California Life and Health Insurance Practice Exam 2025 – Complete Test Prep

An agent's implied authority encompasses the reasonable actions needed to fulfill their expressly authorized duties. This type of authority allows an agent to perform tasks and make decisions that are not specifically stated in the written contract or agreement but are essential for the execution of their responsibilities.

For instance, if an agent has been authorized to sell insurance policies but the agreement does not explicitly mention handling customer inquiries or resolving minor issues, the agent still has the implied authority to undertake such activities because they are necessary for effectively executing the primary task of selling policies. This ensures that agents can operate efficiently and make timely decisions that benefit the principal’s interests without waiting for explicit permission every time a minor decision arises.

Other forms of authority, such as express authority, refer specifically to the documented instructions given to an agent, while legal authority pertains to the statutory powers granted by law. Appointed authority is not commonly referred to in agency contexts, making implied authority the correct choice as it emphasizes the necessary actions derived from the broader scope of the agent's role.