Does An Insurance Agent Have A Duty To Obtain Additional Coverage

Arlington insurance lawyers need to understand the situations where an insurance agent has responsibility to his customer and when not. A 1996, Fort Worth Court of Appeals cases discusses this issue. The case is styled, Sledge v. Mullin.
On January 25, 1988, Ruby Sledge notified her insurance agent, Mullin, that she had acquired a 1980 Chevrolet Citation and that she was selling a 1975 Nova to her son, Dale. Ruby had three cars insured with Republic Insurance Company and advised Mullin that she could not afford to insure a fourth car. Ruby instructed Mullin to substitute the Citation for the Nova on her policy. Ruby’s son, Dale, was involved in an accident on February 4, 1988. Republic denied coverage for the claim and Ruby and Dale sued Republic claiming coverage and alternatively sued Mullin for negligence and violations of the Texas Insurance Code and the DTPA for not properly advising Ruby and for not ensuring that the Nova remained covered.
In a prior appeal, the Court determined that because Ruby instructed Mullin to cancel the insurance on the Nova, there was no coverage by Republic for the collision. Ruby contends that Mullin should have told her that the policy’s provisions automatically extended insurance coverage to any car she acquired, such as the Citation, for the first thirty days of her ownership, and that if she had been so advised she would have had coverage on all four cars on the date of the collision. There was no evidence, however, that Ruby would have elected to accept that “automatic” insurance coverage. Further, in the absence of a showing that there is a special business relationship between an insured and its agent in which they share an expectation that the agent habitually will satisfy all of the customer’s insurance needs without consultation, that there is no legal duty on the part of an insurance agent to expand the insurance protection of its customer, even if the agent had knowledge of the customer’s needs for additional insurance. In this case, there was no special relationship between Mullin and Ruby, Mullin simply complied with Ruby’s specific instructions.
Mullin has no duty under the State’s Safety Responsibility Act to ensure that Dale possessed the minimal limits of insurance. Plaintiffs concede that Mullin made no false statements or affirmative misrepresentations. Mullin owed Ruby no duty to suggest alternatives for insuring the Nova once she explained that she was selling it. Further, Ruby’s reliance, if any, on Mullin to advise her of insurance needs is not proof of a misrepresentation or a deceptive trade practice by Mullin.
The trial court’s granting of summary judgment in favor of Mullin was affirmed.