Supreme Court Rules Against Insured

The Texas Supreme Court ruled last month that an insurance agency which failed to procure insurance for its customer will not be liable for his losses. In the case of Metro Allied Insurance Agency, Inc. v. Lin, handed down on December 11, 2009, the Supreme Court overturned a Court of Appeals decision, the jury’s verdict, and decades of legal precedent to require proof of the terms of a specific policy that the insurance agent failed to obtain.

In Lin, in connection with a contract he obtained from the U.S. government, the customer instructed his agent to obtain a Commercial General Liability (CGL) policy with certain terms that were indicated in one quote. The agency completely failed to get the insurance. The customer later experienced problems in the job, and his surety bond had to pay a claim. The surety then sued him. The customer requested that the CGL policy defend him. That was when it was revealed that there never was a policy.

The agent testified that, on occasion, policies can be provided with “contract” coverage as the customer requested. But the agent claimed that he was no expert, and the Supreme Court ruled that his testimony was “no evidence” that such a policy could have been purchased to cover the claim in question. As a result, the Supreme Court ruled that there was no causation of any harm (contrary to legal precedent when the statute had different phraseology), and so the court ruled that the jury’s verdict for the customer should be thrown out.