Insurance lawyers in the Dallas and Fort Worth area will tell you that being in a position to be able to sue an insurance agent who has committed acts costing their clients money are sometimes easy targets. Not only are they liable for wrongs they may have committed, but they can also be held accountable for things they did not do.
Insurance agents can be important persons/entities to sue in a lawsuit. Most agents do not work by themselves. They work in an office with other insurance agents and have CSR’s working for them. CSR’s are Customer Service Representatives. Almost any of the people working in an insurance office such as the CSR’s, or anybody in a clerical role or who handles money, faxes/mails policies, gives advice, etc can be considered an agent of the insurance company who provides the policy.
Texas Insurance Code, Section 4001.052(a) says, “a person who solicits an application for life, accident, or health insurance or property or casualty insurance is considered the agent of the insurer issuing a policy on the application and not the agent of the insured in any controversy between the insurer and insured, the insured’s beneficiary or the insured’s dependents.”
Texas Insurance Code, Section 4001.051(b) says:
Regardless of whether the act is done at the request of or by the employment of an insurer, broker, or other person, a person is the agent of the insurer for which the act is done or risk is taken for purposes of liabilities, duties, requirements and penalties provided by this title … if the person,
1. solicits insurance on behalf of the insurer;
2. receives or transmits other than on the person’s own behalf an application for insurance or an insurance policy to or from the insurer;
3. advertises or otherwise gives notice that the person will receive or transmit an application for insurance or an insurance policy;
4. receives or transmits an insurance policy of the insurer;
5. examines or inspects a risk;
6. receives, collects, or transmits an insurance premium;
7. makes or forwards a diagram of a building;
8. takes any other action in the making of consummation of an insurance contract for or with the insurer other than on the person’s own behalf; or 9. examines into, adjusts, or aids in adjusting a loss for or on behalf of the insurer.
Being able to sue an insurance agent is important for three reasons.
1) An insurance agent is a direct link between an insurance company and the client.
2) Suing an insurance agent usually will prevent an insurance company from having an insurance lawsuit being moved to Federal Court.
3) Insurance agents are simply easy targets.
Insurance agents have to ask themselves – Who do they represent? – The insurance company or their insured / customer?
Their exists an agent-principle relationship between an insurance agent and their insured/customer when –
a. The agent possesses actual and / or apparent authority through the principles conduct;
b. The actual authority is authority the principle intentionally confers;
c. The apparent authority arises through an act of participation, knowledge, or acquiescence by the principle that clothes the agent with authority.
It is important to realize that an insurance agent does not typically owe a fiduciary duty to their insured / customer.
Insurance agents can typically be sued for – negligence – negligent misrepresentation – violations of the Texas Deceptive Trade Practices Act – violations of the Texas Insurance Code – and for fraud.
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