Which document defines the scope of authority granted to an insurance agent?

Which document defines the scope of authority granted to an insurance agent?

• A. Agency contract
• B. Binder
• C. Policy
• D. Endorsement

Answer: (A)

Authority given to an insurance agent is defined by the agency contract between the insurer and the agent. This agreement lays out what the agent is empowered to do, such as soliciting applications, binding coverage, issuing policies within approved lines, and collecting premiums, all within specified limits and duties. A binder is a temporary instrument that provides immediate evidence of coverage before a policy is issued, not a framework for the agent’s overall authority. A policy is the contract between insurer and insured detailing the coverage provided, not the agent’s powers. An endorsement is a modification to an existing policy, not a declaration of the agent’s scope of authority.

Authority given to an insurance agent is defined by the agency contract between the insurer and the agent. This agreement lays out what the agent is empowered to do, such as soliciting applications, binding coverage, issuing policies within approved lines, and collecting premiums, all within specified limits and duties.

A binder is a temporary instrument that provides immediate evidence of coverage before a policy is issued, not a framework for the agent’s overall authority. A policy is the contract between insurer and insured detailing the coverage provided, not the agent’s powers. An endorsement is a modification to an existing policy, not a declaration of the agent’s scope of authority.