Who is legally liable?

I was recently married (within the year). My wife has had the same insurance company for the past few years and had also signed the company up to automatically withdraw the amount due per month out of her bank account.
A few months ago, we started banking together. Having closed the bank account that was being used, we contacted the insurance company to advise them. Our agent told us that we needed to fill out a form and get it to him – obviously. He added that it wasn’t a big deal and didn’t need it immediately, but soon. He mailed the form to us.
When we got the letter, I filled it out appropriately and proceeded to fax the form back to him. My fax machine responded by printing me a sheet that said the fax machine I was dialing would not answer. I tried it a few times, but it was not successful; from what I could see.
I called the insurance agent and told him that the fax machine on his end was not answering. He replied with, “It’s ok, why don’t we figure this out later and double up on the payment next month.”

- this would mean that on (or about) the 31 of August, or the 1st or 2nd of September my payment would be due.

I agreed.

Life went on throughout the month.

At the end of the month, at a point when the payment was approaching, I contacted him again. This was on the 31st. I called him and told him that we were having a little bit of a struggle and that we needed to pay our balance on Friday and asked him if that would be ok. He responded with a statement that sent me to the corporate offices to discuss the payment arrangement.
I called and spoke with a woman. I told her that we needed to make the payment on Friday, rather than on Tuesday. She told me that the payment had already been sent through to the bank account. I responded by telling her that the bank account she was withdrawing the money from did not exist anymore. She told me not to worry because the payment would just be rejected by the bank and a statement would be sent to us without any penalties. Also, she informed me that the statement would arrive on or about Friday, the day I wanted to make the payment. It sounded great and I thanked her and hung up.

The next day. I logged on to our bank account (the new one that we are jointly on) and saw that we were at a negative balance. A little research showed me that the $302 dollars owed to our insurance company was withdrawn from our account, draining everything we had in checking and savings.

That morning, I went to another bank, which I have an account at and took $80 out and put it in the account that was overdrawn – making it a positive balance. When I went to the bank, I asked the teller if there were going to be any fees that would be added to my account. She told me, “You SHOULD be ok.”

About an hour later two over-draft fee’s were added to my account. After that, throughout the day, five more were added at $35 dollars a piece. The reason all these were added were because I had paid some bills using their online bill pay option. Six bills to be exact.

I had contacted my insurance company and told them they were not supposed to take the payment out?! What the hell happened???

When I sent the fax, it DID work and I was never informed of it arriving at the insurance office. From there, the agent DID sign our NEW bank account up without telling me.

Therefor, when they withdrew the money, it drained our account and we incurred all the overdraft fees because of the bills I had set up to come out previously.

The agent told me that he would cover the fees and work with me. I was pissed to say the least. I talked with the bank about removing some of the fees and they told me they would not remove any, and that the insurance company is at fault arguing that had the money not been taken out, my bank would still be in the black.

I took a statement of my account to the agent to get a check and he told me the bank is charging outrageous fees and that it was ridiculous. He then, wouldn’t cover the fees once he saw how much they actually were.

Who is at fault? Who should pay?

Help, my bank is still in the red.