Apparent Authority

What Does Apparent Authority Mean?

Apparent authority occurs when a person is believed to have authority, even though they do not actually possess it.

Insuranceopedia Explains Apparent Authority

In the context of insurance, apparent authority often arises when a person is given an insurance quote by someone who does not actually have the authority to issue one, potentially leading to legal issues.

Companies can be held legally liable for actions taken under apparent authority. For example, if a customer service agent who is not authorized to provide insurance quotes gives one to a customer, the insurance company may be required to sell the policy at the quoted price. These oral contracts can hold legal weight, even in the absence of actual authority backing them.