Dallas Fort Worth Insurance Lawyer Blog

Insurance Law Attorneys and Lawyers in Fort Worth, Dallas, Weatherford, and other places in Texas know the claims that can be made against an insurance company that treats one of its insureds in an unlawful manner. These same lawyers should also know the claims to make against insurance agents that make misrepresentations to their insureds when selling a policy of insurance.
The question today is: Can an agent be held liable for something he does not say? The answer is: It depends. Here is a case that gives some guidance.
The San Antonio Court of Appeals issued an opinion in 1998, in the case styled, Moore v. Whitney-Vaky Agency. Here are some facts:
Moore was the owner of an apartment complex. An agent for Whitney-Vaky asked whether he could handle the insurance for the complex. Moore testified in deposition that he did not recall discussing any types of coverage with the agent, that he never asked the agent to tell him what the policy covered, that he did not discuss the contents of the policy with the agent, that he never ask the agent to tell him what the policy covered and that he could not recall any conversations with the agent about the coverages he wanted prior to obtaining the policy. However, Moore stated that he believed that all liabilities were covered under the policy and argued that he should have been informed of the provisions of the policy at the time he purchased it.
Subsequently, Moore was sued for wrongful termination by a former employee. Moore believed the claim was covered under his liability policy and made a claim. The claim was denied. Moore then retained counsel and settled the suit. After settlement, Moore sued the insurer and Whitney-Vaky, the agent. The insurer was non-suited. Whitney-Vaky then moved for summary judgment. The parties agreed that the only issue to be determined by the trial court was whether Whitney-Vaky had a duty to advise Moore of the coverage provided under the policy. The trial court granted the motion for summary judgment and Moore appealed.
This appeals court affirmed the trial court ruling and stated that an insurance agent in Texas owes a common-law duty to a client for whom he undertakes to procure insurance: (1) to use reasonable diligence in attempting to place the requested insurance; and (2) to inform the client promptly if unable to do so. Neither of these duties was breached here because Moore admitted that he never requested a specific type of coverage, and Whitney-Vaky did provide a policy of insurance in accordance with its understanding of Moore's expectations. Moore also was never led to wrongly believe that his policy covered risks that were in fact excluded because Moore admitted that he never discussed the contents of the policy with the agent, and that the agent never said anything to give him the impression that the policy would cover all suits against him. There is also no evidence of a special relationship that may give rise to a duty to disclose coverage limitations, even though Moore continued to use Whitney-Vaky to renew his policy every year. Since there is no evidence of some specific misrepresentation by Whitney-Vaky or the agent about the insurance, Moore's mistaken belief about the scope of coverage is not actionable under either the DTPA or the Texas Insurance Code.

No matter if you are in Weatherford, Mineral Wells, Aledo, Azle, Willow Park, Hudson Oaks, Brock, Millsap, Cool, Peaster, Springtown, or any other place in Parker County, at many points in your life there will be times when you buy insurance and as a result there will be many chances for the insurance company to make a mistake.
The insurance industry is regulated in Texas by the Texas Department of Insurance and complaints can be filed with that department. The courts in Texas handle disputes that become lawsuits and these disputes can wind up in the Texas Supreme Court. Guidelines and laws/statutes for insurance companies to follow are found in the Texas Insurance Code and the Texas Administrative Code.
There are many ways an insurance company can mess up.
1) The agent can make mistakes when he sells the policy.
2) The underwriting department can mess up in the way they evaluate coverages.
3) The administrators will make mistakes in the way they collect premiums and handle notices to their insureds.
4) Adjusters will not be professional in the way they handle claims.
Rarely are mistakes on purpose, otherwise it would not be a mistake, it would be an intentional act. The problem with mistakes is that they can often times be costly to the insured.
When an insurance company makes a mistake an experienced Insurance Law Attorney needs to be contacted as soon as possible. Don't start making statements and giving recorded interviews to the insurance company until you have consulted with an attorney.
Here are the different parts of the insurance transaction.
To understand the different ways disputes can arise, it is helpful to consider the sequence of events that is likely to occur. At its very simplest, the insurance transaction can be divided into the initial sale of the policy, and subsequent handling of claims. These can be broken down further to include:
(1) The sale of the policy: Initially, the consumer and insurance company or insurance company agent must communicate to establish a contractual relationship. Disputes may arise over what was asked for by the applicant, what was represented by the insurer or agent, or the timeliness of the insurer or agent in providing coverage. Issues may also arise about the truthfulness of the applicant or agent in disclosing information requested by the insurer;
(2) Underwriting: At this stage the insurance company considers the application and determines whether the applicant is an acceptable risk. Certain types of discrimination based on risk are legitimate and are inherent in the process of providing insurance. Other types of discrimination -- such as distinctions based on gender, ethnicity, or disability -- are unlawful;
(3) Policy administration: During the course of the insured/insurer relationship, disputes may arise even if there is no claim. For example, the insurance company may choose to cancel or not renew the policy. The insurer may demand a premium that is higher than the insured was lead to expect. Proper notices may not be sent or may be sent late; and
(4) Claims: If a claim arises under the policy, the parties may fall into disagreement over the scope of coverage, the amount of payment, the insurer's failure to pay, or the timeliness of any payment. An insurance claim may also give rise to disagreements based on the difference between the coverage promised by the insurance company or its agent at the time of sale contrasted with the coverage given at the time of the claim.
As stated earlier, when disputes or concerns arise, speak with an attorney.

