authority.
Express Authority - CORRECT ANSWER The Authority that the principal specifically
grants to the agent.
Actual Authority - CORRECT ANSWER Authority (express or implied) conferred by
the principal on an agent under an agency contact.
Binding Authority - CORRECT ANSWER An insurance agent's authority to effect
coverage on behalf of the insurer.
Apparent Authority - CORRECT ANSWER A third party's reasonable belief that an
agent has authority to act on the principal's behalf
