Question

Jackie lives in an area recently devastated by a hurricane and has filed a claim with her insurance company, ABC Insurance. Jerry, an adjuster contracted by ABC Insurance, pulls up to Jackie's house in a truck with the ABC Insurance logo on the side, and wearing a shirt with the ABC Insurance logo on the front. Although Jackie doesn't know that Jerry is contracted by ABC Insurance, she has reason to believe he has the authority to adjust her claim. This is an example of:

A. Apparent authority
B. Implied authority
C. Ostensible agency
D. Inherent agency

Answer 1

The situation with Jerry representing ABC Insurance to Jackie represents apparent authority, which is when someone appears to have the authority to act for a company, regardless of whether this is formally true.

Step-by-step explanation:

Jackie is dealing with a situation where Jerry, despite being a contractor, appears to have authority to handle her insurance claim due to the signs of affiliation with ABC Insurance such as the truck and clothing logos. This circumstance is an example of apparent authority, which occurs when a person reasonably believes another person has the authority to act on behalf of a company, even though that authority might not have been formally granted. Implied authority typically involves situations where authority is assumed through the actions of the agent, while ostensible agency and inherent agency deal with different aspects of agency relationships.