People in Weatherford, Aledo, Azle, Hudson Oaks, Willow Park, Mineral Wells, Millsap, Brock, Cool, Springtown, Peaster, Poolville, Whitt, and other places in Parker County need to make sure they know what they are doing when they sign a release for a claim they have against an insurance company.
The Texas Court of Appeals, Amarillo, issued an opinion on October 25, 2011. The style of the case is Trisha Braziel, Spencer Braziel and Kathy Wright v. Becton Insurance Agency, Inc.
This case was an appeal from a Motion For Summary Judgement which was granted against the Braziels and Wright.
Wright and the Braziels sued to recover damages allegedly suffered when a fire burned a home owned by the former and leased to the latter. Wright who purchased insurance on the abode from Travelers Lloyds of Texas Insurance Company (Travelers) through Becton (i.e. Travelers' agent) and alleged that Becton had been instructed to name the Braziels as additional insureds. Becton apparently failed to abide by the directive, though the trial court nonetheless found that the occupant's contents (that is, those of the Braziels) were covered by the policy. Eventually, Travelers, Wright, and the Braziels settled their dispute and executed an agreement releasing Travelers. It paid Wright $94,391.15 to satisfy her claim under the policy and an additional $25,000 to Wright and the Braziels in exchange for the release.
In his motion for summary judgment, Becton asserted that he was not liable because Wright and the Braziels settled with and released their claims against Travelers.
In reviewing the case the court noted that no one disputed that a settlement was had with Travelers and that a release was executed as part of that agreement. Per that document, Wright and each Braziel bound themselves to "RELEASE, ACQUIT, and FOREVER DISCHARGE Travelers from any and all Event Claims including those asserted, whether accrued or unaccrued, whether known or unknown, whether existing or that may arise hereafter." Furthermore, the settlement contract they signed defined not only the term "Travelers" but also "Event" and "Claims." Within the scope of "Travelers," the parties agreed to include not only the insurance company itself but also "... all of its past, present, and future underwriters, officers, directors, stockholders, agents, attorneys, insurers, servants ..." and others. In turn, "Event" was interpreted to mean "the fire loss occurring on or about December 8, 2007," while "Claims" was defined as "any and all past, present and/or future claims, demands ... settlements and causes of action ...."
Included in the court's record on this case was a copy of an agreement between Becton and Travelers. Through it, Travelers designated Becton as its "agent," and in accordance with that designation, Becton's name appeared under the moniker "Agent's Name and Address" in the insurance policy issued by Travelers to Wright. No one disputes that Wright and the Braziels seek damages from Becton and that the damages pertain to the loss caused by the fire occurring on or about December 8, 2007.
Based on the plain language of the release the court ruled in favor of Becton.
The relevance of this case is pointing out that a person needs to know what they are signing when they sign a release. It appears that Wright and the Braziels wanted to preserve their claim against the agent, Becton, but the language of the release they signed prevented them being able to pursue the claims against him. One way of preventing this is to see an experienced Insurance Law Attorney.

The liability of an insurance agent for his actions in selling an insurance policy to someone in Grand Prairie, Arlington, Mansfield, Fort Worth, Hurst, Euless, Bedford, or anywhere else in Texas should be of interest to the person buying the insurance. Especially so if the agent does something wrong and as a result the insurance company denies a claim made by the customer.
That is what happened in the 1989, case, "Paramount National Life Insurance Company v. Frankie Williams." This opinion was issued by the Houston, 14th District, Court of Appeals. Here are some of the facts.
Frankie Williams sued Paramount after the denial of two claims and the cancellation of her medical insurance policy. The jury found in her favor and Paramount appealed the decision.
On March 5, 1981, insurance agent, Cliff Cox, met with Frankie Williams and her husband Willie and took an application for a hospital insurance policy to be issued by Paramount. She was 64 years old and had a long history of medical problems which were described to Cox. Cox told the Williames he needed to know only about the preceding five years. He filled out the application and had them read and sign it. Paramount approved the application and issued the policy on March 20, 1981. She was hospitalized twice and filed claims totaling over $40,000 in connection with the hospitalizations. Paramount denied the claims and cancelled the policy on the grounds that Mrs. Williams had failed to disclose her full medical history on the insurance application and that the conditions for which she was treated were preexisting conditions.
The primary issue here was what occurred when agent Cox took the application for the policy. Williams did not contest Paramount's description of her medical history. She contended she disclosed it all to Cox but he told her he needed to know only about the preceding five years. He then filled out the application and had Williams initial the answers and sign the application.
Mrs. Williams did sign a document, the Confirmation of Presentation, which was a representation by her to Paramount acknowledging the terms of the contract and limitations on Cox's authority. Paramount maintained that Cox acted for Paramount in delivering the policy and collecting the premium but that he acted for Mrs. Williams and on her behalf when making the application for the insurance and in processing the policy and thus they are not liable for Cox.
As this court pointed out, and is now codified in the Texas Insurance Code, Section 4001.051, an agent binds an insurance company in any number of ways, several of which were present here.
Absent actual authority, liability may still arise if the agent had apparent authority to act for the carrier. Cox used Paramount forms when he took the application from Mrs. Williams. He signed the Confirmation of Presentation document as "Agent." The document itself, which purported to ensure that there is a "complete and clear understanding between the parties," was signed following the application visit, and refers to Cox's relationship to Paramount as "your agent." For example, one paragraph read, "Upon my request, your agent, whose signature appears below, visited with me to determine my interest in applying for insurance with your company." the receipt for the initial premium was signed for Paramount by Cox as "Duly Licensed Representative."
A statement in the Confirmation of Presentation that the company "is not bound by any knowledge of or statements made by or to the agent" does little to negate the apparent authority with which the company had clothed the agent.
The jury found that Paramount had breached its contract with Mrs. Williams by not paying her claim. Had the Williames not believed she was insured, they could have made different arrangements for her treatment.
This court upheld the ruling in favor of Frankie Williams.
The normal practice for an insurance company when denying a claim is to send a letter to their customer stating the reason for the denial. They normally will point to specific policy language or facts for the basis of their denial. Whenever this happens an experienced Insurance Law Attorney should be shown the letter. Often times the insurance company is wrong in their denial of the claim and you can get advice on the best next steps to take in favorably resolving the issue.

