What type of authority does an agent appear to have based on the actions or circumstances created by the insurer?

The type of authority that an agent appears to have, based on the actions or circumstances created by the insurer, is known as apparent authority. This concept arises not from a formal agreement or explicit communication between the insurer and the agent but rather from the way the insurer presents the agent to the public. If the insurer's actions or representations lead third parties to believe that the agent has certain powers, those third parties may rely on that perception in their dealings with the agent.

For example, if an insurer allows an agent to use its branding and marketing materials without clarifying the extent of the agent's powers, clients might assume the agent has the authority to bind coverage or make decisions that they might not actually have. Thus, the concept of apparent authority protects those third parties by preventing the insurer from denying an agent's authority when the insurer's conduct has led them to believe otherwise.

The other types of authority, such as actual authority, refer to powers explicitly granted to the agent by the insurer. Restricted authority typically indicates limitations on the agent's powers as specified by the insurer, while limited authority suggests a narrower scope of powers specifically defined by a company policy or agreement. None of these capture the essence of the public perception and unintentional empowerment that apparent authority