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More Certificate of Insurance Q&A from our November 2013 Webinar

On November 14, 2013, we held our first full Certificates of Insurance (COI) webinar in three years, “Certificates of Insurance Issues & Answers – 2013 Edition” presented by Bill Wilson, Stuart Powell, and Bill Perkins.
 
Below are some Q&A from that webinar, along with link to the archived webinar, and some links to ACORD resources.
In addition to the two-hour discussion in the webinar, here are some Q&A of interest that arose immediately after the webinar, including a list of ACORD web resources your entire agency staff should have:
 
Question"I attended your webinar yesterday and was very informative. Thanks. I have a question about when we issue a certificate, for example, for a contractor to the person hiring him on a job. Should we send copy of the certificate to the insurer? If the policy cancels or changes,  are we responsible to notify the certificate holder of this or is the company?"  - Illinois agent
 
AnswerE&O experts recommend that insurers be copied on all certificates issued. We had hoped to address this issue during the webinar, but we ran out of time. Here is a VU article on this:
 
 
The article cites two court cases where there was a question about whether a problem originated with the agency or the insurer. The insurer denied liability based on the fact that they never got a copy of the certificate. So, whether they throw it away or not, we recommend they be copied. If insurers were aware of some of the information included on certificate being issued on their behalf, it might encourage them to take a more proactive position.
 
In addition, I’ve seen AI endorsements where, believe it or not, AI status is not triggered unless a COI is issued and presumably that would require a copy to the insurer in order to trigger the AI status. Are the folks in your agency aware that they may be issuing COIs on AI endorsements of this type? If not, they may not actually be triggering AI coverage by not copying the insurer. Failure to provide AI status is a major source of E&O claims.
 
As for notice of cancellation or "material change,, an AI is usually entitled to such notice only if provided by the policy or an endorsement. I’ve never seen a policy cancellation provision where the AGENT provides cancellation notice, nor am I familiar with state cancellation laws that place this responsibility on the agent…it’s always the insurer since only the insurer and insured are parties to the insurance contract. So, the insurer should provide notice, IF required by the policy, not the agent. Many state COI-related laws, regulations and DOI directives now clearly state that no notice should be provided unless authorized by the policy...a certificate cannot extend policy rights, which is what a notice of cancellation is. Let's not even get into the issue of what constitutes a "material" change in coverage.
 
Here is the latest information I’m aware of regarding Illinois COI laws and regulations:
 
 
Note: The linked document includes COI-related laws and regs of all states.
 
  
Question"My insured's 'additional insured' is requesting certain language on a certificate. It must say that the 'additional insured', all institutions represented by 'additional insured' for which the insured is licensed and their respective officers, agents and employees are additional insureds. My underwriter has advised that this language is not provided in the policy. The certificate holder has advised me that there are thousands of companies which provide this language to them. Any idea of companies willing to provide this language and is this normal practice? Please advise."  - Illinois agent
 
AnswerIt is normal practice for some certificate requestors to tell agents that they're the "only agency in the State of ________" that refuses to do something, or that dozens/hundreds/thousands of agents do things that this agency in convinced is illegal. Ask for a list of agencies and turn them in to the insurance department...as I understand it, the insurance commissioner in Georgia cites state law that mandates that agents turn in known or suspected violators of the law and, in fact, the DOI has set up an area on their web site for COI problems to be reported:
 
 
Or complaints can be emailed to certificates@oci.ga.gov. If you review Georgia DOI directives and recent legislation regarding certificates, you can see that this state takes these matters very seriously.
 
As for the specific statement being required on the COI, it doesn't even make any sense linguistically. I would challenge the certificate holder to substantiate that such coverage is provided by "thousands" of insurers. If s/he has a certificate of insurance that says that, that doesn't mean it's true. Tell him/her to ask for a copy of the policy or endorsement that extends such coverage.
 
You can show them what the law is in Illinois (or other states):
 
 
If the certificate holder is really concerned that this AI status be provided, they can pull their files with certificates that show this statement and ask for verification in the form of endorsements. I suspect they may find that the AI endorsements often don't include such a statement or a "blanket" AI endorsement like the CG 20 33 is being used (and we discussed the problems with this form during the webinar).
 
If your policy doesn't provide that coverage, you can't make the statement on the certificate. As for companies that will make such a statement, I have no idea which would be foolish enough to do that.
 
