Dallas insurance lawyers and those in Mesquite, Garland, Richardson, De Soto, Cedar Hill, and other areas need to know when an insurance agent or adjuster can be held responsible for the wrongs they commit.
Just as an insurance company is liable for its own misconduct, so too agents may be personally liable for their misdeeds, even when acting on the company’s behalf. In general, an agent is individually liable for his or her own tort or statutory violation.
Ordinarily, an agent is not liable for breach of contract based on the insurance policy, because the contract of insurance is not between the insured and the agent.
The Texas Supreme Court has held that an agent may not be liable for breaching a duty of good faith and fair dealing, because that duty arises from the contract between the insurer and the insured.
An agent may be liable for violating other common law or statutory duties to the insured. For example, an agent who undertakes to get insurance may be liable for negligently failing to get proper insurance for the insured. An agent may also be liable for negligently failing to notify the insureds that their policy is about to expire.
Statutes prohibiting misrepresentations, unfair settlement practices, and unfair discrimination apply to “any person” engaged in the business of insurance and include agents and brokers according to Texas Insurance Code Sections, 541.002(2), 541.151, 544.051(6), and 544.052.
The unfair insurance prohibitions in the Insurance Code apply to agents, adjusters, and others engaged in the “business of insurance,” such as the sale or servicing of policies.
While an individual agent is subject to being sued under the statute, for the agent to be liable there must be proof that the agent himself committed a violation that caused damage to the plaintiff.
An example from the Texas Supreme Court is good to know: An agent personally carried out the transaction that formed the core of the unfair insurance practices complaint. The agent was responsible for explaining premiums and was required to have a measure of expertise. He was a “person” engaged in the “business of insurance” and could be liable under the statute. On the other hand, clerical employees, who have no responsibility for policy sales and servicing and no special insurance expertise, are not “engaged in the insurance business,” and thus would not be personally liable under this rationale.
The same reasoning should apply to other statutes, like the unfair discrimination statute, that include similar definitions.
An agent also may be personally liable for performing acts on behalf of an insurance company, if the insurance company has not complied with the requirements of state law. This is found in Texas Insurance Code, Section 4001.053.
An experienced Insurance Law Attorney is going to know and understand these laws. He knows the questions to ask and the issues to look for when advising someone on an insurance issue.
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