Last week, the U.S. District Court for the Southern District of Texas concluded that there was no evidence that the insurer lead the insured to reasonably believe that the sub-limit of liability coverage for damage to off-premises property had been waived, and granted summary judgment in favor of the insurer.  In J&G Trejo Enterprises, Inc. v. Western World Ins. Co., No. 7:22-CV-00122, 2022 WL 16748801 (S.D. Tex., Nov. 7, 2022, mem. op..), J&G Trejo Enterprises, Inc.’s (“J&G”) MRI machine held off its premises was destroyed in a fire. J&G assessed its own actual loses at around $200,000.00, and made a claim with its insurer, Western World Insurance Company (“Western World”). However, due to a $10,000 sub-limit of liability for business personal property held off-premises, Western World paid only the $10,000 limit.  Consequently, J&G filed suit against Western World, claiming that the insurance agent represented that property held off-premises would be fully insured, and J&G detrimentally relied on that representation. In response, Western World filed a motion for summary judgment, which the Court granted. 

In granting summary judgment, the Court began by concluding that the plain terms of the insurance police provided that the most Western World had to pay for loss or damage under the Property Off-premises Extension was $10,000 and, therefore, Western World—as a matter of law—was not liable for breach of contract “unless the insurer or agent made some specific misrepresentation about the insurance.” “The contractual provision creating a sub-limit of liability is quite clear, and [J&G] is charged with knowledge of it.”

Next, the Court noted that “the statutory authority granted an agent under article 21.02 of the insurance code does not authorize an agent to misrepresent policy coverage and bind the insurer to his misrepresentations unless the insurer approved the agent's conduct by authorizing the agent's wrongful acts or subsequently ratified the wrongful acts.”  Further, “agents may be considered agents of the insurer for purposes of a lawsuit, but they may not alter or waive a term or condition of the policy.”  The Court concluded that there was no evidence that Western World took any action that could lead J&G to reasonably believe that the sub-limit of liability had been waived.   

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