Final answer:
The authority that a customer believes that an agent holds based on the agent's statements and which may make the insurer liable for the agent's acts is called apparent authority.
Step-by-step explanation:
The authority that a customer believes that an agent holds based on the agent's statements and which may make the insurer liable for the agent's acts is called apparent authority.
Apparent authority is a legal concept that refers to the authority a third party reasonably believes an agent has based on the agent's actions or statements. When an agent exceeds their actual authority but the customer reasonably believes they have the authority to act on behalf of the insurer, the insurer can be held liable for the agent's acts or omissions.
For example, if an insurance agent tells a customer that a certain policy covers a specific type of damage, and the customer relies on that information and suffers a loss, the insurer may be held responsible for the agent's false statement under the principle of apparent authority.