What does an insurance agent's authority often include?

• A. The ability to underwrite policies
• B. The ability to bind insurance coverage on behalf of the principal
• C. The authority to deny claims
• D. The ability to raise premium rates unilaterally

Answer: (B)

An insurance agent's authority often includes the ability to bind insurance coverage on behalf of the principal. This means that when an agent obtains a binding agreement from the insurer, they can provide immediate coverage to the insured, which is crucial for both parties in ensuring that protection is in place without unnecessary delays.

This binding authority empowers agents to act on behalf of the insurer to facilitate smooth transactions and provide customers with the coverage they need right away. It helps streamline the process of insurance application and coverage initiation, ensuring that clients receive prompt protection against potential risks.

In contrast, underwriting policies typically requires a more specialized authority than what is generally granted to agents. Similarly, denying claims is a function of claims adjusters or the insurer itself, as it involves evaluating the specifics of a claim against the terms of the policy. Raising premium rates unilaterally is a decision made by the insurance company based on overall risk assessments and market conditions, not by individual agents. Therefore, the ability to bind coverage accurately reflects a common and significant authority held by insurance agents.