An agent can make decisions that the principal is responsible for if the agent is acting with actual, express, or implied authority on behalf of the principal. Actual authority is when the agent reasonably believes that the principal wishes the agent to do the action. Express authority is when the principal directly states that an agent may perform a specific act on behalf of the principal. Implied authority is when the agent performs acts incidental to, necessary, usual, and proper to perform the authority that has been expressly delegated to the agent. In this case, Johnson gave his friend the express authority to take insurance out for both of them. The court decided that because the friend had the express authority to take out the insurance, the friend also had the implied authority to make all of the decisions necessary when taking out the insurance policy. Although Johnson did not specifically instruct his friend to accept or reject the UM/UIM coverage for the car, the decision was necessary, usual, and proper for purchasing insurance, which he expressly authorized her to do.

 The Supreme Court determined that they need not reevaluate the meaning of “the named insured” because even though Johnson was a named insured, his agent was acting with express authority on his behalf in purchasing the insurance policy.

 Editor's Note: This is a typical issue with insurance policies. Often an insured thinks that even though they purchased the most inexpensive coverage, since they have insurance they are covered for everything, no matter what happens. Then, the insured is sorely upset when they are denied coverage after flood damage to a home, a drag racing car accident, or in a situation like this case. It is important for insureds to read through policies or have an expert evaluate a policy for them so they can be sure they know what is and is not covered.