What type of authority is assumed by the customer in an insurance agreement?

In an insurance agreement, the type of authority typically assumed by the customer is apparent authority. This concept suggests that a customer can reasonably assume that a representative of the insurance company has the power to act on behalf of the company and make promises or representations that bind the company to the agreement.

Apparent authority arises when the insurance company’s actions or communications lead the customer to believe that the agent has the authority to act in a certain way. For example, if an agent makes a verbal promise about coverage that is not explicitly outlined in the policy, a customer may rely on that promise due to the agent's perceived authority. This reliance is central to the principle of apparent authority because it emphasizes the customer’s perspective in understanding the relationship with the insurance provider.

The other types of authority—unilateral, implied, and inherent—do not specifically address the context in which the customer operates within an insurance agreement. Unilateral authority pertains more to situations where only one party makes commitments, such as in unilateral contracts. Implied authority refers to the authority that cannot be expressly stated but is inferred through actions or established practices. Inherent authority typically involves a more fundamental or natural power to act, often seen in the context of agents or representatives acting within the scope of