Nashville Insurance Agents Liable for Inaccurate Information in Policy

In a recent Tennessee Supreme Court case, Morrison v. Allen, two Nashville financial planners/insurance agents were held liable to the widow of a husband who had purchased life insurance through the agents. The agents recommended that the husband obtain a life insurance policy with coverage of one million dollars, and presented the husband with a quote for a life insurance policy from American General with coverage of one million dollars.

The husband decided to purchase the American General policy. One of the agents called the husband to obtain information needed for the application for the policy. Thereafter, the agent delivered the application, which he had completed, to the husband with sticky notes indicating where the husband should sign the application.

After American General has issued the one million dollar policy, the husband was killed. American General denied coverage because the husband’s application included a question that required the husband to state “yes” or “no” as to whether, in the five years before the application was completed, he had been convicted of driving under the influence.

The policy application, which had been completed by the agent, contained the response “no” to that question. The husband, had, in fact been convicted of driving under the influence within the five year period before the application was completed.

The evidence at trial was that the husband had relied on the agents to complete the policy application accurately. There was evidence that the agents had intentionally filled out other parts of the application (besides the question about driving under the influence) incorrectly. The agents argued that they could not be held liable for the misrepresentation in the application because the husband signed the application, and stated that the information in it was true and correct.

The Tennessee Supreme Court disagreed, and ruled against the agents and their firm, Wiley Brothers. The wife was awarded a judgment against the agents and their firm for the full value of the American General policy–$1,000,000.00.

The ruling in this Tennessee insurance litigation case should cause insurance agents to be much more careful (or much less dishonest) when presenting clients with policy applications which they have completed for their clients. The court in this case recognized that, when a professional is helping you, you should have the right to rely on the professional’s honesty and competency in gathering information and completing lengthy forms.