Residents in Weatherford, Mineral Wells, Millsap, Hudson Oaks, Aledo, Willow Park, Brock, Cool, Springtown, and other places in Parker County might wonder if what their insurance agent tells them is true. Or, if what the agent says is not true?
Most insurance agents are honest. However, there are a few that are not completely honest because they want to sell you a policy in order to make their commission on the sell. Others are confused or do not completely understand the insurance product they are selling. The question becomes; what can be done when the agent makes a mistake in what he tells someone when he sells the policy?
The answer often times depends on the authority of the agent.
There are two types of authority -- actual and apparent. In turn, actual authority can be expressed or implied. An Agent's authority can be actual authority expressly conferred by the insurance company, or it can be actual authority implicit in the agent's duties. The authority also can be apparent authority arising from acts by the insurer that give the agent the appearance of having authority.
In Texas, courts have described actual authority this way:
"Actual" authority, which includes both express and implied authority, usually denotes that authority a principle: (1) intentionally confers upon an agent; (2) intentionally allows the agent to believe that he possesses; or (3) 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 .... This was stated in 1994, by the Houston [1st Dist.] Court of Appeals in the case, Spring Garden 79U, Inc. v. Stewart Title Co.
An example of the above is found in the 1979, Texas Supreme Court case, Royal Globe Insurance Company v. Bar Consultants, Inc., wherein they said, an agent may be given express authority to sell policies. That express grant of authority would carry with it implied authority to explain the policy benefits. A misrepresentation about the policy would be within the scope of the agent's actual authority.
Also, the Texas Supreme Court in 1994, in the case, Celtic Life Insurance Company v. Coats, said that where an insurer authorized the agent to explain its policy, the insurer was liable for the agent's misrepresentation that the policy provided a greater amount of mental health benefits than it actually did.
As for "apparent authority" an insurance company may also be liable for unauthorized acts by an agent, if the agent is acting within the scope of his "apparent authority." Actual authority is not required. The insurer will be liable when by its conduct it has given the agent the appearance of having authority, so that a reasonable person would suppose the agent had authority.
Apparent authority is an estoppel theory that holds the insurer liable because the insurer has clothed the agent with indicia of authority that would lead a reasonable person to believe the agent had authority. If the agent is acting within the scope of his apparent authority, not even instructions not to mislead, nor diligence in preventing misrepresentations, will shield the insurer from liability.
So what are examples of apparent authority?
Evidence of apparent authority may include:
1) application forms referring to the individual as the company's agent.
2) forms signed by the agent as "authorized representative,"
3) corroborating statements by the agent.
The three examples above were cases where this evidence allowed the court to find apparent authority.
An example where is was not found is in the 5th Circuit, Federal Court case, TIG Insurance Co. v. Sedgwick James. In this 2002 case, the court said that the only indicia of the agent's authority was a certificate of insurance provided by the insurer. The certificate disclaimed that the agent had the power to name additional insureds. The agent did not have apparent authority to modify the policy.
There are many cases where it is beneficial to make the agent and the company, both, part of the lawsuit. An experienced Insurance Law Attorney can explain these strategy considerations when an agent misrepresents a policy that ends up causing harm to one of his customers.

