Tennessee Life Producer Practice Exam

In the event of a producer’s wrongdoing, when is the insurance company considered liable?

1. When the producer is convicted

2. When the act is part of their duties

3. When the client files a complaint

4. When the act is recorded in company files

The correct answer is: When the act is part of their duties

The insurance company is considered liable for a producer’s wrongdoing when the act is part of their duties. This principle is rooted in the legal concept of vicarious liability, which holds employers accountable for the actions of their employees when those actions occur within the scope of employment. If a producer is acting as an agent of the insurance company and their actions are directly related to carrying out their responsibilities, the company can be held liable for any harm resulting from those actions. This ensures that clients and third parties have recourse against the company for misconduct that occurs in a professional context, thereby promoting accountability within the insurance industry.