How to Handle Demands to Add Language to a COI
An agency in South Dakota provides a general liability policy for a local religious fraternity. Another insurer is requesting a certificate of insurance (COI). However, the insurer is also demanding to be added as an additional insured on the COI.
There are two parish locations where the fraternity meets that are on the general liability policy as additional insureds, as well as the diocese. The insurer wants only one COI to be issued and the description of operations to state the parishes and diocese “are named as additional insureds, but only with respect to liability arising out of the operations” of the fraternity.
The agent recently attended a seminar on COIs and errors & omissions risk where the instructor specifically advised that no policy language be entered in the description of operations. The agent has already supplied three separate COIs, one for each entity, and listed the locations in the description of operations.
However, the insurer is insistent on the language and has threatened to tell the customer to get insurance elsewhere. The agent feels the insurer is bullying its way into getting what it wants—and that it also doesn’t understand the COI.
Q: How should the agent handle a demand to add language to the description of operations in a COI?
Response 1: Yes, they’re trying to bully you and your client. If this insurer is licensed by the South Dakota insurance department, you may want to consider submitting a complaint about the threats they’ve made against you.
Does South Dakota have a law governing the use of COIs? Some states have laws that prohibit certificate requesters from requiring wording on a certificate that is not in the listed policies. For example, in New York, violators can be fined $1,000 for the first offense and $2,000 for each subsequent offense.
What do the experts think?
COIs are not contractual documents, and the underwriters at the insurer are certainly aware of that. Words on a COI are only slightly more useful than words written on a tissue on a rainy day. See if the insurer will accept the COI with a copy of endorsement CG 20 26 04 13, since it is the words on that endorsement and not those on a certificate that will apply should a loss occur.
The advice you heard in the E&O seminar is wise. The less content you include in the description of operations field, the better.
Response 2: The COI should list the locations as “additional insureds per the attached endorsement.” And then attach the endorsement.
You can accompany the COI with an email which states that any additional information is contained in the policy—which this insurer should already have a copy of. I suggest a message that says:
As an agent, we have no authority to reproduce or promise coverage in any manner. To do so would be a violation of the state insurance agent licensing authority, a breach of our agency contract with the carrier, and would violate the licensing agreement required to use ACORD forms. Any agent that attempts to convey interpretations of coverage in a certificate of insurance may be ignorant of their legal limitations. This is a line that our agency will not cross.
The most interesting thing about the request is that the words they want to see are: “but only with respect to liability arising out of the operations.” You and I know the policy restricts coverage to apply only to the fraternity’s liability. That is restricting language that will prevent the churches from being covered for liability that had nothing to do with the group. It is silly that the insurer is adamant about seeing the restricting language in the COI and clearly demonstrates it doesn’t know what it is asking for.
More on COIs
Response 3: You are correct and very wise. Ask your carrier if they agree with you—which they will—and then explain to your insured that you and the insured’s own carrier agree on how to handle this. Explain that the other insurer is asking for something that is not possible according to the rules that govern ACORD form usage and that your common sense and license do not allow you to break that rule.
You might suggest that your customer provide the other insurer with a copy of their policy to assuage any concerns. I have been known to be overly suspicious, but it seems to me this other insurer may be using this as a marketing tool to take a client from you. Your best approach is to get your carrier to weigh in too, so that your insured knows you are just doing the right thing.
Response 4: The advice you received in the seminar is sound. Don’t add that wording to the COI. Take the matter to your underwriter and ask them what you can do to satisfy this request. Do that, and nothing more. When you get some wording sanctioned by the insurance company, send the certificate to the requester along with a memo explaining that the insurance company has approved this wording. Offer to provide a copy of the policy, as well as the name and address of the insurance company.
This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.
This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is” with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.
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