Insurance agents in Weatherford, Mineral Wells, Aledo, Willow Park, Hudson Oaks, Azle, Millsap, Brock, Cool, Springtown, or anywhere else in Parker County will make mistakes. The question becomes: What can be done about it?
A 1979, Texas Supreme Court case is still good law for that question. The style of the case is, "Royal Globe Insurance Company v. Bar Consultants, Inc."
The principle question in this case was whether or not a misrepresentation about coverage afforded by a policy of insurance, made by the insurance company's local recording agent, was a deceptive trade practice under Texas statutes for which the insurance company as principle is liable. This court said yes. Further, the Texas Insurance Code now makes the company liable for the acts of the agent.
Texas Insurance Code, Section 4001.051, makes the insurance company liable for the acts of its' agent.
Here are some of the facts in the Royal Globe case.
Bar Consultants, Inc. operated a bar near the campus of The University of Texas known as "The Bucket." The president of Bar Consultants, Inc. John Barber, testified in the trial that he purchased a policy of insurance from Tully Embrey, an agent of Royal Globe, sometime prior to September 1975. Barber testified that he had a lengthy discussion with Embrey about the problem of vandalism at which time Embrey assured him that he was "totally covered" from losses caused by vandalism. This was uncontradicted.
The policy in question was a Texas Standard Policy covering fire and extended coverage. An endorsement attached included coverage for vandalism and malicious mischief. The insurance memorandum said that the property covered is "on the contents in the ... building," giving the address of "The Bucket." The term "contents" was defined in the policy.
On January 31, 1974, Royal globe paid a vandalism claim filed by Bar Consultants. The description of the damage on the proof of loss form was "Vandals inflicted damage in the bathroom area for which insured is liable under lease contract."
On March 5, 1976, the men's restroom at The Bucket sustained extensive damage. The following day Barber called Embrey's office and was assured the damage was covered. Subsequently, Royal Globe denied coverage.
The argument by Royal Globe was that Embrey did not have authority to make such representations to Barber.
The court then pointed out the law wherein an agent who solicits insurance on behalf of any insurance company, shall be be the agent of the company for which the act is done, or the risk is taken, as far as relates to all the liabilities, duties, requirements, and penalties set out in the Insurance Code.
As a result of the then existing law, which is still the current law, Royal Globe was liable for the misrepresentations of Embrey.
This is an area of the law that is very much in favor of the customers of insurance agents. Whenever there is a dispute between an agent and his customer, it is important for the customer to seek the advice of an experienced Insurance Law Attorney. There are lots of legal remedies available for the customer.

An insurance agent in Weatherford, Mineral Wells, Aledo, Hudson Oaks, Willow Park, Pool, Millsap, Brock, Azle, Peaster, and other places Parker County and Texas can be liable for failing to provide you with the insurance you have requested, plus the insurance company can be liable for the agent.
The Texas Supreme Court issued an opinion in 1994, in the case, Celtic Life Insurance Company v. John D. Coats. This case serves as an example how an insurance company can be found liable for the actions of the agent when the agent commits something wrong in selling an insurance policy. Here is some legal and factual background.
The case presented two relevant 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 Life Insurance Company, visited Aloha Pools in September 1984 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.
Harrell subsequently proposed that Coats purchase a specific policy written by Celtic -- a policy that provided a maximum lifetime hospitalization benefit of $1 million. Harrell did not point out that psychiatric benefits under the policy were limited to $10,000.
Harrell later assured a business manager for Coats, that the $10,000 limit applied only to out-patient psychiatric care. Based on these representations, the policy was purchased.
During the following August, Coats' son was admitted to Shoal Creek Hospital for psychiatric care. Coats filed a claim for his son's treatment; despite Harrell's continued assurances that the in-hospital psychiatric treatment was covered by the $1 million hospitalization limit, Celtic paid only $10,000 of the $27,000 in medical expenses.
The jury found in favor of Coats for $17,000.
On appeal, Celtic argues that it should not be responsible for Harrell's representations for two reasons: first, Harrell was a mere soliciting agent, and as such lacked authority to bind Celtic; and second, the jury's answer to the third jury question established that Harrell was acting outside his authority as Celtic's agent.
In the contexts of life, health, and accident insurance, the Texas Insurance Code makes no distinction between recording agents and soliciting agents. Rather, agents are defined generally and the code states that any person 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 of the code.
The court pointed out that there was no dispute that Harrell performed, on Celtic's behalf, at least some of the acts listed in the Insurance Code.
Texas law says that an insurance company is generally liable for any misconduct by an agent that is within the actual or apparent scope of the agent's authority. This rule is based on notions of fairness: "since the principle has selected the agent to act in a venture in which the principle is interested, it is fair, as between him and a third person, to impose upon him the risk that the agent may exceed his instructions."
Going further, the court said, "In determining a principle's vicarious liability, the proper question is not whether the principle authorized the specific wrongful act; if that were the case, principals would seldom be liable for their agents' misconduct. Rather, the proper inquiry is whether the agent was acting within the scope of the agency relationship at the time of committing the act." The misrepresentation in this case was made in the course of explaining the terms of the policy -- a task the jury specifically found to be within the scope of Harrell's authority. Thus, Celtic cannot escape liability on the basis that it did not authorize particular representations concerning the policy.
Disputes about what the agent told his customer and what the customer requested from the agent are common. When a dispute arises, it is important to consult with an experienced Insurance Law Attorney.

