Insured people in Grand Prairie, Fort Worth, Dallas, Lake Worth, Benbrook, Saginaw, Crowley, Mansfield, and other places in Tarrant County and Texas need to be cautious when dealing with their insurance company agent.
A case from the Austin Court of Appeals decided in 2000, is a good example of the above. The style of the case is, “Stan Stumph, d/b/a Concrete Concepts/Dallas Fire Insurance Company v. Dallas Fire Insurance Company/Stan Stumph, d/b/a Concrete Concepts.”
Here is some background.
Stumph is the sole proprietor of Concrete Concepts. In 1992, Stumph purchase a commercial policy from Dallas Fire (the “first policy”). The first policy was purchased through Dallas Fire’s local recording agent, don Harvey. Harvey owned Emerald Insurance. The policy was to be in effect from November 17, 1992, through November 17, 1993. Stumph made a down payment on the policy’s premium and financed the remainder through a premium finance company, to whom he sent monthly payments. The premium finance company forwarded the payments to Harvey. Harvey was to send the payments, minus a commission, to Dallas Fire. Dallas Fire did not receive Stumph’s payments and eventually discovered that Harvey had not forwarded payments on other accounts as well. On July 14, 1993, Dallas Fire quit doing business with Harvey.
Shortly after this, Dallas Fire sent a cancellation notice to Stumph, stating that his policy would be cancelled on July 26, 1993, for “non-pay agent to co.” Upon receiving the cancellation notice, Stumph called Harvey. Harvey told Stumph to continue making payments as usual and that this “had to be a paperwork mix-up.” Stumph then called Dallas Fire and spoke to Liz Jennings, an “underwriter” at Dallas Fire. There is a disagreement about their conversation but Stumph claims Jennings told him that there must have been a “mix-up,” Harvey was a “good man,” Stumph should continue to make payments to Harvey and should keep his canceled checks, and Jennings would call him if he needed to send the checks to her or if there was a “problem.”
This continued with a second policy (the “renewal policy”). With the renewal policy however, Stumph made the monthly premium payments directly to Harvey. Soon a claim was made against the policy.
In September 1994, Stumph sued Harvey, which settled, then later he sued Dallas Fire for violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA).
Dallas Fire asserted they could not be sued because they had suspended Harvey’s authority to issue policies. Stumph countered by asserting that Jenning’s conversation with Stumph created apparent authority for Harvey to issue Dallas Fire policy’s and that Stumph relied upon that apparent authority.
This court found that Dallas Fire was liable for misrepresentations by its underwriter that Stumph could continue to send premium payments to Harvey, described by the underwriter, Jennings, as a “good man” but who was in fact suspended.
This case is a situation where an employee, in this case the underwriter, made misrepresentations that the insured relied on and as a result suffered harm. Usually the misrepresentation is made by the insurance agent or there is a misrepresentation in the policy itself.
This situation, where the insured payed his premiums, suffered a loss, then made a claim that was denied, is exactly the type of insurance wrong doing where an Insurance Law Attorney is needed to assist the insured.
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