Does an Insurance Agent, as a Matter of Law, Have the Authority to Revoke a Cancellation Notice Sent by the Insurer Directly to the Insured
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Summarizes the United States Court of Appeals for the Fifth Circuit’s case Blakely v. American Employer’s Insurance Co. In Blakely, an insurance company issued an automobile liability policy to Campbell, but after determining her to be an undesirable risk, attempted to cancel the policy by letter. After attempting to dissuade the company, Vaughn, its register agent, contacted Campbell and told her to ignore the cancellation notice. Campbell subsequently had a judgement against her after an automobile accident, and the insurance company refused liability. The trial court held, and the fifth circuit affirmed, that under Texas law an agent has broad authority to bind its principle company on insurance risk, and did so in this case by retracting the cancellation notice.