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Insurance Community CenterA Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com
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What You and Your Client Need to Know About Certificates of
Liability Insurance
Presented By:Insurance Community Center, LLC
Presenter:Marjorie L. Segale, AFIS, CISC, CIC, CRIS, RPLU, ACSR, CISR
ICC Director of EducationPresident Segale Consulting Services, LLC
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Disclaimer Not only are policy forms, clauses, rules and court decisions constantly changing, but
forms vary from company to company and state to state.
This book is intended as a general guideline and might not apply to a specific situation.
Information which is copyrighted by any proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to
ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating
Insurers.
The author and any organization for which this seminar is conducted shall have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information
contained in this book. Contact Info: 714.206.9583
[email protected] www.segaleconsulting.com
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Insurance Community Center
• We are happy to present this inaugural webinar from your Community Timely Topics and hope that you find the information helpful.
• Community Timely Topics Presented once or twice per month Notification will go out at least one week
prior to the webinar date
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Community Timely Topics
Will cover timely topics such as: New insurance issues Lessons learned from current events New case law that impacts insurance Market update What’s new in the insurance community
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Community Timely Topics
Powerpoint presentations AND audios on the topics presented are available after the webinar through the ICC University to University members and their staff
Surveys will be sent immediately following each session for you to comment on the webinar presented and to suggest topics you would like presented in the community
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Community Timely Topics
By popular demand we will be offering a second webinar on Certificates of Insurance on December 16th at 11:00 AM PST
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University Lecture Series
The ICC University will be offering a webinar to all members and staff on a monthly basis
The schedule of The University topics will be published on December 15, 2010
Each topic will include presentation and reference materials
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University Lecture Series
The University Lecture series will begin with “How To Insure” lectures targeting specific industries such as: How to insure a manufacturer How to insure a winery How to insure e-commerce risk How to insure contractors
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Certificate Basics
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What Is A Certificate?
A certificate of insurance is a document issued by or on behalf of an insurance company to a third party who has not contracted with the insurer to purchase an insurance policy
A business agrees to provide evidence of certain coverages, such as General Liability, Business Auto Liability or Workers’ Compensation due to a business agreement between themselves and another party
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Why Are Certificates Used?
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ACORD Certificate of Liability Insurance
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Policy: Contract Between Insurer and Insured
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Primary Areas of Concern
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ACORD Forms Instruction Guide
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ACORD Forms Instruction Guide
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Results of Improper Issuance
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State Insurance Departments
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State Regulation of Certificates
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State Regulation of Certificates
Virtually every other state will not allow any change in a certificate of insurance that would attempt to modify a policy unless the revised certificate is filed and approved. In these states, this form can only be changed to reflect the terms and conditions of the policy on which it is reporting. Such change(s) must be approved in advance by the insurance carrier that issued such policy.
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State of Idaho – Department of Insurance Bulletin 08-03
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State of Idaho – Department of Insurance Bulletin 08-03
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Department of Consumer and Business Services – Insurance Department
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Department of Consumer and Business Services – Insurance Department
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Indiana Bulletin # 170 – Issued 4-3-2009
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Indiana Bulletin # 170 – Issued 4-3-2009
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California / Washington
• No bulletin as yet
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Certificate of Liability Insurance
Let’s Compare a prior version of the ACORD Certificate to the 9-2009
edition
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Notice of Cancellation
Notice of cancellation is a POLICY right, not a voluntary service
The policy, often following state law, determines who gets notice of cancellation for what reason(s), and with how much advance notice
NONE of the ISO additional insured endorsements provide for any notice of cancellation to the AI AND restrict notice to the First Named Insured
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Policy Cancellation Language
A. Cancellation 1. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation. 2. We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least:
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Policy Cancellation Language
a. 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or b. 30 days before the effective date of cancellation if we cancel for any other reason.
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Effect of Change• Follows policy language• Reduces improper issuance by insurance
agents• Compliance with state regulations• Business contracts need to be reviewed
by both contractual parties The contract could require that the other
contractual party be required to notify in the event of coverage cancellation
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What Are Insurance Companies Doing?
• Will not review certificates• MGAs / Wholesalers being more care ful
about reviewing certificates• At least one insurance company has just
come out with an endorsement that changes the policy to allow the producer to issue notice of cancellation
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Authority of Producer to Issue Notice of Cancellation and Non-renewal on Behalf of the Insured
In the event of cancellation or non-renewal of this policy by either you or us, the first named insured authorizes the producer of record to send notice of the applicable cancellation or non-renewal on its behalf to any person or organization which the first named insured or any other named insured has: •agreed to provide notice of cancellation or non-renewal of this policy; and •provided the name and address of such person or organization to the producer of record.
The first named insured represents that the producer of record has agreed to provide such notice. •Failure of the producer of record to provide the notice will not: •impose liability of any kind upon us or the producer of record; or
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Related Issues
Additional Insured RequirementsPrimary, Non-contributory wording
Waiver of Subrogation
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Additional Insured Requirements
• Language on a Certificate was NEVER binding upon the insurance company
• The party requesting this coverage MUST have an endorsement to the policy Wording on a Certificate is irrelevant
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Primary, Non-Contributory Wording
• Language on a Certificate was NEVER binding upon the insurance company
• The party requesting this coverage MUST have an endorsement to the policy Wording on a Certificate is irrelevant
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Waiver of Subrogation
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Business Contract vs. Insurance
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Coverage Confirmation
Help Your Client With Their Business Practices, Contracts and Agreements
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Receiving Coverage Confirmation
• Make sure the Certificate is unaltered• Request copy of policy language to
support insurance requirements Policy Endorsements
Additional Insured Endorsement Waiver of Subrogation Primary, Non-Contributory
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Receiving Coverage Confirmation
• Verify limits of liability insurance are at least equal those required by the contract
• Verify that any names shown on the endorsements are correct
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Match Contract With Coverage
• Check contracts for appropriate and available insurance requirements
• The agent/broker needs to educate their clients about these issues Will not eliminate the push-back on these
changes but may help going forward Watch out for new language in contracts
that the 2009 edition of the ACORD is no longer acceptable
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Match Contract With Coverage
• Insurance buyers will need to Submit proper RFP identifying
insurance specifications that will be provided
Teach your clients to review contract language before signing
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Summary• Requiring a document that incorrectly
describes insurance coverages is not helpful Could result in spending thousands of dollars
in legal fees to pursue litigation or to defend oneself from litigation
• Agents, brokers or producers that continue to violate the guidelines of Certificate issuance do so at their own peril and possible loss of their livelihood.
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