Under TIC 801.052, what is a certificate of authority?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 801.052, a certificate of authority issued under Chapter 801 authorizes the insurer to engage in the business of insurance in Texas, and the certificate must state the specific kinds of insurance the insurer is authorized to write. It is the company's own permission to do business, issued for the lines of insurance the company is qualified to write. Practically, an agent should keep three very different documents straight: the certificate of authority belongs to the insurer, the license belongs to the individual agent, and the certificate of insurance is merely evidence of coverage given to a policyholder or group member.
Why the other options are wrong
- A) An individual's authority to act comes from an agent license under Chapter 4001, not from a certificate of authority.
- C) That document is a certificate of insurance, evidence of coverage delivered to an insured or group member; it confers no authority to transact insurance.
- D) Approval of a policy form is a separate rate and form requirement; it permits use of the form, not the insurer's entry into the Texas market.
Memory hook
Certificate of authority belongs to the company; the license belongs to the person.