Who Is The Insurance Agent An Agent Of – The Insurer Or Insured

Most insurance lawyers would think an insurance agent is the agent of the insurance company.  But, there are situations where the insurance agent is the agent of his customer.

Here is a 2023 opinion wherein this topic is discussed.  The opinion is from the Thirteenth Court of Appeals and is styled, Bill Wendlandt, 120-MP Victoria Ltd, and Laurent Tower, LLC, v. Certain Underwriters at Lloyd’s, London, Subscribing To Policy Nos. AOP-170109 And AQS-170213, et al.

This is an appeal from a summary judgement in favor of Underwriters.

Wendlandt obtained the relevant insurance policy from Underwriters through Stephens Insurance, an insurance retail agent, in March 2017, effective until March 2018.  At the time Wendlandt received the policy, there were no applicable exclusions related to hurricanes written into the policy.  According to Underwriters, it was subsequently discovered that the “Named Storm” exclusion had been left off the policy issued to Wendlandt.  In April 2017, Underwriters’ broker, AmWINS Specialty Risk Underwriters (AmWINS), who prepared the policy, sent a “Change Endorsement” containing the “Named Storm” exclusion to Stephens Insurance to forward to Wendlandt.  There is no dispute that the updated policy containing the exclusion was not forwarded to Wendlandt.

Of course Wendlandt sustained damage by Hurricane Harvey in August 2017.  A claim was made and then denied by the insurer.

The purpose of an exclusion in an insurance policy is to remove or exclude something from coverage that would otherwise have been covered.  While endorsements should be attached to insurance policies, the failure to do so does not invalidate them.  Texas law has long provided
that a separate contract can be incorporated into an insurance policy by an explicit reference clearly indicating the parties’ intention to include that contract as part of their agreement.

Endorsements to an insurance policy generally supersede and control over conflicting printed terms within the main policy.  However, insurance policies and their endorsements should be construed together unless they are so much in conflict that they cannot be reconciled.  It is well established in Texas that endorsements attached to a policy, when delivered, are properly treated as a part of the policy even though not independently signed, because the policy signatory is inclusive of all endorsements.

The primary dispute amongst the parties is whether the endorsement was delivered to appellants to render it effective in Wendlandt’s policy.  The question of delivery is a mixed one of law and fact to be determined by the trier of fact.

In appellees’ motion for summary judgment, appellees argued that the evidence established delivery of the endorsement.  We disagree.  It is undisputed that Wendlandt never received the endorsement. The evidence presented shows, at best, the endorsement was delivered to Stephens Insurance with the expectation that it would be forwarded to Wendlandt.  Appellees argue that Stephens Insurance was an agent of Wendlandt’s and delivery was complete upon sending Stephens Insurance the endorsement.  Appellants argue the opposite, stating Stephens Insurance had authority to perform tasks for appellees and was an agent of appellees’.

It is true that, generally speaking, an insurance broker is considered the agent of the insured; if the insured reports a claim to the broker, but the broker fails to report it to the insurer, the insured is not relieved of his notice obligations.  However, an insurance company may be estopped to deny that such broker is its own agent when that person has authority to perform
various functions on the insurer’s behalf.

Agency is generally a question of fact.

Construing the facts presented in this case in a light most favorable to appellants, we conclude that questions of fact remain regarding the agency relationship of Stephens Insurance to both parties as well as the circumstances of delivery and whether there was in fact a delivery.  Pursuant to Texas Rule of Procedure 166a(c), when an issue of material fact exists, summary judgment cannot be granted.

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