Generally, insureds are required to read their insurance policies in Texas. However, where the nature of the lawsuit brought against the agent or broker involves affirmative misrepresentations under Texas’ Deceptive Business Practices statute, the insured’s failure to read the insurance policy is not fatal to proceeding with that type of claim under Texas law.
In Wyly v. Integrity Insurance Solutions, 502 S.W.3d 901 (Tx. App. – Houston 2016), the insured sought coverage for a newly purchased airplane. The agent gave the insured specific assurance that the plane would be covered for any type of damage which occurred in transit. When the plane was delivered in Texas from Tennessee, damage was discovered which occurred because the plane had been improperly managed during transit. The policy contained an exclusion for improper loading. The broker unsuccessfully argued that the insured failed to read the insurance policy and therefore could not maintain an action against the broker for failure to procure. The court rejected this argument, finding that while a Deceptive Trade Practices Act violation could not rest on a broker’s mere failure to disclose coverage gaps, inasmuch as the insured had constructive notice of the policy terms, when an actual affirmative misrepresentation was the cause, there could be an actionable Deceptive Trade Practice claim, notwithstanding the insured’s failure to read the policy.