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Additional Insureds on a COI: Is the Word ‘Blanket’ Misleading?

What is the proper wording to reflect additional insureds on certificates of insurance (COIs)?
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additional insureds on a coi: is the word ‘blanket’ misleading?

Some agents at a Connecticut agency think that using a blanket additional insured endorsement with the word “blanket" is permissible with a certificate of insurance (COI) statement that says “party or parties or included as additional insureds on a blanket basis per policy form XYZ" However, others believe that the word “blanket" should not be used as it is misleading.

Q: What is the proper wording for reflecting additional insureds on certificates of insurance (COIs)? Can the word “blanket" be misleading?

 Response 1: I agree that using the term “blanket" is not particularly accurate. The ISO additional insureds endorsements do not use that term, but rather “automatic status" and further “when required in a written construction agreement." The term “blanket" has a number of uses—for example, there is a difference between a blanket limit and a blanket policy. Using it with as much precision as possible is recommended.

Maybe more importantly, the COI should not include anything that is not already in the policy, which is another reason to not use the term “blanket." The Connecticut Department of Insurance issued a bulletin in 2010 that addresses the use of COIs. The bulletin says, “The Department wishes to inform insurance producers and all other individuals that certificates of insurance cannot be used to amend, expand or alter the terms of the underlying policy."

The term “blanket" suggests coverage that is different from the additional insured endorsement, so it should be avoided. For more information, the Big “I" Virtual University has several resources on COIs.

Response 2: Discourage the use of the word “blanket" in this instance. The actual additional insured endorsement is an automatic grant of additional insured status if certain conditions specified in the endorsement are met.

The most sensible annotation would be to identify the certificate holder as “An additional insured as per the attached endorsement." Overcharacterizing the additional insured status can lead to an adverse interpretation and incorrect extension of additional insured status.

Response 3: By including the blanket additional insured endorsement as an attachment to the COI, the idea is to transfer the responsibility to the certificate holder in determining if they are an additional insured or not. The word “blanket" should not be used. Just like the term “all risks," “blanket" should be avoided in communications with insureds.

Instead, try this wording: “Certificate holder is an additional insured if in compliance with the conditions of the attached endorsement #XYZ123." It is not up to you to decide if they have met the conditions; let them and their attorney take responsibility for that.

Response 4: If your agency states that an entity is an additional insured under a policy, they better be in the policy. The necessity of this is reinforced by a 2019 decision from the Washington Supreme Court in T-Mobile USA v. Selective Ins. Co. of America.

Response 5: Adding language such as this is not the intended use of the descriptions of operations field in a COI. The ACORD Forms instruction guide states that this field is to be used to record "information necessary to identify the operations, locations and vehicles for which the certificate was issued." The reality is, though, that many COIs will be rejected unless some language concerning additional insureds is entered, and an agency needs to make a business decision about how to respond.

If an agency decides to add language concerning additional insureds to this field, it is important to make sure that the entry of such language does not violate any guidelines provided by the insurer or by the state insurance department. Many states have laws or insurance department bulletins concerning what can be shown on a certificate. 

Assuming that there is no prohibition against the use of such language and that an agency wishes to include language, it is important that the language be precise and accurate and not try to paraphrase or describe the coverage. Using the term "blanket basis" is an attempt to describe the coverage and should be avoided. It is better to simply state the form number and attach a copy of the endorsement so the certificate holder can see the extent of coverage.

Response 6: There is significant errors & omissions exposure for the agent when using a potentially ambiguous term to assert what coverage does or doesn't exist. In general, any additional verbiage should be avoided on a COI whenever possible, but when not, try to use only language found in the governing policy forms. The COI merely certifies the policy is in force. Interpreting the policy via the COI creates an avoidable exposure for the agency.

The certificate may not alter the coverage, but it can alter the expectation of coverage. A misleading COI can create "detrimental reliance." While the COI may not alter the insurance contract, if the party depending on the wording of the COI is harmed because of its reliance on the wording in the COI, you may lose and lose big in court.

Response 7: Issuing COIs is very much like issuing policies in that it's done by insurance companies through their legal representatives: agents. For that reason, the correct answer to your question must come from the company involved. Pose the specific question to it and do exactly what it tells you. If you step outside your authority and some harm occurs, you and your agency could find yourself on the wrong end of an E&O lawsuit.

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.

Thursday, March 28, 2024
Agency Operations & Best Practices
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