What type of authority binds the insurer to cover a 21-year-old driver despite the broker's restrictions?

Apparent authority is the type of authority that binds the insurer to cover a 21-year-old driver, despite the broker's restrictions. This concept arises when a broker or agent appears to possess the authority to act on behalf of the insurer in a manner that could reasonably lead third parties to believe they have such authority.

In this scenario, if the broker has previously bound the insurer to cover drivers who fall under certain conditions (like age), a third-party perspective would suggest that the insurer is still bound by that arrangement, even if the broker's current mandate has restrictions. The key point about apparent authority is that it depends on how the agent is perceived by external parties, leading them to reasonably assume that the agent has the authority to act.

For example, if a broker consistently covers younger drivers without objections from the insurer, this could create a situation where stakeholders believe that the broker has the authority to bind the insurer, regardless of any recent limitations communicated by the insurer. Thus, apparent authority serves to protect the interests of those relying on the representation made by the broker while ensuring that insurers remain accountable for their agents’ actions as perceived from an external perspective.