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October 27, 2010 at 08:00 PM
The incident
An experienced life agent met with a client to sell him a health insurance policy. The agent allegedly assured the client that the new health policy would provide the same or better coverage than his prior policy for a lower premium. When completing the application, the agent had the client sign a notice to acknowledge any pre-existing conditions may not be covered under the new policy.
Four months into coverage, the client went to the doctor for a back examination and was later informed by the insurance carrier that they would not cover the claim as his back condition was pre-existing. The client alleged that the agent told him the new policy would cover his pre-existing back problems. The agent stated he was not made aware of his client’s pre-existing back issues in the process of applying for coverage.
The claim
The client filed suit against the agent for fraud and misrepresentation and further alleged that the signatures on the health policy documents were forged by the agent. The damages claimed were $36,549 plus attorney fees and compensation for the client’s mental anguish.
The outcome
During mediation, the client did admit to signing the documents; however, he alleged that his agent advised him not to take the time to read them and to simply sign where indicated. It became a war of words and the client won. The claim was settled for a total of $177,500 with the agent’s E&O carrier contributing $65,000 and the health carrier contributing $112,500.
