In the context of authority under insurance contracts, what is "implied authority"?

Implied authority refers to the authority that an insurance agent has, which is not explicitly stated in their contract but is inferred from the actions and behaviors that are typically expected within the scope of their position. This means that even if there is no written documentation granting specific permissions, agents may still possess the authority to perform certain tasks based on their role and the standard practices within the industry.

For example, if an agent routinely processes claims or collects premiums as part of their job, those actions suggest that they have the authority to do so, regardless of whether this authority is formally documented. In this way, implied authority helps facilitate operations within the insurance sector by allowing agents to act in a manner consistent with their responsibilities, making it easier for clients and insurers to navigate transactions without needing constant explicit approval. This understanding of implied authority emphasizes the agent's ability to act in the best interest of the principal (the insurance company) based on established norms and practices.