Hawaii Insurance License Practice Exam

The correct answer is express authority, which is the specific authority granted to an agent by an insurer to act on its behalf. This authority is clearly defined in a written contract or agreement between the insurer and the agent, outlining the powers granted, such as selling insurance policies, handling claims, and making decisions related to the policies.

Express authority is vital in an insurance context because it establishes the legal framework of agency. When an agent operates under express authority, they are acting within the guidelines set by the insurer, which helps ensure that both the insurer and the client are protected in terms of responsibilities and expectations. This clear definition of authority helps facilitate smooth business operations and legal compliance.

Other types of authority, such as implied authority, provide an agent with powers that are not explicitly outlined but are assumed to be included in the agent's duties. This may lead to ambiguities. Apparent authority is based on the perception of third parties and does not come from a formal agreement, resulting in potential legal issues if the agent acts beyond their powers. General authority typically references broader powers but lacks the specificity of express authority. Thus, express authority is the most accurate answer regarding granting permission to sell insurance.