As most insurance law attorneys can tell a prospective client: An insurance agent does not have a responsibility to explain the terms of the policy.
As in most laws, there are exceptions based on the facts of each given situation. The Western District of Texas, Austin Division, issued an opinion in 2019 worth reading. It is styled, Riojas v. Nationwide General Insurance Company, et al.
While in the process of selling the Riojases a home loan in 2015, DHI, through its employee Brittany Present, allegedly told the Riojases that DHI would secure homeowners’ insurance for their home. Brittany asked Lezam to obtain a policy, which he did through Nationwide. All of the defendants in this case, allegedly told the Riojases that the policy provided full coverage for their home including water damage.
In October 2017, the Riojases’ experienced a pipe burst in an upstairs bathroom that damaged the home. The loss was reported and Nationwide represented the loss would be covered, told them to check into a motel, and hired a remodeling company to repair damage. After work had began, Nationwide is alleged to have told the Riojases the loss would not be covered. This lawsuit resulted in a lawsuit being filed in State Court and the case was removed to this Federal Court.
In this case there was an issue as to whether Nationwide had timely asserted a limitations defense as to the fraud claims that were being asserted. The details of that argument can be read in the opinion.
The relevance of this case is the court recognizing that even if limitations had possibly run on the misrepresentation claim (2 year limitations period) the limitations had not run on the on a fraud claim which is four years.
The Court pointed out that the Riojases asserted a claim for fraud against the defendants based on their representation that Nationwide’s homeowners’ policy provided “full” coverage, including water damage. The Riojases did not allege exactly when the defendants made the representation or when the policy was received but they made clear that the policy was purchased along with their home loan, which was required at that time. Thus, if the Riojases’ heard the representations on the first day of 2015 and reviewed the policy the same day, their claim would have accrued on that day and their limitations period would not expire until January 1, 2019. So, at the very least the Riojases timely filed their fraud claim.