What Do You Mean It's Not Covered: Actual Authority vs. Apparent Authority

This raised a common issue in disputes about agents' promises. The argument dared the appeals court to decide whether Yannacito had actual or apparent authority. The appeals court decided the distinction was useless. "Actual authority is considered that authority which is in fact given to an agent. In contrast, apparent authority is that authority which the agent appears to third parties to have," it wrote. "The acts or statements of an agent performed within the scope of his real or apparent authority are binding upon the principal, regardless of whether the principal has actual knowledge of the agent's act." The court ruled that Yannacito had authority to negotiate for Life Investors. Responsibilities under his contract included soliciting applications, collecting premiums, and delivering policies to applicants after they were issued by the company. "Certainly, Life Investors expected Yannacito to discuss the health and life insurance coverages offered by it with prospective policy purchasers," the court concluded. Finally, Life Investors tried to argue that the Cozzas had the responsibility to read their policy -- including the restrictions that limited coverage for Kim Cozza's childbirth and that held the company blameless for any misrepresentations an agent might make. The appeals court rejected this argument out of hand. The Cozzas didn't have a copy of the policy when their twins were born, so they couldn't know it contradicted what Yannacito had told them.