An insurance agent in Grand Prairie, Arlington, Hurst, Euless, Bedford, Fort Worth, Dalworthington Gardens, Mansfield, Crowley, or anywhere else in Tarrant County or Texas is capable of making a mistake. But what if the mistake results in one of his customers not having the coverage they need when a claim occurs?
This situation came up in the Fourteenth Court of Appeals case styled, West Houston Airport, Inc. v. Millennium Insurance Agency, Inc. The opinion in this case was issued on in 2010 and the opinion was essentially upheld by the Texas Supreme Court in August 2011.
The facts in this case are not in dispute. However, they are pretty involved and are hard to follow. Rather than spending several pages trying to make the facts understandable, what needs to be learned or realized from the case is the duty an insurance agent owes to one of his customers when it comes to procuring insurance for that customer.
The thing to know factually about this case is that an agent sold a policy of insurance that contained coverages less than the amount that was requested. So that brings up the question: What duties does an insurance agent / broker owe to one of his insureds when it comes to his obtaining insurance for the customer?
Texas courts have long recognized that an insurance broker owes the following duties to a client for whom the broker undertakes to procure insurance: (1) to use reasonable diligence in attempting to place the requested insurance; and (2) to inform the client promptly if unable to do so. This standard was set out in the Texas Supreme Court case, May v. United Service Association of America, in 1992. This standard was used again in the Fourteenth Court of Appeals in the case, Sonic Systems International, Inc. v. Croix, in 2008. An appeal from the Croix case was denied by the Texas Supreme Court.
In this case involving West Houston Airport, the customer had asked for a $1,000,000 in coverage and the agent wrote coverage for only $50,000. A lawsuit against the customer resulted in a judgment substantially above the $50,000.
Other than the common law duty set out above, the insurance agent can be liable for breach of contract and for violations of the Texas Deceptive Trade Practices Act (DTPA).
Under the DTPA, the agent could be held liable under the Section 17.46(b)(5) for representing that the policy had benefits it did not have. Also, under Section 17.46(b)(7) for representing that the policy was of a particular standard when it was of another. Also, under Section 17.46(b)(12) for representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve.
Under the Texas Insurance Code, the agent could be sued for violation of Section 541.061, for misrepresentation of the insurance policy.
Violations of the DTPA and the Texas Insurance Code and breach of contract allow recovery of attorney fees and court costs. In the appropriate situation, there is the potential for recovery of punitive damages.
Seeking the advice of an experienced Insurance Law Attorney is necessary to prove one of these types of cases. They are usually swearing matches as to what was asked by the customer and what was said by the agent. However, many times there are ways of using evidence to get beyond the "he said, I said" argument.

There are insurance agents in Grand Prairie, Arlington, Dallas, Fort Worth, Mansfield, Crowley, Everman, Burleson, Benbrook, Lake Worth, and all over Texas. What happens when one of those insurance agent is cheating? The answer would depend on how it is that they are "cheating". Some of their actions are violations of the Texas Insurance Code. Other times their actions are outright fraud or criminal in nature. One thing for certain is that an experienced Insurance Law Attorney needs to be consulted as soon as you think something is wrong.
A February 8, 2011, article illustrates what some agents do. The article was published in the MetroWest Daily News, a Framingham, Massachusetts, newspaper. The article is titled, "Insurance Scam Hits Framingham Towing Company." The article is written by Danielle Ameden, a staff reporter for the newspaper.
The article in part says:
The state is investigating a licensed insurance agent who allegedly fleeced a local towing company into buying a fake insurance policy.
Townando Towing at 93 Beaver St. filed a complaint against Somerville agent James I. Rider last November with the state's Division of Insurance. Rider claimed to have bought the firm a policy for commercial auto liability insurance back in November 2009 through Pilgrim Insurance, according to Townando.
But when Townando called to report two minor accidents last year, the company found out the deal was a fraud, office manager, Simone Barbosa, said.
"The policy number they had belonged to someone else," said the attorney for the towing company.
Rider provided Townando with monthly invoices and collected payments, but kept the money and didn't buy them insurance. "I was shocked to be honest with you," said Barbosa. For the crashes, Townando, owned by Fernando Vieira, ended up having to pay for damage out of pocket.
As investigators work, Townando is seeking a settlement of over $25,000 from Rider for reimbursement, related costs and as payback for lost customers.
Townando is now fully insured through a different company, but his attorney says the damage has been done.
"In a community like Framingham, it's important to keep your reputation if you're a small business," he said. "Nobody's going to want to use a towing company that doesn't have insurance."
Townando counts filing a lawsuit as an option, his attorney says.
Rider has not returned calls.
His invoices list a post office mailbox address in Somerville and an office on Tufts Street.
A Division of Insurance spokesman said Rider's agent license is still active.
Penalties the division commonly hands down as a result of investigations range from a cease and desist order to fines and / or license suspensions or revocations, said Jason Lefferts, spokesman with the state's Office of Consumer Affairs and Business Regulation.
Barbosa filed a copy of her complaint with the Better Business Bureau and the Insurance Fraud Bureau of Massachusetts.
That quasi-private agency only does criminal work, and refers their investigations to district attorneys, the U.S. attorney's office, state attorney general's office and licensing agencies.
Rider never worked directly for Pilgrim Insurance, Pilgrim said in a statement. Instead, his agency was assigned on May 19, 2009, to work with Pilgrim as an involuntary agent by the Commonwealth Automobile Reinsurers. He wrote policies for high-risk drivers.
"Upon becoming aware of his assigned agency's business practices and an ongoing investigation being conducted by the Division of Insurance, we terminated our relationship with James I. Rider Insurance Agency" last month, the statement reads.
Rider provided Townando with the plates and documents, but never any policy paperwork, Barbosa said.
"I would like to find out what's going on," Barbosa said recently at Dawley's office.
While Vieira bought the policy from Rider before Barbosa started working at Townando, she said she dealt with Rider at past jobs for insurance.
If the above had happened in Texas, the first thing someone should do is contact an expereinced Insurance Law Attorney. Then depending on the advice of the attorney, there may be a complaint filed with the Texas Department of Insurance or even a phone call to the local district attorney office. The Texas Insurance Code provides many recourses depending on the exact nature of the wrong committed.

