Life insurance lawyers need to know the legal theories whereby a life insurance agent can be held liable for the wrongs they commit. These agent responsibility don’t just extend to life insurance agents but to agents in other areas of insurance.
As the contracting party, the insurance company of course may be liable based on the contract with the insured.
An insurer also may be statutorily liable. For example, “any person” engaged in the business of insurance may be liable for unfair insurance practices according to Texas Insurance Code, Section 541.151. The term “person” is defined to include various insuring entities under Section 541.002(2).
The Texas prompt payment of claims statute applies solely to the insurance company according to Section 542.051.
Similarly, the prohibitions on unfair discrimination specifically include insurance companies as stated in Sections 544.001, 544.051, 544.101, and 544.153.
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. These issues are discussed in a 1985 Texas Supreme Court opinion styled, Weitzel v. Barnes. And in a 1983 Texas Supreme Court opinion styled, Light v. Wilson. The 1991 Austin Court of Appeals wrote an opinion on this matter in the opinion styled, State Farm Fire & Cas. Co. v. Gros.
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 insurance company and the insured. This is discussed in the 1994 opinion styled, Natividad v. Alexsis, Inc.