The IIAT technical staff has received some great questions about what the certificate law and rules mean and how they should be interpreted when issuing a new certificate. Here are some helpful tips:
1. If it is not on the policy, it cannot be on the certificate
The most common examples are requests that include lengthy additional insured requirements, primary and non-contributory wording, and certifying that the excess/umbrella coverage is "follow form."
2. Use the suggested language in the Best Practices for Certificates of Insurance
The language is a helpful tool and is designed to provide guidance for most situations. >> Download Best Practices for Certificates of Insurance
3. Use the actual policy language rather than trying to interpret it
For example, if the policy includes a blanket additional insured endorsement and the certificate holder will not accept the sample wording in the best practices guide, then use the actual endorsement or policy language including any limitations (written contract, ongoing operations, etc.)
4. Common issues
- Lengthy List of Additional Insureds – Use a company-specific or ISO blanket additional insured endorsement that grants AI status to individuals and entities that are not parties to the contract or endorse the policy to specifically name the additional insureds and reference the endorsement number if necessary.
- Primary and Non Contributory – Attach the endorsement or the actual policy language that applies and if required, note on the certificate that the language only applies to the general liability policy unless you have added the same language to all policies listed in the certificate.
- "Follow-Form" – Use the language in the excess/umbrella policy. If the excess/umbrella does not specifically use the term "follow form" the term cannot be used on the certificate.
- Certificate Holder Is Requesting a Lengthy List of Names in the Certificate Holder Box – A certificate holder does not have to be an additional insured. Some certificate holders may request a lengthy list of names in the certificate box, especially if you have a blanket AI endorsement and cannot put the names in the description box. If placing the names in the certificate holder box will satisfy the certificate holder, we suggest the following wording in the description box: "The (_) policy includes a blanket automatic additional insured endorsement (provision) that provides additional insured status only when there is a written contract that requires such status." This removes any reference that the certificate holder(s) are being given additional insured status, but may satisfy the certificate holder that all names are listed in the certificate holder box.
- Bid Affidavit – A bid affidavit is not a certificate if it is just asking if insurance can be provided if the bid is awarded. However, if it is asking the agent for verification of current coverage then it becomes a certificate and must be approved by TDI.
5. What to tell certificate holders
It may be more effective to let a certificate holder know why the law won't let you comply. Here are the sections of the law that apply to specific situations:
- Required wording that doesn't match policy – Sec.1811.054. ISSUANCE OF FALSE OR MISLEADING CERTIFICATE OF INSURANCE
A person may not require the issuance of a certificate of insurance from an insurer, agent, or policyholder that contains any false or misleading information concerning the policy of insurance to which the certificate refers.
- Requests that reference other contracts – Sec.1811.154. REFERENCE TO OTHER CONTRACTS
A certificate of insurance may not contain a reference to a legal or insurance requirement contained in a contract other than the underlying contract of insurance, including a contract for construction or services.
- What the certificate holder gets – Sec.1811.156. CERTIFICATE OF INSURANCE ISSUED IN VIOLATION OF CHAPTER
A certificate of insurance that is executed, issued, or required and that is in violation of this chapter is void and has no effect.
- Consequences for certificate holder and agent – Sec.1811.203.CIVIL PENALTY; INJUNCTION
A person, including an insurer or agent, who wilfully violates this chapter is subject to a civil penalty of not more than $1,000 for each violation.