Final answer:
The authority for producers to bind an insurer to a contract is granted in the Binder Agreement, which provides temporary insurance coverage until a formal policy is issued. The correct option is C.
Step-by-step explanation:
Producers' authority to bind an insurer to an insurance contract is granted in the Binder Agreement. The binder is a temporary insurance contract that provides coverage until a formal policy is issued. It serves as a proof of insurance, confirming that a policy is in effect and details the main elements of the insurance agreement.
This legal document can be issued by licensed agents or brokers, who act with the authority of the insurer. The binder is particularly important in situations that require immediate coverage before the formal policy can be prepared and delivered.