Which statement about agency authority in title insurance is true?

Which statement about agency authority in title insurance is true?

• A. The license has nothing to do with defining or limiting the scope of the agent's authority.
• B. The title insurance company is absolved from all liability for unauthorized acts of the agent.
• C. The title insurance company is bound by all acts of the agent within the scope of the agent's apparent authority.
• D. The scope of the agent's authority is limited by the terms and conditions set forth in the license.

Answer: (C)

The key idea is how agency authority works in title insurance. A title insurer uses agents to handle policies, so the insurer is vicariously bound by what its agents do within the authority that third parties reasonably believe the agent has. This is known as apparent authority. If an agent acts within that apparent scope, the insurer must honor those acts and be liable for them. The license the agent holds is important for qualification, but it does not by itself set or limit the scope of the agent’s actual or apparent authority. The insurer isn’t automatically absolved of liability for authorized acts, and the authority isn’t strictly confined to what the license says. If an agent acts beyond what is apparent or actual authority, the insurer may not be bound unless there’s later ratification. This is why the statement that the title company is bound by all acts of the agent within the scope of the agent’s apparent authority is the correct one.

The key idea is how agency authority works in title insurance. A title insurer uses agents to handle policies, so the insurer is vicariously bound by what its agents do within the authority that third parties reasonably believe the agent has. This is known as apparent authority. If an agent acts within that apparent scope, the insurer must honor those acts and be liable for them. The license the agent holds is important for qualification, but it does not by itself set or limit the scope of the agent’s actual or apparent authority. The insurer isn’t automatically absolved of liability for authorized acts, and the authority isn’t strictly confined to what the license says. If an agent acts beyond what is apparent or actual authority, the insurer may not be bound unless there’s later ratification. This is why the statement that the title company is bound by all acts of the agent within the scope of the agent’s apparent authority is the correct one.