If an insured has paid a premium to an agent authorised by the insurer to collect premiums on its behalf and the agent then fails to pass on the premium to the insurer, what is the legal situation?

When an insured pays a premium to an agent who is authorized by the insurer to collect premiums, the legal principle of "agency" applies. This means that the agent acts on behalf of the insurer in carrying out certain functions, including the collection of premiums. Therefore, when the insured makes a payment to the agent, it is considered as if that payment has been made directly to the insurer.

In this context, if the agent fails to forward the premium to the insurer, the legal situation establishes that the insurer is still deemed to have received the premium. This means that the insured remains covered under the insurance policy, as the obligation of the insured to pay premium is satisfied by the payment to the authorized agent.

This principle protects insured parties from potential lapses in coverage due to issues that arise between the agent and the insurer, maintaining the insured's legal right to be covered as long as they have fulfilled their duty to pay the premium.