What type of authority is based on the agent's actions, or words?

• A. Apparent
• B. Express
• C. Implied
• D. Actual

Answer: (A)

Apparent authority is based on how others perceive the agent’s power to act, created by the principal’s representations or conduct and the agent’s own actions or statements. If a principal allows or doesn’t correct the impression that an agent can bind coverage, a third party may reasonably rely on that appearance of authority, even though the agent may not have actual authority. This is different from actual authority, which comes from the principal’s explicit grant (express) or from the agent’s accepted duties and conduct that justify implied authority. It’s also distinct from express authority (clearly stated in words by the principal) and implied authority (inferred from the agent’s role and usual practices).