An insurer also may be liable for unauthorized acts by an agent, if the agent is acting within the scope of his “apparent authority.” Actual authority is not required. The insurer will be liable when by its conduct it has given the agent the appearance of having authority, so that a reasonable person would suppose the agent had authority. This was the ruling in the 1979, Texas Supreme Court case, Royal Globe Insurance Co. v. Bar Consultants, Inc.
Apparent authority is an estoppel theory that holds the insurer liable because the insurer has clothed the agent with indicia of authority that would lead a reasonable person to believe the agent had authority. If the agent is acting within the scope of his apparent authority, not even instructions not to mislead, nor diligence in preventing misrepresentations, will shield the insurer from liability. Evidence of apparent authority may include: