Occasionally insurance agents will get requests from customers asking for specific wording on insurance certificates. Often times, the agent is not allowed to add that language because the coverage that the language infers does not exist on the policy. This tends to get customers angry, especially if they need the certificate in order to get paid for a job they have already completed. I think a little history of the purpose of a certificate can clear up why the agent cannot always provide what a customer asks for on a certificate. What is a certificate of insurance and what can it do?
A certificate of insurance is a document that summarizes the terms, conditions and duration of an insurance contract, but it is not the contract itself. It shows what type of insurance is in place at the time it is requested. It does not tell you what is in place a month from now or a year from now. Th is is why it is commonly referred to as a “point in time” or a “snapshot in time” document. It was originally created to serve as an outline of coverages in place and was used in lieu of producing the entire policy for review.
What can a certificate NOT do?
A certificate cannot alter, amend or change any coverages that are currently in place. No changes can be made to the policy by way of using the certificate to manuscript coverages. If any provision in the certificate of insurance purports to amend, expand or otherwise alter the terms of an applicable insurance policy, that form must be filed with the state.
Connecticut Statute Section 38a-92n states: “Each licensed financial guaranty insurance corporation shall file all policy forms and any amendments thereto with the commissioner prior to the issuance of a financial guaranty insurance policy.
Immediately upon filing, the financial guaranty insurance corporation may utilize any such policy form or amendment, unless and until the commissioner disapproves of the policy forms or amendments filed. Filings that otherwise comply with this section and that the commissioner does not disapprove within 30 days of filing shall be deemed approved.”
What rights or coverages does a certificate holder have?
None. If a certificate holder is not listed on the policy as an additional insured, the certificate gives no coverage or rights to the certificate holder. The only way that someone can be listed as an additional insured is by endorsing the original policy.
The certificate, according to its clear wording, is not part of the policy; you cannot endorse a certificate of insurance.
What does the Connecticut Insurance Department say about it?
Unfortunately, the Connecticut Insurance Department has not specifically issued an opinion or circular on the interpretation of certificates. PIA has communicated with them requesting that they review the subject and offer direction as to how certificates of insurance are to be interpreted.
What is my agent allowed to do for me?
Your insurance agent can give you a completed certificate of insurance that acknowledges effective dates, what coverages or policies, endorsements and limits are in place at the time of the request.
Conversely, your agent CANNOT:
• add language at the request of the certificate holder when it does not exist in the policy (for example, a primary and noncontributory clause, waiver of subrogation or hold-harmless agreement);
• provide coverage to someone who is not designated in the policy as an insured entitled to coverage; or
• provide notice of policy cancellation to someone who is not designated in the policy as entitled to such notice.
The following cases are examples where courts have refused to permit the coverages implied on a certificate of insurance:
United States Pipe & Foundry Co. v. United States Fidelity & Guaranty Co., 505 F.2d 88 (5th Cir. 1974);
Lezak & Levy Wholesale Meats Inc. v. Illinois Employees Insurance Co., 460 N.E.2d 475 (Ill. Ct. App. 1984);
Pekin Insurance Co. v. American Country Insurance Co., 572 N.E.2d 1112 (Ill. Ct. App. 1991);
Bradley Real Estate Trust, et al. v. Plummer & Rowe Insurance Agency Inc., 609 A2d 1233 (Sup. Ct. NH, 1992); and
Glynn v. United House of Prayer For All People, 741, N.Y.S.2d 499 (N.Y. App. Div., 2002).