Insurance Law Lesson 3: Insurance Agents

The prior lesson discussed that insurance policies are generally compiled from a set of forms used by the insurance company.

Some policies can be procured directly from the insurance company. For example, Progressive issues auto policies through its website. But, most insurance is procured through agents.

In Michigan (and other jurisdictions), an insurance agent that sells policies for multiple insurance companies is not considered to represent the insurance company. Promises from those agents about coverage are not binding on the insurance company.

It is imperative that a policyholder review the policy she receives and ask specific questions to the agent. Agents generally have very limited liability to the policyholder. They are considered “order takers” unless there is a “special relationship” under the factors set forth in Harts v Farmer Ins Exch, 461 Mich 1 (1999).

Moreover, the agency’s representations – or misrepresentations – are imputed to the insured. Policyholders need to review their applications closely and make sure that all information is accurate to avoid potential issues down the road.

Leave a Reply