Case Studies-Certificates of Insurance

Certificates of Insurance Case Study #1

The Scenario

The insured had a $500,000 general liability policy and an umbrella. The agent completed an application for the umbrella and issued a certificate showing the underlying liability limit at $1,000,000 as required by the umbrella carrier. A serious claim occurred resulting in the insured being sued for an amount well in excess of the $500,000 general liability limit.

The Issues

  • Failure to provide adequate underlying insurance.
  • Error in issuing certificate of insurance.
  • Error on application completed by the agency.

The Outcome

Since this was a very serious injury to a customer of the insured, the umbrella was called into question. However, since the policyholder did not carry the required underlying limit, the insured was left with a $500,000 gap in coverage. The agent admitted having made an error.
$465,000 paid to insured in excess of the agent’s retention
$3,047.49 in defense costs

Prevention Tips

In this case, the agent did not deny wrongdoing.

  • Verify all information on an umbrella application is correct.
  • Be careful when issuing certificates of insurance as an agent can be held liable for what is indicated on the certificate.
  • When an umbrella policy is received, verify all underlying policy information.