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Question
Consumers Assurance was Lin's insurance agent on a truck that was insured with Casualty Company. Lin later purchased a car from Ted's Toyota Dealership, but, before he was allowed to remove it from the dealership, the dealer's credit manager called Consumers to verify that the new car would be insured. A Consumers' employee indicted that the car was insured by Casualty. Based on these assurances, Lin took delivery of the new car, started driving it, and paid the insurance premiums when they became due. Several months later, Lin wrecked the car and filed an insurance claim. Casualty denied coverage on the grounds that it had never agreed to insure the car. Lin sued Casualty, alleging that the agency relationship between Casualty and Consumers bound the insurer to the assurances made by its agent. Casualty denied that an agency relationship existed. Discuss.
Answer
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