How does a person in Grand Prairie, Arlington, Mansfield, Aledo, Burleson, Bedford, Euless, Lancaster, Hurst, Fort Worth, or any other city in Texas know when their insurance company or agent is committing fraud? The problem with fraud is that a person usually does not know when it happens.
USLegal defines fraud as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.
The Texas Supreme Court, in 1977, defined fraud in the case, Stone v. Lawyers Title Insurance Corp., saying:
A fraud cause of action requires proof of the following elements:
(1) a material representation was made;
(2) the representation was false;
(3) the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion;
(4) the speaker made it with the intention that it should be acted on by the party;
(5) the party acts in reliance upon it; and
(6) the party suffered injury.
In Stone, the purchaser of a tract of land sued Lawyers Title Insurance Corp. on an owner's policy covering the tract for damages sustained due to the failure of the policy to show pipeline easements as exceptions. The Court held the title-agency president's statement that "everything was squared away" constituted some evidence that he represented that there were no easements on the property. As a result, the Court found evidence of actionable fraud against the title agency and its president.
Another example of fraud is found in, Pankow v. Colonial Life Insurance Co. of Texas. This is a 1996, Amarillo Court of Appeals case.
In Pankow, Pankow sued Colonial Life Insurance Co. of Texas, a credit life insurer, after it failed to pay policy proceeds on grounds that the policy had not been reinstated before the insured's husband died. Pankow alleged that employees of Colonial misrepresented that the policy would be reinstated and that they would secure the transfer of monies from an escrow account to pay outstanding premiums. These were actionable representations, as they involved misrepresentations of a future act which could be performed in compliance with policy terms.
Celestino v. Mid-American Indemnity Co., is an example of a case where the court said there was not any fraud. This is a 1994, Corpus Christi Court of Appeals case.
In Celestino, an employer's excess policy contained an exclusion for punitive damages. The declaration page, which specified that the umbrella policy conferred one million dollars in excess employer's liabiity coverage, did not amount to a fraudulent misrepresentation merely because the Mid-American Indemnity Co. policy contained the punitive damages exclusion. Celestino alleged that, by virtue of the exclusion, the policy in essence provided no employer's liability coverage at all. But the court stated that it could not isolate a general provision within a contract and label it a misrepresentation merely because subsequent exceptions preclude the effect of that provision. Furthermore, the language of the exclusion was plain, and its placement was prominent.
With the examples given above, it can be seen that each case is fact specific and has to be looked at closely to see if the allegation of fraud applies.

How does a person in Grand Prairie, Arlington, Mansfield, Hurst, Euless, Bedford, Fort Worth, Burleson, or anywhere else in Texas know when their insurance agent or insurance company has committed an act of negligence? This is a fair question and maybe this article will give you something to think about.
Insurance companies and insurance agents do not have a general duty to obtain coverage or to make sure the coverge they get for you is adequate. On the other hand though, courts have found insurance companies and insurance agents liable for affirmative misrepresentations, and the courts have stated that an insurance agent who undertakes to procure insurance for someone owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so. This was discussed in the Texas Supreme Court case, May v. United Services Association of America, in 1992. Also, this issue was discussed by the Court of Appeals in Houston, in the 1999 case, Frazer v. Texas Farm Bureau Mutual Insurance Company. In Frazier the court allowed Frazier to go forward with his claim against Texas Farm Bureau Insurance Company and his agent where it is alleged he asked his agent to raise his coverage limits and the agent failed to do so.
The Texas Supreme Court in the case, Kitching v. Zamora, in 1985, stated 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 was restated by the Texas Court of Appeals of Amarillo, in 1992, in the case Horn v. Hedgecoke Insurance Agency.
The courts in Texas have suggested an insurance agent could be found negligent if an explicit agreement or course of conduct showed the agent undertook to determine the customer's insurance needs and counseled the customer as to how they could be met and then failed in this understanding.
Even a seven year relationship between a customer and an insurance agent was not enough to create such a special relationship where, even though the customer sought advice on the types of coverage available, the customer alone decided the total dollar amounts of insurance he wanted. This was the ruling in McCall v. Marshall, decided by the Supreme Court in 1965. Likewise, in Pickens v. Texas Farm Bureau Ins Co., the court stated the insurance agent for Texas Farm Bureau was not liable for failing to sugggest higher liability limits. The court stated there was no course of dealing and no history of taking care of the customer's needs. There, the customer purchased insurance over the phone from the secretary in the office, did not seek advice from the agent on how much coverage they should get, the customer did not question the amount of coverge and did not inquire about the possible coverage available, and the customer had previously called and raised another type of coverage.
In the May case above, the court suggested that an agent may be held liable for his negligence in obtaining an adequate policy where the adequacy of the policy can be "assessed by some objective measure." For this proposition the May court cited, McAlvain v. General Insurance Co. of America, a 1976, Idaho case. There, the agent for McAlvain, was held liable after McAlvain requested sufficient insurance to cover his business, including inventory, fully, and furnished to the agent for General Insurance Co. of America, an appraisal showing that the inventory was worth $45,000, and the agent procured a policy with only a $30,000 limit.
Most these cases, where there is a possible claim of negligence against an insurance agent or an insurance company need to be reviewed by an experience Insurance Law Attorney. Each of these situations need to be looked at on a case by case basis.
In the Kitching case cited above, the court upheld the jury's finding that the agent negligently failed to notify the insureds about information he had received pertaining to the expiration date of their flood insurance. The agent had received copies of two policy renewal forms before the policy expired and did not notify the insureds about his having received such information. In addition, he received a "speed letter" from the insureds' mortgage company requesting the agent to look into the insureds' lack of payment of the renewal premium, but he disregarded the instructions. Thus, the insureds did not pay their premium and their policy expired.

