Insurance Agents Liability
The Texas Department of Insurance regulates the insurance industry and takes enforcement actions as necessary to protect the public. However, as an insurance agent, there may be additional consequences: You can be sued by a client for breach of the duties arising out of your business relationship. Both statutory and case law define your legal obligations, and you may be liable for the losses that result from a violation. While you should discuss your specific circumstances with a Texas insurance liability defense attorney, it is helpful to review some of the fundamentals.
Duty to Procure
Central to the insurer-insured relationship is complying with the client’s request to procure insurance. An agent who has entered into an agreement to obtain coverage has a duty to do so, or let the principal know about any failures or problems. This concept is relatively basic in insurance agent liability law, but many breaches are a result of a breakdown in communications.
Duty to Review Policy
An insurance agent has an obligation to scrutinize the policy when receiving it in response to a client request. The key point to review is the coverage amount and ensuring that the policy amount aligns with what the principal expects. This duty is closely related to the duty to procure, but it places an additional task upon the agent to actually read through the terms and conditions of coverage.
Duty to Explain
Insurance coverage and policies are increasingly complicated, so many clients rely on an insurance agent to explain the terms and conditions. This duty applies to the provisions on the insurance application form and related documents. An agent is not expected to explain details and legal matters outside the confines of the paperwork.
Other duties for Texas insurance agents include:
- The duty to use good faith and diligence in selecting an appropriate insurance company, where the client does not specifically request one;
- The responsibility to keep a client informed about policy issues and changes, so that the insured remains safely covered;
- The duty to extend insurance where necessary or appropriate, which requires an agent to regularly communicate with the client regarding additional coverage; and,
- Other obligations as defined by law.
Discuss Insurance Agent Liability with an Experienced Lawyer
If you have questions or concerns about your liability as an insurance agent in Texas, please contact the Campbell & Associates Law Firm PC in Dallas, TX. We can schedule a consultation to discuss your situation and advise you on your legal options.