FAILURE OF INSURED TO READ POLICY RELIEVED AGENT OF LIABILITY FOR INSUFFICIENT INSURANCE

FAILURE OF INSURED TO READ POLICY RELIEVED AGENT OF LIABILITY FOR INSUFFICIENT INSURANCE 389_C036

FAILURE OF INSURED TO READ POLICY RELIEVED AGENT OF LIABILITY FOR INSUFFICIENT INSURANCE

The Virginia Supreme Court, in its review of a trial court decision holding an insurance agent liable for failure to provide adequate insurance coverage, addressed the question of whether the failure of the insured to read his policy was, in itself, negligence that relieved the agent from liability.

The record showed that the insured was the sole owner of an incorporated business that provided mechanical and tire services for trucking companies. He had quit school at an early age, claiming reading difficulties, had served in the Navy, and then started his business after learning the trade of automotive mechanic working for a trucking company.

The insured had contacted the insurance agent when, as the business grew, he was aware of a need for additional insurance but was unsure of what kind and how much. He gave the agent an existing policy, saying that he did not understand it and that he wanted the agent to take care of all of his insurance needs.

Several years into the relationship, the insured acquired a new building and met with the agent to update the insurance arrangements. Discussion included the mortgage arrangements, parts inventory, value of tools and the like. The agent arranged and delivered a policy that clearly stated in the declarations that it provided specific amounts of insurance on the building and on personal property of others. The insured later testified that he put the policy in a desk drawer without having looked at it.

The building and its contents were destroyed by fire a year later. The building was substantially underinsured and most of the contents were not covered by the policy. Other insurance paid less than half of the loss of tools. The agent appealed from a judgment against him when the insured sued him for failure to obtain adequate insurance coverage.

The agent argued that the insured's failure to read the policy was negligence and the proximate cause of his losses. The Virginia Supreme Court, noting the insured's testimony about reading difficulties, said that he "....had a duty, nonetheless, to have his wife, who occasionally helped with business matters, or someone else read the policy to him if he could not read it." The nature of the coverage was plainly stated.

The judgment of the trial court was reversed in favor of the agent and against the insured.

(GENERAL INSURANCE OF ROANOKE, INCORPORATED ET AL, Defendants-Appellants v. PAGE ET AL, Plaintiffs-Appellees. Virginia Supreme Court. No. 950195. November 3, 1995. CCH 1996 Fire and Casualty Cases, Paragraph 5501.)