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Certificates of insurance--are the bad old days coming back.

In the June 15, 2015 issue of the Insurance Advocate, I wrote that the NY Department of Financial Services would publish a list of approved certificate of insurance forms in connection with the new legislation that outlawed using or even requesting unapproved certificates. The list is now available. (6) It contains the expected ACORD forms, but the others are surprising.

ACORD received approval of 11 certificate of insurance forms (numbers 21 through 31)--including different editions of some of them--plus the 855NY New York Construction Certificate of Liability Insurance Addendum, which I was particularly glad to see. 855NY is a form that owners should require from every construction contractor. (7)

The surprises were the forms other than ACORD. The first surprise was that there were so few of them. There are really only two other filers at this writing (September 8, 2015): New York City and an independent agent who writes a specialty class of business. The second surprise is that the New York City filing may indicate that we're heading back to the bad old days of public bodies imposing onerous requirements.

The independent agent, Sullivan St Strauss located in Lake Success, NY, filed a certificate of insurance and an evidence of insurance form for use in connection with its recreational boat insurance program. The certificate is a pared-down version of an ACORD certificate. The lead-in language states that the policy listed has been issued and is subject to that policy's terms and conditions, any other document or contract to the contrary notwithstanding. Like the ACORD form, it states that the "certificate does not amend, extend or alter the coverages afforded by the policy."

It does not contain the misleading language the ACORD forms use with regard to cancellation notice. ACORD forms say "should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions." I'm glad that language is not included. It's at best misleading and at worst dishonest. A typical layperson would assume that the insurance company has agreed to provide notice to the certificate holder, when, in fact, the opposite is true. The overwhelming majority of insurance policies call for notice of cancellation to be given to the first-named insured and no one else. There's no provision for a certificate-holder to receive notice unless the policy is specifically endorsed. I've never seen a policy endorsed in that way. On balance, I'm comfortable with Sullivan & Strauss's certificate.

The filings on behalf of New York City Agencies, Departments, and Offices are more problematic. They require the agent or broker to sign the following statement when submitting a certificate of insurance: "The undersigned insurance broker or agent represents to the City of New York that the attached Certificate of Insurance is accurate in all material respects." The name and title of the signing official is required and his or her signature must be notarized.

I don't like that. Aside from the added work to have the certificate completed and notarized, what does the phrase "accurate in all material respects" mean? If the policy contains a non-standard endorsement limiting coverage that is not mentioned and a claim is denied that would otherwise have been covered, is that a material misrepresentation? Is a clerical error in completing the certificate a material misrepresentation? How do you prove it was a clerical error and not a deliberate act? You may want to increase your E&O insurance limits before you sign one of these forms.

(6) Approved Certificates of Insurance

(7) I discussed the 855NY (New York Construction Certificate of Liability Insurance Addendum) in detail in the August 18, 2014 issue of the Insurance Advocate.

Jerome "Jerry" Trupin, CPCU, is a partner in Trupin Insurance Services located in Briarcliff Manor, NY. He provides property/casualty insurance consulting advice to commercial, nonprofit and governmental entities. He is, in effect, an outsourced risk manager.

Jerry has been an expert witness in numerous cases involving insurance policy coverage disputes and has taught many CPCU and IIA courses. Jerry has spoken across the country on insurance topics and is the coauthor of over ten insurance texts used in CPCU and IIA programs including Commercial Property Risk Management and Insurance and Commercial Liability Management and Insurance. He regularly contributes articles to CPCU Society publications, the Insurance Advocate, and others. He can be reached at Thanks to Jerry Trupin for this article and to the CPCU Society for letting us reprint it.
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Author:Trupin, Jerome
Publication:Insurance Advocate
Date:Sep 28, 2015
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