What Is The Agent’s Responsibility?

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.
It is worth noting that 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 customers insurance needs and counseled the customer as to how they could be met.
Even a seven year relationship between an insured and agent 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 the 1992 Amarillo Court of Appeals case, Pickens v. Texas Farm Bureau Insurance Co., the agent was not liable for failing to suggest higher liability limits. There was no course of dealing and no history of taking care of customer’s needs. 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 coverage and did not inquire about the possible coverage available, and the customer previously called and raised another type of coverage.
The court in May 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. The difficulty here is that there is no precise formula to put the agent on notice of this reliance.
In 1977, the Beaumont Court of Appeals recognized that there is a duty by the agent to keep the insured informed. 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 the 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.”
The El Paso Court of Appeals and the San Antonio Court of Appeals have held that an agent may also be liable for failing to obtain insurance sought by the insured.