Which party has the belief that an agent has the right to act under apparent authority?

The belief that an agent has the right to act under apparent authority primarily lies with the customer or third party involved in the transaction. Apparent authority occurs when a principal (in this case, the insurance company) creates circumstances where a reasonable third party would believe that the agent has the authority to act on behalf of the principal.

The third party, upon interacting with the agent, is entitled to rely on the representations made by the agent, including the belief that the agent is authorized to bind the principal to contracts or agreements. This reliance is based on the external actions and statements made by the principal, which leads the third party to assume that the agent carries such authority.

In situations of apparent authority, the principal may be held accountable for the agent's actions that the third party reasonably perceived to be within the agent's authority. This highlights the significance of the agent’s role as an intermediary and the importance of clear communications regarding authority limits to prevent misunderstandings among all parties involved.