Implied Authority

What Does Implied Authority Mean?

Implied authority refers to the authority granted to agents to act on behalf of a company, even if it is not explicitly stated in their contract. Insurance agents possess implied authority because they are permitted to represent insurance companies and sell policies on their behalf. When someone compares quotes from the top car insurance companies, the agent on the other end of the call is usually acting under this kind of authority.

Insuranceopedia Explains Implied Authority

Insurance companies enhance their efficiency by allowing agents to handle certain tasks on their behalf. Implied authority, therefore, not only enables agents to earn a living but also contributes to the insurer’s profitability. It also helps explain why life insurance companies rely so heavily on agent networks for distribution instead of selling policies directly to consumers.

However, insurance companies retain the right to revoke an agent’s implied authority if they choose to do so.