An agent accepts the premium payment 35 days after it is due, telling the insured that there will not be a problem keeping the policy in force. This is an example of what type of agent authority?

The correct answer, which is apparent authority, refers to the situation where a third party perceives that an agent has the authority to act on behalf of the insurer, even if that authority has not been expressly granted. In this scenario, the agent's decision to accept a late premium payment and assure the insured that the policy would remain in force implies that the agent has the necessary authority to perform this act, even though the insurer may not have explicitly granted that authority.

When the agent accepts the payment, the insured might reasonably believe that the agent has the authority to extend the grace period or maintain the policy's validity, based on the agent's actions and representations. This perception creates a trust relationship between the insured and the agent, which the insurer is typically bound by, regardless of whether the agent officially has that power.

If the agent had only acted within their explicitly granted powers, such as accepting payments strictly within a predetermined time frame, that would have demonstrated express authority. Implied authority would cover the general responsibilities that an agent needs to perform their job effectively, while limited authority would refer to specific restrictions on the agent's power. Therefore, apparent authority clearly encapsulates the situation, as the insured perceives the agent as empowered to make the decision regarding