What type of authority is created when a producer exceeds their expressed authority?

The correct answer is apparent authority. This type of authority arises when a producer or agent acts in a way that goes beyond their expressed authority and the actions lead a third party to reasonably believe that the agent has the authority to act on behalf of the principal.

In the context of insurance, when a producer communicates or takes actions that create an impression of having authority—even if the contract or agreement does not officially grant that level of authority—those actions can bind the principal, in this case, the insurance company. Thus, if the producer exceeds their expressed authority but the third party perceives that the producer is authorized to act, apparent authority is established.

Express authority is the specific powers granted to a producer in a contract or agreement and would not apply here, as the situation revolves around actions beyond that authority. Implied authority refers to the typical duties or responsibilities that are assumed based on the agent's position but does not encompass actions that are distinctly beyond the authority given. Operational authority is not a recognized term in this context in insurance discussions.