Flashcards Studio

A domestic insurer, BrightShield Assurance Co., acts through its local agent Isidro Lim in Cebu to procure marine cargo insurance for MetroPort Logistics. Lim tells MetroPort that BrightShield will bind coverage up to PHP 6,000,000 and issues a binder stating the coverage, perils, and premium. The binder lists Lim’s name and indicates it is binding authority subject to BrightShield’s marine policy terms. The next day BrightShield issues a formal marine cargo policy for PHP 4,800,000 with similar perils but different terms. BrightShield later repudiates Lim’s actions, claiming Lim had no authority to bind coverage or to issue a binder.   (a)Identify the central doctrine governing whether BrightShield is bound by Lim’s binder. (b)Distinguish actual authority, apparent authority, and agency by estoppel as they apply to Lim’s binder. (c)Apply to the facts: Is BrightShield bound to honor the binder and the policy? Explain your answer with reference to the Insurance Code (PD 612, as amended by RA 10607).