Life Insurance Claim Denied – And The Agent’s Fault

Can an insurance company be responsible for what the selling agent did that was wrong?  The answer is, it depends.
Because it depends on the actions or in-actions of the agent, a person must always get the advice of an experienced Life Insurance Lawyer.
Here is a 1999 opinion from the San Antonio Court of Appeals that provides some guidance under the particular facts of the case.  The opinion is styled, Noseff v. Tower Life Insurance Company.
Here, the Facts tell us as follows:  Noseff applied through an agent for a life insurance policy with Tower Life Insurance Company.  He died before the policy was delivered.  It is undisputed that delivery of the policy and collection of the first premium was a valid condition precedent to the policy going into effect.  Noseff’s wife sued alleging that Tower Life failed to use ordinary care in delivery of the policy.  Tower Life moved for summary judgment, which was granted.  This appeal followed.
In it’s holding, the San Antonio Court of Appeals affirmed the summary judgment in favor of Tower Life.  The policy stated that it would not take effect until “the policy is delivered to the owner and the first full premium is accepted by the Company while the proposed Insured is alive …”.  There is no question that Noseff died without taking delivery of the policy, and signing off on the policy amendments.  While Texas courts have long recognized that an insurance agent owes a duty to a client at the inception of coverage, Texas does not recognize a claim against an insurance company for failure to deliver an insurance policy.  The cases relied upon to establish that an insurance agent can be liable to an insurance applicant if the agent fails to follow through on the promised performance does not pertain to the insurance company’s liability.  An agent or broker undertakes to procure insurance for another and is paid therefor.
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