LEGAL PRINCIPLE: INSURANCE LAW – Agency Authority – Insurance Agent with Authority to Receive Premium Binds the Insurer
PRINCIPLE STATEMENT
If an insurance agent has authority to receive premium, payment to the agent binds the insurer. The authority need not be express; it may be implied from circumstances.
RATIO DECIDENDI (SOURCE)
Per Kutigi, JSC, in Ngillari v. National Insurance Corporation of Nigeria (1998) NLC-721992(SC) at pp. 14; Paras D–E.
"The premium may be paid by the assured to the insurers or to an insurance agent acting on behalf of the insurers. If the agent has authority to receive it the payment binds the insurers. The authority need not be an express authority: it may be implied from circumstances."
EXPLANATION / SCOPE
An insurance agent’s authority to receive premiums may be express or implied. Payment to an authorised agent is payment to the insurer. The principle protects policyholders who pay premiums in good faith. The insurer cannot deny coverage after accepting premiums through an agent. The rule applies to all insurance contracts. The insurer may be estopped from denying the agent’s authority.