ACORD and Notice of Cancellation
Agents are often asked to put just about anything on a certificate of insurance short of their Social Security number. Now that ACORD certificates no longer have a cancellation notice provision, certificate holders sometimes request that cancellation language be added under the Description of Operations (DOO) or elsewhere. In a couple of cases reported to the Big “I” Virtual University, requestors have cited an online ACORD document that they allege gives ACORD’s blessing to do this.

Big “I” Virtual University faculty discourages agents from doing this and, in some states, it may be prohibited by regulators. ACORD’s own Forms Instruction Guide says nothing about adding this information in the DOO field. Certificates are intended to provide a very broad snapshot in time of the types of policies and limits provided, not detailed information on coverages and terms. Attempting to paraphrase what could be a two-page endorsement could result in allegations of misrepresentation by E&O claimants when something slips through the cracks created by conflicting policy language and certificate verbiage.

Read the full article and related information in the Certificates of Insurance Resources area of the Big “I” Virtual University.


Condos, Binders and “Walls In” Coverage
Recently, lenders have been demanding that certificates of insurance be issued for HO-6 condo unit owners in connection with their mortgages that indicate “walls in” coverage is provided by the policy. Apparently this is something that originated with Fannie Mae.

“Walls in” is not a defined term in the ISO HO-6 and may have varying meanings from state to state according to condo statutes or association bylaws. It is never a good idea to indicate on a certificate of insurance that coverage is provided for a vague, undefined term.

The ISO HO-6 form is constructed to provide coverage for whatever the condo owner’s legal obligations are under the condo bylaws. Under Coverage A, the policy covers “Property which is your insurance responsibility under a corporation or association of property owners agreement.”

So, it’s unnecessary to indicate “walls in” coverage; if the bylaws require “walls in” coverage, that’s what the policy provides. If the bylaws establish some other basis for coverage, the policy responds to that as well. Therefore, it is impractical, unwarranted and potentially misrepresentative to definitively state that “walls in” coverage is provided unless you have determined that with certainty from the condo documents.

For more information, click here.


CGL Fire Damage Legal Liability: Is It Obsolete?
Years ago, leases typically made the tenant responsible for negligence that resulted in fire damage to the occupied premises. Today, leases more commonly make the tenant responsible for a much broader spectrum of losses and often without regard to fault.

The Virtual University recently received two “Ask an Expert” questions about damages: one involving damage to a leased warehouse by a lift truck; and another about damage caused by vandals. In both cases, the lease insurance requirements only specified CGL coverage for a specific fire damage legal liability (FDLL) limit. However, the lease’s indemnity agreement created a far greater liability for the tenants than could be covered by FDLL coverage under a CGL policy.

While ISO offers a CP 00 40 Legal Liability Coverage Form, it would likely not respond to claims arising from damage for which the tenant is not legally liable in tort (e.g., vandalism, windstorm, etc.) and the form includes a contractual liability exclusion.

This leaves the only practical solution being direct property damage coverage on an open perils basis, most likely using a CP 00 10 or BOP policy. For a more detailed discussion of the issues, click here.


Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University, an online learning center for agents and brokers. Do you have coverage questions? To pose a question to the VU volunteer faculty, log in to the Virtual University at www.independentagent.com/VU and click on the “Experts” link near the top of the page.