Agent Misrepresents Policy

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.

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