An insurance company can be liable for a producer's unauthorized acts under what condition?

A producer may engage in unauthorized acts that could impact the insurance company’s liability, particularly when the agency contract does not clearly define the scope of the authority granted to the producer. In such cases, if a producer acts outside the bounds of their authority, the insurance company could still be held liable for those actions, especially if the lack of clarity in the contract contributed to the misunderstanding of the producer’s authority.

When an agency contract is ambiguous, it can create a situation where third parties might reasonably assume the producer has certain powers that they do not actually possess. This is important because insurance companies must ensure that their agents have clear guidelines and limitations regarding their authority to avoid potential liabilities arising from unauthorized acts.

The other options hint at specific conditions that do not typically apply broadly to producer liability. For example, liability related to felonies is not a standard criterion for establishing a company's responsibility for a producer's actions. Additionally, the nature of the agency contract, whether unilateral or bilateral, does not inherently dictate the situation unless it pertains to the clarity of authority, as noted in the correct answer.