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Who issues insurance policies?

Posted on: December 31, 2022

LEGALLY REVIEWED BY:
Chi Hung Nguyen
December 31, 2022

Issuing insurance policy

While many drivers in Texas are paying attention, many other drivers are reckless and negligent. This kind of behavior can lead to car accidents or truck accidents with severe consequences. Vehicle accident injuries can result in money damages, such as medical bills, wages lost from being unable to work, and psychological or emotional pain and suffering. These damages add the stress of trying to pay for medical treatment on top of trying to heal and move on from the accident. As compensation for their injuries and damages, injured claimants often begin by filing an insurance claim.

In a perfect world, both sides work together to resolve an insurance claim through cooperation and negotiation.

But insurance companies are not always on your side. Insurance companies, like other businesses, do not always want to pay a claim as soon as possible because they lose money. Plus, insurance company employees are capable of making mistakes, or even intentional bad behavior. As a result, injured claimants face delays and continue to suffer.

After an injured claimant tells the insurance company about the car accident and insurance claim by giving them notice of the claim, the insurance company has a duty to investigate. This investigation includes evaluating written records, files, reports and evidence as well as conducting interviews with employees and people involved in the insurance policy negotiation, including those who were involved in issuing the insurance policy.

When you hire a lawyer in your personal injury case to fight the insurance company on your behalf, your lawyer will look at the files, evidence, contracts and any other relevant documents to see if the insurance company made a mistake, is taking advantage of someone not familiar with the claims process or wrongfully denied your insurance claim.

An important part of evaluating your case involves looking at the parts of an insurance contract and potentially interviewing the employees involved in issuing insurance policies.

3 Parts of an Insurance Contract:

Generally, there are three parts to an insurance contract: (1) the insurance application, (2) the declaration sheet and (3) the insurance policy contract. Typically, the first step begins with the insurance application. Once an insurance policy is issued, the policy needs to reflect the application.

3 Employees Involved in Issuing Insurance Policies:

Insurance companies can be large corporations with many departments and branches that handle everything from issuing the insurance policy at the start, to handling any claims made under the policy. Usually, there are three insurance employees that can issue an insurance policy:

1. The Underwriter: An underwriting department takes in applications for insurance. The insurance underwriters examine an application, and find out what the applicant wants. Typically, clients and potential insureds do not communicate with the members of the underwriting department.

The Underwriter’s Files

An underwriter’s files typically has memos and other documents from an insurance agent that shows what exactly the potential insured client wants to be covered by insurance. If there was bad communication between the client and the insurance agent, this may also show up in the underwriter’s files. In these situations, reformation may be an option to help remedy the issue.

The Underwriter’s Manual

Another document that should be examined is any underwriter’s manual that the insurance underwriter may have used to help understand his or her intent, or perspective when he wrote the policy. An insurance underwriter’s manual will likely break down what should and should not be covered under an insurance policy.

For example, a company called National Underwriter wrote and published a manual for the Insurance Service Office forms (ISO). This is often a first step to understanding how the underwriter was thinking when he or she helped make the insurance policy, because it helps clarify what the standard insurance forms and endorsements mean. The insurance manual can also help show what an insurance policy terms were supposed to mean, and what should be included and excluded in the insurance coverage.

If an insurance manual shows that the underwriter did not mean to include insurance coverage for a specific kind of risk or danger, but the policy is unclear about this, then it is more likely that a court will side with the insured person and policyholder than with the insurance company. When an insurance company wants to get rid of, or limit, insurance coverage for a particular risk, then this needs to be clearly understood and obvious when the policy is read.

2. The Agent or Insurance Broker: The job of an insurance agent and broker is to make sure that everything that the client ordered was what the client got. Often, there is a system, rules or other guidelines the insurance company uses to make sure there are not mistakes when the insurance contract is made.

Insurance agents usually works behalf of the insurance company, while the insurance broker works on behalf of the policyholder.

Brokers usually do not actually write any insurance policy terms, and just help find the right insurance policy for the policyholder.

Insurance agents usually have an agency contract that outlines their duties and what they can and cannot do when they make changes to insurance policies or affect the level of insurance coverage. Depending on the case and how much authority the insurance company gave the insurance agent, the words and actions of the insurance agent may legally bind the insurance company even if the insurance company tries to say they are not responsible for the agent’s mistakes or representations.

Still, both a broker and an insurance agent are basically middlemen between the insurance company and policyholder.

Regardless of whether they are called an insurance agent or an insurance broker, either one of them can still get into trouble if they assure the policyholder that he or she is “fully covered” when that is not the case.

3. The Managing or General Agent: Sometimes, the managing insurance agent or the general agent has authority from the insurance company to finalize an insurance policy contract. When this is the case, the insurance company is legally held responsible under the contract. Usually, the only way for the insurance company to get out from its obligations under the insurance policy is if there is mutual mistake, which is a mistake that was important that was made by both sides.

Mistake by Managing or General Agent

Sometimes, a meaningful mistake by the managing of general agent of an insurance company can result in an award of punitive damages to the person bringing a lawsuit against the insurance company. There are many types of damages. Punitive damages are usually awarded by courts and juries to an injured claimant on top of the other damages awarded for bodily injuries and property damage for particularly bad misconduct.

For example, punitive damages may be awarded to an injured claimant when the managing or general agent acts with malice, fraud, or oppression. An injured claimant can also show that the insurance company was reckless, and not careful when it hired the managing or general agent, and the agent is clearly not able to do a good job. The injured claimant can show that it ratified, or continued to approve the bad actions of the agent. It may also be enough that the managing or general agent was in a managing, leadership role when he or she made the mistake. However proven, an insurance company can be held liable for its managing or general agent’s mistakes.

Other Insurance Company Mistakes

Insurance claims must be processed in a reasonable amount of time. Insurance companies cannot take too much time in handling an insurance claim. They must also conduct thorough investigations, and consider all of the evidence even if the evidence is not helpful to their side. Making one of these three mistakes can be grounds for a bad faith case, or ultimately weaken the insurance companies’ own case.

An experienced personal injury lawyer has the knowledge and skills to handle insurance companies, understands the insurance claims process and can help an injured claimant recover the compensation he or she deserves. If the insurance company or their employees make a mistake, your attorney will ensure that the insurance company is held responsible.

Contact an experienced personal injury lawyer 

Without experience in the insurance industry or legal experience, understanding which factors or evidence can help or hurt your case can be difficult to understand.

Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.

The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-524-8139 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.

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