 
Question"We are in the midst of taking our second swipe at passing COI legislation in our state, after already having a memo from our insurance department. My biggest single motivation is to stem back the tide of the third party vendors (TPV) that are killing us. So comes my question. What contained within any COI legislation prevents the TPV from requesting outrageous language be placed on a COI? Our commissioner is questioning his office having any authority over a third party.  How are the other states tackling this issue?"  - Name of state withheld by request
 
AnswerA number of jurisdictions have implemented legislation supported by regulations that state that only actual policy or endorsement language should be on a certificate…it is not the agent’s job to interpret what is covered or not covered, so such questions cannot be asked of the agent. These laws may require requests for information to be "specific, clear, and reasonable," something often not the case with TPV or other requests. Here's an example of language from the state of Washington:
 
“No person may knowingly demand or require an insurer, insurance producer, surplus line broker, or policyholder to issue a certificate that contains any false or misleading information or that purports to alter, amend, or extend the coverage provided by the insurance policy.”
 
And here is language from the state of Georgia:
 
“[a]ny natural person who knowingly or willfully…[m]akes or aids in the making of any false or fraudulent statement or representation of any material fact or thing…in any written statement or certificate…or [i]ssues fake or counterfeit…certificates of insurance…commits the crime of insurance fraud.” Persons convicted are guilty of a felony punishable by “imprisonment for not less than two or more than ten years, or by a fine of not more than $10,000.00, or both.” In addition, any licensee may be fined up to $5,000.00 for each noncompliant certificate issued
 
As mentioned in the Q&A above, Georgia also has a bulletin citing Georgia law that REQUIRES agents and insurers to report actual or suspected certificate fraud.
 
As for the commissioner's concerns, most insurance commissioners have broad, discretionary powers to regulate the commerce of insurance. And, given recent state legislation, a states elected officials (in the form of legislative action) can certainly extend an insurance commissioner's authority to third parties.
 
 
Question"I attended your certificates of insurance webinar and found it very useful. I brought the information back to my team and we have concluded that we should not be putting any wording in the ACORD 25 Description of Operations box unless it is part of a policy provision (before we were referencing the actual endorsement/forms but have removed that wording after the webinar). However we do have a question on how you recommend or how other agencies are handling the situation where a certificate holder is demanding project name/job# and address in the DOO box."  - Georgia agency
 
AnswerThis is what the ACORD Forms Instruction Guide (FIG) says with regard to completing the ACORD 25 DOO field:
 
"As used here, records information necessary to identify the operations, locations and vehicles for which the certificate was issued."
 
If you take the position that project name, number, and address simply identify the LOCATION of operations “for which the certificate was issued,” I think you can show that information in the DOO field.
 
 
Question"You mentioned that there was a new January 2014 edition of the ACORD 25 that includes mainly cosmetic and editorial changes. Can you elaborate on these changes?"  - Maine agent
 
AnswerHere are the changes in the January 2014 edition of the ACORD 25:
 
  1. Reduce font size of title to 14 pt bold
  2. COVERAGES section, revise second column header to ADDL INSD
  3. COVERAGES section, first row of data, delete GENERAL LIABILITY header, move all checkboxes up and bold COMMERCIAL GENERAL LIABILITY checkbox label
  4. COVERAGES section, first row of data, GEN’L AGGREGATE LIMIT APPLIES PER:, add an OTHER: checkbox with a field to capture description
  5. COVERAGES section, WORKERS COMPENSATION row of data, in LIMITS column on right, revise WC STATUTORY LIMITS to PER STATUTE
  6. Revise text in parentheses in DESCRIPTION OF OPERATIONS header
  7. Revise ACORD copyright to 1988-2014
 
 
Question"How can we keep up with ACORD form changes and how do we know what is the current edition of a form?"  - Florida agent
 
AnswerThe following is a listing of links to very important ACORD information. We recommend that you give everyone in your office a copy of these links. We are also providing them to all of our state associations and suggest they consider posting them on their web sites.
 
DOWNLOAD ANY ACORD FORM OR FIG
You can access all ACORD forms here in PDF format for free, including the Forms Instruction Guide (FIG) for each (you will have to register first, but registration is free):
 
 
INDEX OF ALL CURRENT ACORD FORMS
Here is an index of the current edition of every ACORD form:
 
 
ACORD FORMS CURRENTLY AVAILABLE FROM AGENCY MANAGEMENT SYSTEMS
This link will show you which versions of ACORD forms are currently supported in various agency management systems:
 
 
NOTIFICATION OF ACORD FORMS CHANGES
You can sign up here to get a monthly email notice of all ACORD form changes, including very specific explanations of changes:
 
 
ACORD INSTRUCTIONAL VIDEOS
Here are instructional videos that discuss a number of ACORD issues:
 
 
HOW TO PARTICIPATE IN UPDATING ACORD FORMS
ACORD forms are updated using a "Working Group" approach where agents, insurers, vendors, and other interested parties (from lenders to risk managers) can participate in the process of considering recommendations for form changes to be voted on by ACORD members. These working groups meet, when necessary, via web conference. To participate in the ACORD 25 Working Group (or any other group),  go here (click on the "Follow" button...you must be registered with ACORD but, again, this is free):
 

https://www.acord.org/Community/IG/Certificates/default.aspx

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