Weatherford Lawyers and those in Willow Park, Springtown, Aledo, Cool, Garner, and other places in Parker County need to know this insurance law.
It may be obvious in situations that a person was the insurance company agent and was acting as agent in that the person was licensed to sell the company’s policies. In Texas law, the statutes make clear that anyone engaging in the listed activities in Texas Insurance Code, Section 4001.051 on behalf of the insurance company will be treated as an agent for that insurance company.
As the Texas Supreme Court explained under predecessor statutes, agents are defined generally, and the statutes list various acts performed in the ordinary course of providing insurance, such as soliciting insurance; transmitting an application; receiving, collecting, or transmitting a premium; and adjusting a loss. Anyone who performs these acts “shall be held to be the agent of the company for which the act is done, or the risk is taken, as far as relates to all liabilities, duties, requirements and penalties set forth.
Here are some examples:
1. The Texas Supreme Court in 1994, said that where the person performed on behalf of the insurer at least some of the listed acts – such as soliciting the policy – he was clearly the insurer’s agent. The insurer was liable for the agent’s misrepresentation in explaining the mental health benefits under the policy.
2. The Texas Supreme Court in 1979, said that an agent who issued a policy and signed it on behalf of the insurer was the insurer’s agent. The insurer was vicariously liable for the agent’s misrepresentation that the policy covered property damage caused by vandalism.
3. The United States 5th Circuit in 2002, said that the agreement with the agent did not give authority to modify the policy. The agent was authorized to issue certificates of insurance. The certificates stated they did not modify the underlying policy. The agent did not have actual authority to extend coverage by issuing a certificate to extend coverage beyond the policy.
An agent can be both agent for the insured and for the insurance company. The agent may owe a duty to the insured to procure insurance, and a duty to the insurance company to collect premiums and deliver the policy for the insurance company. Thus, proving the agent acted for the insured does not shield the company from responsibility, and proving the agent acted for the insurance company does not negate all duties to the insured.
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