Dave Is an Agent for Easy Pay Insurance

question 42

Multiple Choice

Dave is an agent for Easy Pay Insurance.Easy Pay insures only high-quality applicants.Dave wanted to earn more commissions,so he sold some policies to applicants he knew were below-average risks.When these policyowners started filing claims,Easy Pay tried to deny the claims stating that Dave had not acted appropriately.Which general rule of agency makes Easy Pay responsible for the claims of the higher-than-average risk policyowners?

• A)There is no presumption of an agency relationship.
• B)Agents should be compensated based on the quality of the business they generate.
• C)A principal is responsible for the acts of its agents who are acting within the scope of their authority.
• D)An agent must have authority to represent the principal.

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Definitions:

Opportunity Costs

The cost of forgoing the next best alternative when making a decision.

Financial Statements

Reports that summarize the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.

Pecuniary

Relating to or consisting of money.