Dallas Fort Worth Insurance Lawyer Blog

Who Are Insurance Agents?

January 27, 2018 | Mark S. Humphreys

Graford Texas insurance lawyers learn real fast how to determine whether someone is an agent of an insurance company, or not.

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

The question — “Who are agents?” was answered, until recently, by one statute. Formerly, article 21.02 broadly defined “agents” to include any person who performed certain actions on behalf of an insurance company. As part of the ongoing codification of Texas statutes, the old article 21.02 is now found in Texas Insurance Code sections 4001.003 and 4001.051.

Insurance Company Being Responsible For Agent

January 25, 2018 | Mark S. Humphreys

It is not unfair to say that an insurance company is going to be liable for the acts of its agents 95% of the time.

Insurance companies, like other entities, can act only through agents. Insurance companies rely on agents to sell their policies, to underwrite potential insureds, and to investigate and adjust claims. Insurance companies may be vicariously liable for another’s misconduct if that other person is the insurer’s agent and it that agent acted within the scope of his or her authority. This is made clear in the 1994 opinion from the Texas Supreme Court styled, Celtic Life Insurance Company v. Coats. It was stated earlier in the Supreme Court from 1979 styled, Royal Globe Insurance Company v. Bar Consultants, Inc. Another case mentioned often is the 1989 opinion from the Houston 14th District styled, Paramount National Life Insurance Co. v. Williams.

As explained by the Texas Supreme Court in the Celtic Life case:

Requesting Coverage For A Claim

January 23, 2018 | Mark S. Humphreys

Insurance attorneys know about the statutory requirements of making a claim. These rules can be looked up in the Texas Insurance Code. The problem arises when the insurance companies do not comply with these rules. So, what are some of these rules.

Start with Texas Insurance Code, Section 542.056(a). This statute requires an insurance company to give written notice it is accepting or rejecting a claim. A telephone call from the insurance company adjuster notifying the insured of the amount of the loss will not constitute “notice of payment of claim, because the statute requires that the acceptance or rejection be in writing. This writing requirement is discussed in the Houston Court of Appeals [14th Dist.] opinion styled Daugherty v. American Motorists Insurance Company.

However, an insurance company’s written response acknowledging only that a claim has been received does not constitute an acceptance or rejection under the statute according to a Corpus Christi Court of Appeals opinion styled, Northern County Mutual Insurance Company v. Davalos.

Liability Of Insurance Agents

January 21, 2018 | Mark S. Humphreys

Texas insurance law lawyers should be able to turn to the Insurance Code and know this section that relates to insurance agents. The section is 4001.053. It says an agent also may be personally liable for performing acts on behalf of an insurance company. This is supported with case law from the Texas Supreme Court in the 1998 opinion styled, Liberty Mutual Insurance Company v. Garrison Contractors, Inc.

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. This is what was stated in the 2004, 5th Circuit opinion styled, Hornbuckle v. State Farm Lloyds.

Here is an example from the Garrison Contractors opinion. An agent personally carried out the transaction that formed the core of the unfair insurance practices complaint. The agent was responsible for explaining premiums and was required to have a measure of expertise. He was a “person” engaged in the “business of insurance” and could be liable under the statute. On the other hand, clerical employees, who have no responsibility for policy sales and servicing and no special insurance expertise, are not “engaged in the insurance business,” and thus, would not be personally liable under this rationale. The same reasoning should apply to other statutes, like the unfair discrimination statute, that include similar definitions.

Liability Of Agents And Adjusters

January 20, 2018 | Mark S. Humphreys

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.

What Can The Insurance Company Be Liable For?

January 18, 2018 | Mark S. Humphreys

Texas insurance lawyers are always asking the above question when someone comes to see them about an insurance company doing them wrong.

To start with, as the contracting party, the insurance company can be liable based on the contract that exists between them and their customer.

There are also several statues, under which, the insurance company can be held liable. For example, under Texas Insurance Code, Section 541.151, the statute states “any person” engaged in the business of insurance may be liable for unfair insurance practices. Reading further, the Texas Insurance Code, Section 541.002(2), defines the term “person” to include various insuring entities.

Insured Rescinding A Policy

January 16, 2018 | Mark S. Humphreys

Here is a curious 1933 opinion from the Texas Court of Commission of Appeals. It is styled, American National Insurance Co. v. Huey.

This is a case wherein an insurance agent is alleged to have misrepresented the terms of an insurance policy wherein the insured was to receive monthly benefit. This was not what the policy provided. When the claim for benefits was denied, the insured filed suit alleging the misrepresentations by the agent.

It appears from the record and findings of the jury that, Huey made an application for insurance to the insurance company. As actually written and signed, this application called for the issuance of a life insurance policy for $2,000, providing for double indemnity in case of accidental death, and waiver of premiums in case of total disability. On March 12, 1929, a policy of insurance issued by such company was delivered to Huey in all things conforming to the application as written.

Cooperation With Insurance Company

January 14, 2018 | Mark S. Humphreys

Cooperation with the insurance company investigation of a claim is required under the insurance policy. Failure to cooperate can result in the policy being rescinded and the claim denied.

The 1994, Amarillo Court of Appeals opinion, Andy Costely and Cathy Costley v. State Farm Fire And Casualty Company, illustrates the necessity of cooperation with the insurance company investigation of a claim.

In this case, State Farm was allowed to rescind a policy based on the insured failure to cooperate. Cathy had her truck, tractor, and other personal property destroyed by a fire while it was parked on Andy’s father’s (Robert) property. Andy and Cathy sued Andy’s father. Later Robert sued Andy alleging the damage was due to the negligence of Andy.

Reasons For Rescission Of An Insurance Policy

January 13, 2018 | Mark S. Humphreys

Area life insurance attorneys need to know the reasons an insurance company can rescind an insurance policy.

In addition to the common law standards, several statutory provisions regulate an insurer’s ability to avoid coverage based on a misrepresentation by the insured. These are found in Texas Insurance Code, Chapter 705.

The statute provides:

Life Insurance And Warranties

January 11, 2018 | Mark S. Humphreys

Parker County life insurance lawyers know how the courts look at warranties in life insurance policies.

As stated in the 1997, 5th Circuit opinion styled, Riner v. Allstate Life Insurance Company, “Warranties in insurance applications are strongly disfavored in the law, and even fairly obvious attempts to create warranties in the application process have been rejected by Texas Courts.” There is a line of cases holding the same as Riner. Courts thus have been disinclined to find that contract language creates a warranty or condition precedent unless the language allows no other conclusion.

The language used the 1966, Texas Supreme Court case, Great American Reserve Insurance Co. v. Britton, said that “the policy shall not take effect until it has been delivered to its owner during the lifetime and good health of the Insured.” The court found this was a condition precedent.