Has your claim been denied due to misrepresentation or insufficient coverage caused by insurance agent negligence? Find out from a nationally-recognized life insurance beneficiary lawyer what an insured or a beneficiary can do when an agent was negligent in filling out a life insurance application, there was a mistake on life insurance application resulting in insufficient coverage or a claim being denied.
Life Insurance Agent Responsibilities
What are the duties of a life insurance agent to a client? What if the agent was responsible for an omission or mistake on a life insurance application that resulted in a claim being denied? What if you thought you had a certain type or amount of insurance coverage, but the agent did not get that coverage for you?
When you purchase life insurance, you are putting your trust not only in the insurance company, but in your life insurance agent. Life insurance is complicated and there are so many choices. Everyone’s situation is different, so the industry has professionals — their agents — as a point of contact between you and your insurance company to offer you personal advice and guide you in the right direction.
You should be able to rely upon your agent to assess your situation, make recommendations as to what type and amount of coverage you need, explain how that coverage works, and fill out all of the required documents accurately. But what happens when the agent fails in any of these duties?
Life Insurance Agent Duty to Client
Life insurance agents are highly trained specialists who have a fiduciary responsibility to their clients, much like attorneys and accountants do. That means that an insurance agent is in a position of trust, and must always act in the best interests of their clients.
Does this mean the agent must inquire about every aspect of your life that bears on the type and amount of insurance you should get? No. But it does mean that the agent must accurately assess and record the information you give him or her, submit all required forms to the insurance company in full and on time, and procure the amount and type of coverage you agree to purchase.
Because an “agent” acts on behalf of its “principal,” in this case the insurance company, the actions of the agent are imputed to the insurance company, and the company is liable for the consequences of the agent’s negligent acts.
What does this mean? It means that if the insurance agent’s mistakes or omissions cause you to have insufficient insurance coverage or no insurance coverage, or, if those acts result in your death benefit claim being denied, the insurance company could be forced to pay.
Life Insurance Agents vs Life Insurance Brokers
As a point of interest, some life insurance agents are actually “brokers,” meaning that they have a special, more personal and long-lasting relationship with their clients. For example, an insurance broker might be someone who has advised your family on what homeowner’s, auto, and life insurance you need over several years. A court might find this type of broker personally liable for negligence.
What to do when an insurance agent failed to procure the coverage you wanted:
What if you thought you were covered by life insurance, but when you make a claim, it turns out you were not due to the insurance agent’s mistake or negligence? We have gotten our clients’ claims paid when they were first denied in cases like these:
The insured purchased funeral benefits for herself and later for her husband. When her husband died, the insurance company denied her claim because her agent mistakenly procured two funeral benefits in her name, including two separate caskets. The insurance company was found to be vicariously liable for the negligent actions of the agent performed within the scope of the agent’s duties.
The insured applied for reinstatement of coverage and her agent stated that she was “not worried about the kids on the policy” and only needed health information for client, who communicated that she only had high blood pressure. The agent did not include the disclosed information regarding hypertension on application, and did not ask any questions about other people on the policy.
What to do then an insurance agent was negligent in filling out a life insurance application:
It is very common for a life insurance company to deny a claim due to a mistake or omission on the application. The reason they give for the denial is “misrepresentation,” whether the mistake or omission was intentional or not, or whether it was made by the insured or the agent.
Often state law controls what acts constitute “misrepresentation. For example, in Illinois, misrepresentation is only found when a statement is made with the actual intent to defraud. For this reason, in Illinois (and in many other states) an insurance company cannot use fraudulent, careless, negligent, or mistaken actions of its agent to avoid payment on claims.
Our client’s claim was initially denied for misrepresentation regarding the insured’s blindness and diabetes. The insured’s agent filled out the application but marked “no” for both disabilities. Both conditions were verbally disclosed to the agent and the insured could not possibly deceive the insurance company because she literally could not even see the application.
The insured disclosed all relevant medical information, including a hospital trip and follow-up visits. The agent input all information other than the signature and the claim was denied due to an alleged misrepresentation.
The beneficiary was only paid about one-half of a $50,000 policy. The insured applied for $50k policy through an agent, answered all questions honestly, and signed it without an opportunity to review it. The insurance company claimed that there was a 10-year discrepancy between the insured’s age on the application and the insured’s true age. We were able to get the beneficiary paid in full.
Suing life insurance company or insurance agent for negligence
It does not matter whether the mistakes or omissions the insurance agent made were intentional or unintentional: the insured or the insured’s designated beneficiaries have a negligence claim, and the agent (and/or the agent’s principal, the insurance company) can be held liable not only for the agent’s negligent or intentional acts, but for the consequences of those acts. This means your claim could be paid.
Insurance law is complex and the laws controlling liability and misrepresentation vary from state-to-state. If your claim was denied due to misrepresentation, life insurance agent mistake or omission, or life insurance agent negligence, contact our firm today. We get our clients paid.