Acts Of Agents

Most Weatherford lawyers will tell you that it may be obvious that a person was the insurer’s agent and was acting as a agent — e.g., a person licensed to sell the company’s policy was engaged in selling the policy.  In addition, the statutes make clear that anyone engaging in the listed activities on behalf of an insurer will be treated as agent for that insurer.

As the Texas Supreme Court said in the 1994 opinion, Celtic Life Insurance Co. v. Coats, under the predecessor statute agents are defined generally, and the statute lists various acts performed in the ordinary course of providing insurance — such as soliciting insurance; transmitting an application; receiving, collecting or transmitting a premium; and adjusting a loss.  Anyone 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 set forth in the statute.

In Celtic Life where the person performed on behalf of the insurer at least some of the listed acts – such as soliciting the policy – he was clearly the insurer’s agent.  The insurer was liable for the agent’s misrepresentation in explaining the mental health benefits under the policy.

In the opinion, Royal Globe Insurance Company v. Bar Consultants, Inc., an agent who issued a policy and signed it on behalf of the insurer was the insurer’s agent.  The insurer was vicariously liable for the agent’s misrepresentation that the policy coverage property damaged caused by vandalism.

In the 5th Circuit opinion, TIG Insurance Co. v. Sedgwick James, the agreement with the agent did not give authority to modify the policy.  The agent was authorized to issue certificates of insurance.  The certificates stated they did not modify the underlying policy.  The agent did not have actual authority to extend coverage by issuing the certificate to extend coverage beyond the policy.

An agent can be both agent for the insured and for the insurer.  The agent may owe a duty to the insurer to collect premiums and deliver the policy for the insurer.  thus, proving the agent acted for the insured does not shield the insurer from responsibility, and proving the agent acted for the insurer does not negate all duties to the insured.