Agent Misrepresentations

Dallas insurance lawyers need to understand when an agent can be held liable for mis-representations regarding an insurance policy. A 1998, San Antonio Court of Appeals case is a good read for understanding when this can be done. The style of the case is, Moore v. Whitney-Vaky Insurance Agency. Here is some relevant information.
Moore contends the trial court erred in granting summary judgment because Whitney-Vaky owed him a common law and statutory duty to disclose any limitation in his insurance coverage.
Moore repossessed an apartment complex known as Oakhills Village. After he reacquired the complex, McLain, an agent for Whitney-Vaky, asked whether he could handle the insurance for the complex. Moore did not recall specifically discussing any types of coverage with McLain; however, Moore had been responsible for obtaining insurance for businesses in the past and expected to receive fire, extended coverage, liability and workmen’s compensation coverage. When he received the policy from McLain, Moore did not discuss the contents of the policy with him; however, Moore thought when he bought liability insurance that he was being covered for any liability that may occur. Moore admitted that McLain never told him that the liability policy would cover all lawsuits against him.
The manager of Oakhills Village terminated an employee. The employee filed suit claiming retaliatory discharge. Moore believed that the claim was covered under his liability policy. The insurance company subsequently forwarded a letter to Oakhills Village, informing Moore that the claim was not covered. Moore retained counsel, and the suit was settled.
Moore sued Whitney-Vaky and McLain, asserting claims for negligence, breach of contract, fraud, and DTPA and Insurance Code violations. In his petition, Moore alleges that he was lead to believe that all liabilities were covered under the policy. In his deposition, Moore contended that he should have been informed of the provisions of the policy, and McLain never told him what was in the policy. Moore admitted that he never asked McLain to tell him what the policy covered. In addition, Moore could not recall any conversations with McLain about the coverages he wanted prior to obtaining the policy.
This court cited Texas law when, in its ruling, it upheld the trial court ruling. It said:
“In the absence of some specific misrepresentation by the insurer or agent about the insurance, a policyholder’s mistaken belief about the scope or availability of coverage is not generally actionable under the DTPA.” For the same reason, a claim based solely on mistaken belief would fail under the Insurance Code. Moore admitted that McLain never told him that his policy would cover all lawsuits. Therefore, neither McLain nor Whitney-Vaky made a specific misrepresentation about the insurance, and Moore’s mistaken belief about coverage is not actionable under the DTPA or the Insurance Code.