Welcome to Assignment 12
This assignment applies the agency law principles from Assignment 11 to the insurance industry. You will learn who represents whom in an insurance transaction, what authority producers have (and do not have), how the knowledge imputation rule works, and when producers, brokers, and claim representatives face personal liability.
Exam Alert!
Key exam topics: agent vs. broker distinction, the 3 types of agents and their authority levels, knowledge imputation (and its 2 exceptions), apparent authority traps, reservation of rights vs. nonwaiver agreements, and first-party bad faith damages.
What You Will Learn
1. The three types of insurance agents and how they differ in authority
2. How brokers differ from agents — and when a broker becomes the insurer's agent
3. Actual, apparent, and implied authority — and how insurers get bound by unauthorized acts
4. The knowledge imputation rule and its critical exceptions
5. Producer duties, defenses, and personal liability exposure
6. Errors and omissions (E&O) coverage for insurance professionals
7. Claim representative classifications and settlement authority
8. Waiver, estoppel, bad faith, and unfair claim settlement practices
Assignment Parts
Insurer-Agent Relationship
Three types of insurance agents, actual vs. apparent vs. implied authority, binding authority, knowledge imputation, termination, fiduciary duties, producer liability, and defenses.
Brokers, Surplus Lines & Liability
Broker duties, surplus lines placements, E&O coverage, claim representatives, settlement authority, waiver and estoppel, unfair claim practices, bad faith, and excess liability.
Quick Reference Summary
Agent vs. Broker
Agent = represents the INSURER. Broker = represents the CUSTOMER. Critical distinction.
3 Agent Types
General (broadest), Special (most common), Soliciting (most limited, cannot bind).
Knowledge Imputation
Agent knows it = insurer knows it. Exceptions: no real agency, or agent committing fraud.
Apparent Authority
Created by the PRINCIPAL's actions, not the agent's claims. Insurer gets bound.
E&O Coverage
Malpractice insurance for producers. Covers mistakes in professional duties.
Bad Faith Damages
Compensatory + emotional distress + attorney fees + sometimes PUNITIVE damages.