Texas All Lines Adjuster Practice Test

Which form of agency authority is least formal, relying on the behaviors of the agent?

1. Express

2. Implied

3. Apparent

4. Delegated

The correct answer is: Implied

Implied authority is characterized by its informal nature, depending on the actions and behaviors of the agent rather than a formal, explicit agreement. This type of authority arises from the general circumstances of the agency relationship and the responsibilities expected of the agent in carrying out agreed-upon tasks. For example, if an agent has been granted the authority to sell insurance, it is often understood that they can take necessary actions within that role, even if those actions aren’t specifically outlined in their job description or agreement. In contrast, express authority involves clear, direct communication of permissions and responsibilities from the principal to the agent, typically documented in writing or verbal agreements. Apparent authority comes into play when a principal's actions lead a third party to believe that an agent has authority when, in fact, they may not. Delegated authority involves a principal entrusting specific tasks or decision-making powers to an agent, but it still requires formal communication of those powers. Therefore, implied authority stands out as the least formal type of agency authority, relying on the agent's actions in their designated role.