USAA Chapter 2 Test Questions with Complete Solutions (2)

USAA Chapter 2 Test Questions with Complete Solutions (2) Agent - Answer-One who recieves the authority to act on behalf of someone else. What does it mean that the agent has authrotity to bind? - Answer-The agent should take the utmost care with his words and actions because the insurer may have to live with the agents decisions and mistakes. What are the three major responsibilities of contracted agents? - Answer-Adhree to or follow the contract, use resonable judgement and care at all times. provide all necessary information and documentation to the insurer. What are the three types of authority granted in agency relationships? - Answer- Express, Implied, and Apparent Express Authority - Answer-Authority that is directly granted to the agent in writing via the agent's contract. With this authority an agent is able to write policies on behalf of the insurer, to collect premiums, and to cancel insurance polices. Implied Authority - Answer-The authrority that the public resonably believes the agent to have, based on the agent's representations. Becuase an agent portrays himself as a representative of the insurer, anything the agent says or does is implied to be the action of the insurer. Apparent Authority - Answer-Indirect authority that is granted when the insurer does not correct its agent, even though the agent may be acting in error. Typically granted when the insurer does not act or by not correctring the agent, the insurer implies consent.