Dallas Fort Worth Insurance Lawyer Blog
What if the life insurance agent varied the life insurance contract terms? What is your recourse?
There are Insurance Code statutes dealing with this. An agent is not authorized by the statutes to alter or waive a term or condition of an insurance policy or an application for an insurance policy. The statutes governing this are section 4001.051(c), and 4001.053. Nevertheless, an insurance company will be liable “for purposes of the liabilities, duties, and penalties provided by” certain statutes pursuant to Texas Insurance Code, Section 4001.051(b). The referenced statutes include the prohibitions found in Chapter 21 and now found in the new codification, sections 4001.051 and 4001.009. The Texas Supreme Court explained the interaction between these provisions under the older statutes as follows in the 1979 opinion styled, Royal Globe Insurance Company v. Bar Consultants, Inc.:
We are not to be understood as holding that the statutory authority granted an agent under Article 21.02 authorizes that agent to misrepresent policy coverage and bind the company to terms contrary to those of the written policy; that question was decided by us in International Sec. Life In. Co. v. Finch, 496 S.W.2d 544 (Tex. 1973). However, an insurance company that authorizes an agent to sell its policies may not escape liability for the misrepresentations made by that agent which violate article 21.21 or section 17.46 merely by establishing that the agent had no actual authority to make such misrepresentations.
Thus, even if the agent cannot change the policy, the insurance company may still be responsible for what the agent represented.