Writing Above the Power of Attorney
Ray's power of attorney from his surety authorizes a maximum single bond of $100,000 and an aggregate of $250,000. A defendant with a prior failure to appear needs a $150,000 bond. Ray leaves a voicemail for the insurer's marketing representative, who calls back and says, 'Go ahead, we'll paper it Monday.' Ray posts the bond Friday, collects a $15,000 premium, and does not obtain a written endorsement. The defendant flees. The insurer denies coverage, saying the marketing representative had no authority to approve excess bonds.
1. Analyze Ray's authority and the effect of the oral approval.
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Actual authority comes from the power of attorney. It capped Ray at $100,000 for a single bond. A $150,000 bond is $50,000 above his actual authority.
The marketing representative's oral 'go ahead' is weak authority. Unless the insurer actually cloaked that representative with power to approve excess bonds-and Ray can prove it-the approval does not amend the power of attorney. 'We'll paper it Monday' is precisely the kind of informal assurance that fails when a loss occurs.
Ray may be personally liable for the amount above his authority, and the insurer may deny the entire bond if it was issued without authority. Apparent-authority arguments are uncertain and expensive; they are not underwriting.
2. What should Ray have done before posting the $150,000 bond?
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- Read the power of attorney limits-both the single-bond and aggregate caps-before quoting.
- Request written excess approval from someone with documented authority, before posting: an endorsement, a written authorization, or a formal power of attorney increase.
- Check the aggregate exposure: even a $100,000 bond might exceed the $250,000 aggregate if other bonds are outstanding.
- Underwrite the prior failure to appear rather than treating it as a detail. A prior FTA is a red flag that warrants collateral, a higher premium, or declination.
- If approval is not in hand, decline or reduce the bond. A client who needs a Friday posting is not a reason to exceed authority.
3. The defendant has fled. What must Ray do now, and what records matter?
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Immediately notify the surety in writing of the failure to appear, the bond amount, the excess issue, and the oral approval. Do not wait for the court to declare forfeiture.
Notify the court as required by local practice and cooperate with the sheriff and the surety's recovery efforts.
Preserve the record: the voicemail, the representative's return call, the bond, the power of attorney, the premium receipt, the defendant's prior FTA information, and all communications about the $150,000 limit. The insurer will investigate whether the representative had authority and whether Ray exceeded it.
Do not alter the file. Ray's best defense is a complete, contemporaneous record showing exactly what he was told and what he disclosed. He should also expect a personal exposure claim for the $50,000 excess.