General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurance agent negligently tells a client that a preexisting condition will be covered when it will not, and the client later suffers an uncovered claim. The client's potential claim against the agent is best characterized as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An agent who gives erroneous advice without exercising reasonable care may be liable in tort for negligence or negligent misrepresentation — a civil wrong independent of any policy dispute. The client may also have contract or bad-faith theories, but the agent's careless advice is a tort because the duty to give accurate information arises from the agent's professional conduct, not solely from a written agreement. Tort remedies can be pursued in addition to, not instead of, contract remedies.
Why the other options are wrong
- B) Criminal prosecution requires intent or recklessness beyond ordinary negligence; an honest error is not a crime.
- C) Administrative discipline by the department does not extinguish the client's civil right to damages.
- D) The law of large numbers concerns loss prediction and risk pooling; it has nothing to do with the agent's liability.
Memory hook
Careless advice = tort. The agent's professional duty survives the sale.