What type of authority is explicitly stated in the insurance agency contract?

The type of authority that is explicitly stated in the insurance agency contract is express authority. This type of authority is clearly defined and communicated within the contract between the insurer and the agent, outlining the specific powers and duties the agent has concerning the insurance policies they can sell, the limits of coverage they can offer, and the transactions they are authorized to carry out on behalf of the insurer.

Express authority is significant because it outlines the precise relationship and responsibilities that exist between the insurer and the agent, ensuring that both parties are aware of what is expected. This clarity helps prevent misunderstandings and potential legal issues that could arise from actions taken without the appropriate authority.

In contrast, implied authority refers to the authority that is not explicitly stated in the contract but is necessary for the agent to effectively carry out their duties. Apparent authority, on the other hand, arises when a third party reasonably believes that an agent has authority based on the actions or representations made by the insurer, even if that authority has not been granted. General authority typically refers to broader powers granted to agents, but it is not a specific term used in this context.