Whether your agent is in Grand Prairie, Arlington, Mansfield, Richardson, Plano, Fort Worth, or anywhere else in Texas, he has duties he owes to his insurance clients. So, what are an agents duties?
For starters, insurance agents do not have a general duty to obtain coverage nor to make sure any coverage you get is adequate. On the other hand, courts have found insurers liable for affirmative misrepresentations, and an insurance agent who undertakes to procure insurance for another owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to inform the client promptly if unable to do so. This is discussed in the 1992, Texas Supreme Court case, May v. United Services Association of America.
What if the notice of expiration on an insurance policy is sent to the agent rather than to the policy holder it was intended for? Then the agent is responsible for forwarding that information. This was the issue in Kitching v. Zamora and Horn v. Hedgecoke Insurance Agency.
In the May case above, the court suggested an agent could be found negligent if an explicit agreement or course of conduct showed the agent undertook to determine the customer's insurance needs and counseled the customer as to how they could be met.
Contrast May with McCall v. Marshall, a Supreme Court case that said, even a seven year relationship was not enough to create such a special relationship where, even though the insured sought advice on the types of coverage available, the insured alone decided the total dollar amounts of insurance he wanted. Likewise, in Pickens v. Texas Farm Bureau Insurance Company, the Amarillo Court of Appeals, said in 1992, the agent was not liable for failing to suggest higher liability limits. The facts in the Pickens case definitly favored the insurance agent.
In addition to the case of special relationships, the May case also suggests that an agent may be held liable for his negligence in obtaining an adequate policy where the adequacy of the policy can be "assessed by some objective measure." For this proposition, the May court cited McAlvain v. General Insurance Co. of America. In McAlvain, an agent was held liable after the customer requested sufficient insurance to cover his business, including inventory, fully, and furnished to the agent an appraisal showing that the inventory was worth $45,000, and the agent procured a policy with a $30,000 limit.
The May court also suggests that an agent may be held liable to the extent that the customer puts him on notice of reliance on his expertise to compare and contrast various policies. Exactly what precise information is necessary to put the agent on notice, however, remains unclear.
In 1977, the Beaumont Court of Appeals, recognized a duty by the agent to keep the insured informed, when the court stated:
A local agent ... owes his clients the greatest possible duty. He is the one the insured looks to and relies upon. Most people do not know what company they are insured with. The insured looks to the agent he deals with to get the coverage he seeks, with a sound company who can and will properly and promptly pay claims when they are due. It is his duty to keep his clients fully informed so that they can remain safely insured at all time.
Certainly, when a person is dealing with an independent agent who writes insurance for any number of companies, this ruling would be important to note. However, maybe it is less relevant when the agent only represents one company, such as a State Farm agent, or a Farmers agent.

Let's say your insurance agent is in Aledo, Arlington, Azle, Grand Prairie, Fort Worth, Mansfield, Weatherford, or anywhere else in Texas. Now, let's say he does something wrong in the way he handles your insurance needs. Can he be held liable for what he does or fails to do for you?
The answer is yes. An agent can be held accountable on a number of different theories of law related to insurance. He can also be held accountable under the most fundamental of legal theorys, that being "negligence."
The Lectric Law Library defines negligence as, "The failure to use reasonable care. The doing of something which a reasonably prudent person would not do, or the failure to do something which a reasonably prudent person would do under like circumstances. A departure from what an ordinary reasonable person would do in the same community."
In Texas case law, negligence, in the insurance context as in others, consists of three elements:
1) a legal duty owed by one person to another;
2) a breach of that duty; and
3) damages proximately resulting from the breach.
These three elements are cited often in Texas case law. One of these cases is a 1990, Texas Supreme Court case, Greater Texas Transportation Company v. Phillips.
In the context of insurance agents, one of the more major problems that arise is an agent misrepresenting what an insurance policy covers. In this context, courts have adopted the tort of "negligent misrepresentation" as described by the Restatement of Torts, Section 552. This is approved by the courts in the Texas Supreme Court case, Chicago Title Insurance Company v. McDaniel, decided in 1994.
Section 552(1) provides:
One who, in the course of his business, profession or employment, or in any transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
One example of the above is found in the 2002 case, Nast v. State Farm Fire & Casualty Company. In this case, Nast stated a negligence claim against their State Farm Fire & Casualty Company agent for affirmative misrepresentations about coverage, saying they were not eligible for flood insurance and that neighbors who had flood insurance had purchase "fake" insurance from a "shyster."
An experienced Insurance Law Attorney can be very helpful in discussing potential claims against insurance agents. Usually, the biggest problem with these claims against agents for their misrepresentations, is proving the misrepresentation. These matters are usually swearing matches between the agent and the insured. This is where an attorney can use his experience to find ways to prove it is the agent who is on the wrong end of the swearing match.

