What characterizes apparent authority?

Apparent authority is characterized by the situation in which an insurer allows an agent to act on its behalf and does not take action to correct any misrepresentation of authority that the agent projects to third parties. This occurs when the acts of the agent create the impression to others that they have the authority to act in certain ways, typically because the insurer has not contradicted those actions or addressed any misinterpretations regarding the agent's role.

In practical terms, if an agent is behaving in a manner that suggests they have specific powers—such as binding coverage or negotiating terms—and the insurer is aware of this but does nothing to correct or limit the agent's actions, then the agent is viewed as having apparent authority. This concept is crucial as it affects the liability of both the agent and the insurer in situations where the agent's actions may lead to contractual obligations or expectations with third parties.

Considering the other options, authority granted solely through written contracts does not encompass the scope of apparent authority, since such authority must also be recognized by third parties regardless of formal contracts. Authority that can be revoked at any time does not fit the definition, as apparent authority persists as long as the insurer fails to clarify or limit the agent’s perceived authority. Similarly, explicitly