Most Dallas insurance lawyers in Dallas and Fort Worth know the ways agents and adjusters can liable for their actions in selling a policy or handling a claim.
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 an insurer’s behalf. In general, an agent is individually liable for his or her own tort or statutory violation . This has been made clear in numerous Texas cases including the Texas Supreme Court in its 1985 opinion, Weitzel v. Barnes.
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.
In 1994, the Texas Supreme Court held in, Natividad v. Alexsis, Inc., that the 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. This can be found in Texas Insurance Code, Sections 541.002(2), 541.151, 544.051(6), and 544.052.
The unfair prohibitions in chapter 541 of the Insurance Code apply to agents, adjusters, and others engaged in the “business of insurance,” such as the sale or servicing of policies.
The 5th Circuit stated in the 2004, opinion, Hornbuckle v. State Farm Lloyds that 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.