In insurance terminology, the term for the authority granted to an agent in the contracting documents is called what?

The term for the authority granted to an agent in the contracting documents is known as express authority. This type of authority is clearly defined in the contract or agreement, providing the agent with specific powers to act on behalf of the principal or insurance company. It is through express authority that an agent can perform actions such as binding coverage, negotiating terms, and executing insurance contracts as authorized by the principal.

Express authority contrasts with other forms of authority. Implied authority refers to powers that are not explicitly stated in the contract but are assumed to be necessary for carrying out the expressed duties. Apparent authority occurs when a third party perceives that an agent has the authority to act, even if that authority hasn’t been formally granted in the contracting documents. Lastly, incidental authority relates to powers that are not specifically mentioned but are necessary for performing the duties defined by express authority.

Understanding express authority is crucial for both agents and policyholders, as it defines the scope of what actions can be legally taken by the agent within the bounds of their role.