Does An Agent Have To Tell The Customer About Exclusions?

Texas insurance lawyers need to know when an insurance agent is liable for what he says or does not say and when he is not liable. This is partially illustrated in a 2000, San Antonio Court of Appeals case styled, Nwaigwe v. Prudential Property & Casualty Insurance Company.
Moses Nwaigwe was a landlord who purchased a fire insurance policy issued by Prudential. A fire destroyed the property (which was empty at the time) and Prudentail denied Nwaigwe’s claim for property damage based on the policy’s vacancy clause which excluded fire coverage for a building vacant for sixty consecutive days immediately before the loss. Nwaigwe sued Prudential and his insurance agent for violations of the Insurance Code and Deceptive Trade Practices Act (DTPA), breach of common law duty of good faith and fair dealing, fraudulent misrepresentation, negligence, and gross negligence. Prudential and the agent were granted summary judgment and Nwaigwe appealed.
The trial Court’s grant of summary judgment was affirmed by the San Antonio Court of Appeals. Nwaigwe claimed that the failure by the carrier and the agent to advise him of the vacancy clause constituted deceptive conduct which constituted violations of the DTPA and the Insurance Code. The San Antonio Court observed that “no specific misrepresentations were made concerning coverage, and no material information was withheld from Nwaigwe with the intent to induce him to enter into the transaction.” Having decided that there were no mispresentations, the Appellate Court dismissed all of Nwaigwe’s claims and upheld the trial Court’s verdict.
In Texas, an agent has an obligation to answer questions about a policy and to answer them truthfully. However, an agent does not have an obligation to inform a customer about all the contents of the policy. All policies have numerous exclusions and limitations in them and it is the duty / obligation of the insured to either ask about these exclusions and limitations or read the policy and inform himself. A trap a person can fall into is thinking the agent has a duty to inform of everything that is in the policy.