Articles Posted in Insurance Agents

Fort Worth insurance lawyers need to be able to look at the facts of a case and determine whether or not the insurance agent can be held liable for his actions.

One thing to keep in mind as was stated in the Corpus Christ Court of Appeals case, In re National Health Insurance Company, is that to recover damages an insured must prove that the conduct complained of was the cause in fact of the actual damages.

An insurance agent may be liable for negligently failing to inform an insured of a policy renewal date. The case that states this is the Texas Supreme Court case, Kitching v. Zamora. In Kitching the Court held that an insurance agent who receives commissions from a customer’s payment of insurance policy premiums has a duty to reasonably attempt to keep the customer informed about his or her insurance policy expiration date when the agent receives information pertaining the expiration date that is intended for the customer.

Fort Worth insurance lawyers when presented with a claim being denied will want to see if the agent who sold the insurance policy did anything wrong.

The case law in Texas is pretty clear in that insurance agents have no general duty to obtain insurance nor to make sure the coverage is adequate for one of their customers. On the other hand, the Texas Supreme Court issued an opinion in 1992, that found where an insurance agent who undertakes to procure insurance for his customer owes a duty to that customer to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so. This case is styled, May v. United Services Association of America. There is also a case reversing a summary judgment for the agent wherein the customer alleged that the agent failed to raise coverage limits after being asked to do so.

The Texas Supreme Court has held that an agent has a duty to keep the customer informed about the insurance policy’s expiration date when the agent receives information pertaining to the expiration date that is intended for the customer. This case is styled, Kitching v. Zamora. A similar opinion was issued by the Amarillo Court of Appeals in 1992, in the case styled, Horn v. Hedgecoke Insurance Agency.

Dallas insurance lawyers will run across situations where it is apparent an insurance agent does not have authority to do so of the things he is doing. So, what does this mean when trying to advise a client. Here is some information to know.

An insurance company cannot escape liability by showing that it did not authorize the specific wrongful act. This was stated by the Texas Supreme Court in cases in 1994 and 1979. One of those cases was Celtic Life Insurance Company v. Coats.

The Celtic court stated:

Fort Worth insurance lawyers and those in North Richland Hills, Saginaw, Roanoke, Lake Worth, and other places around Tarrant County need to understand the authority of insurance agents and the legal responsibilities related to that authority.

Courts have described actual authority this way:

“Actual” authority, which includes both express and implied authority, usually denotes that authority a principle: (a) intentionally confers upon an agent; (b) intentionally allows the agent to believe he possesses; or (c) allows the agent to believe that he possesses by want of due care. “Implied” actual authority exists only as an adjunct to express actual authority because implied authority is that which is proper, usual, and necessary to the exercise of the authority that the principle expressly delegates.

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.

Weatherford attorneys and those in Hudson Oaks, Millsap, Aledo, Peaster, Brock, and other places in Parker County need to know how an agent is tied to an insurance company by statutes.

The Texas Insurance Code, Section 4001.051 provides an expansive list of conduct that constitutes “acting as an agent” for an insurance company. Here is what it tells us:

(a) This section applies regardless of whether an insurer is incorporated under the laws of this state or a foreign government.

The first step to determine whether an insurance company is vicariously liable is to determine whether the person who engaged in the conduct was acting as the insurance company agent.

Agency has been discussed by the Texas Supreme Court in many contexts. The Texas Legislature has helped by putting the definition of an agent into law as it relates to the insurance context.

The question; “Who are agents?” was answered in the past by one statute. It broadly defined agents to include any person who performed certain actions on behalf of insurance companies. This old law is now found in the Texas Insurance Code, Sections 4001.003 and 4001.051.

This writing gives some insight into how an attorney knows whether not an insurance company can be held responsible for the acts of it’s agents.

Insurance companies, like other entities that exist, can only act through agents. Insurance companies rely on agents to sell their policies, to underwrite potential insureds, and to investigate and adjust claims. The agents will not only sell the policy, but also explain the policy and hopefully, give the customer what they are looking for in a policy.

Insurance companies may be vicariously liable for another’s misconduct if that other person is the insurance company’s agent and if that agent acted within the scope of his or her authority. This has been stated repeatedly in case law by the Texas Supreme Court as well as the Houston Court of Appeals and other Courts throughout the state of Texas.

A 1994, Texas Supreme Court case styled, Celtic Life Insurance Company v. Coats, shows us how the courts look to find the agency relationship between the acts of an agent and an insurance company.

This case presents issues relating to an insurance company’s liability for its agent’s representations: first, whether the company’s liability depends on its authorization of misrepresentations; second, whether reliance on the representations is an element of recovery.

Kenneth Harrell, a duly-appointed agent for Celtic visited Aloha Pools and met with its owner, John Coats, to discuss health insurance for Aloha’s employees and their families. Coats stated that he wanted a policy providing benefits for psychiatric care that would be equal to or better than the $20,000 coverage provided by his current policy. Coats explained that he needed such coverage because his oldest son had previously required psychiatric care, and he was concerned that his younger son might require similar care. Harrell responded that he understood Coats’ needs fully, having experienced similar financial difficulties in providing psychiatric care for his own son.

Dallas insurance lawyers and those in Mesquite, Garland, Richardson, De Soto, Cedar Hill, and other areas need to know when an insurance agent or adjuster can be held responsible for the wrongs they commit.

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 the company’s behalf. In general, an agent is individually liable for his or her own tort or statutory violation.

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.