If an insurance premium is paid by the policy-owner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?

When a policy-owner pays an insurance premium to the agent, that transaction is often considered a valid payment toward the policy as long as the agent is acting within the scope of their authority. In this situation, the agent acts as an intermediary and is expected to remit the collected premiums to the insurer. Therefore, the payment to the agent is typically treated as a payment to the insurer, and as a result, the policy is not considered lapsed because the policy-owner fulfilled their financial obligation by making the premium payment through the agent.

This understanding is based on the principle of apparent authority, where an agent's actions, when within their usual scope, can bind the insurer to the arrangement. The insurance company assumes responsibility for the actions of its agents, which means that as long as the policy-owner made the premium payment, the coverage should remain active, regardless of any failure on the agent's part to forward the payment.

This principle is essential for ensuring that policy-owners do not lose coverage due to issues beyond their control, such as an agent's negligence. It's crucial for insured individuals to verify premium payments and maintain communication with their agents and insurers to safeguard their coverage.