Regardless of what kind of insurance you have purchased or where in Texas the purchase occurred, the same law applies. So residents of Grand Prairie, Arlington, Mansfield, Dallas, Fort Worth, or Weatherford, all get treated the same.
This will be the first part of a several part writing on "unfair insurance practices".
Chapter 541 if the Texas Insurance Code, is where the definition and prohibition for unfair and deceptive insurance practices is found. These sections of the Insurance Code are Sections 541.001 thru 541.061, Section 541.151 thru 541.162, and 541.453.
Unfair insurance practices violations are also a violation of the Texas Deceptice Trade Practices Act (DTPA). DTPA violations are found in the Texas Business & Commerce Code, Section 17.46. This list is long and is also known as the "laundry list" of violations subject to civil prosecution.
The Insurance Code statutes listed above allow a private cause of action by a wronged person who has sustained actual damages caused by another's engaging in any act or practice that is defined as an unfair method of competition or unfair or deceptive act or practice in the business of insurance, or defined as an unlawful deceptive trade practice. This is set out in statute in Section 541.151. The usual violators or this section would be insurance agents and insurance adjusters.
The definitions of unfair and deceptive practices are found in two places: (1) Texas Insurance Code, Sections 541.051 to 541.061; and (2) Business & Commerce Code, Section 17.46(b), also known as the DTPA.
The Insurance Code sections prohibit the following:
1) misrepresentations and false advertising of policy contracts;
2) false information and advertising generally;
3) defamation of insurers or persons engaged in the business of insurance;
4) boycott, coercion, and intimidation in the business of insurance;
5) false financial statements;
6) stock operations and advisory board contracts;
7) unfair discrimination;
8) rebates;
9) deceptive names, words, symbols, devises, and slogans;
10) unfair settlement practices; and
11) misrepresentation of insurance policies.
Of these listed prohibitions, the most commonly used by experienced Insurance Law Attorneys are those related to unfair settlement practices and misrepresentations of insurance policies. Certainly the others apply in some situations and each case has to be looked at closely.

The rules regulating and governing inusrance agents in the State of Texas are found in the Texas Insurance Code. A source for information on a particular agent is the Texas Department of Insurance.

What exactly is an agent? An "agent" is defined in Section 4001.003 of the Texas Insurance Code, in part, as a person who is an authorized agent of an insurance company and any other person who performs the acts of an agent, whether through an oral, written, electronic, or other form of communication, by soliciting, negotiating, procuring, or collecting a premium on an insurance contract. This would include the people you are dealing with on the internet or through the mail when trying to buy insurance.

To become an insurance agent in Texas, a person must be licensed by the State. In order to be licensed by the State of Texas, a person must submit a completed application to the State with fingerprints. They must also take and pass a test showing their knowledge of the basic principles of insurance contracts, the basic laws of Texas regulating the business of insurance, and the ethical obligations and duties of an agent. Further, there are continueing education requirements.

In order to sell insurance for a company a person must receive an appointment from an insurer or insurance company. To do this a fee is paid to the Texas Department of Insurance. At this point a person has for the most part, met their requirments to sell insurance in the State of Texas.

Section 4001.051 of the Texas Insurance Code describes "Acts Constituting Acting as Agent". Basically a person acts as an agent of an insurance company if the person, (1) solicits insurance on behalf of a company, (2) receives or transmits an application for insurance or an insurance policy to or from the company, (3) receives or transmits an insurance policy of a company, (4) examines or inspects a risk, (5) receives, collects, or transmits an insurance premium, (5) takes any action in the making or consummation of an insurance contract for or with the company.

Too often, people who work in offices of insurance agents, are not themselves licensed insurance agents, even though they are doing some of the above described actions. Not only do these people make mistakes but the agents themselves make mistakes. No one is perfect, but if their mistakes cost you, the consumer, it is important to know what the laws are regulating these people in order for you, the insurance customer, to get justice.

The reason for this writing is let the consumer know that sometimes the insurance company itself did not commit a wrong in their way of dealing with the consumer. In other words, it is the action of the agent and or their employees which was wrong. If this is the case the consumer still has recourse and needs to seek the advice of an experienced Insurance Law Attorney for further advice and assistance.