Dallas Fort Worth Insurance Lawyer Blog
An insurance company cannot always escape liability just by showing that it did not authorize the specific wrongful act. This is discussed in the 1994, Texas Supreme Court opinion styled, Celtic Life Insurance Co. v. Coats.
The Celtic court said:
In determining a principal’s vicarious liability, the proper question is not whether the principal authorized the specific wrongful act; if that were the case, principals would seldom be liable for their agents’ misconduct. Rather, the proper inquiry is whether the agent was acting within the scope of the agency relationship at the time of the act …. The misrepresentation in the present case was made in the course of explaining the terms of the policy – a task the jury specifically found to be within the scope of the agent’s authority. Thus, Celtic cannot escape liability on the basis that it did not authorize particular representations concerning the policy.
A reading of the 1979, Texas Supreme Court opinion styled, Royal Globe Insurance Company v. Bar Consultants, Inc. is also helpful to understanding this issue.