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Who is Authorized to Sign Certificates of Insurance?

Must the person signing a certificate of insurance be licensed in all the states where the insured has exposure? Or must the signatory be someone with internal agency authorization?
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Q: Must the person signing a certificate of insurance be licensed in all the states where the insured has exposure? Or must the signatory be someone with internal agency authorization? 

Response 1: The signature on the certificate of insurance is that of an authorized representative of the insurer, which means your question is better directed to the insurer. I would suggest the question should be whether the insurer is licensed or authorized in the state the insured has exposure.

Aside from that, you must follow your licensing laws to determine whether you need to be licensed in states in which you issuing coverage. The general answer is that you need to be licensed in the state in which the policy is negotiated and delivered; not necessarily in all states that an exposure may emerge—but you need to check.

Response 2: The authorized signature is from the person authorized to issue the certificate, not necessarily the agent of record. Authorization comes from the insurer since the agent is issuing on the insurer's behalf.

Response 3: It's an easy question to answer: Call your state's insurance department. The more important question is who should sign insurance certificates in your office? 

The signatory should be someone with sufficient expertise to know whether it's proper to issue the certificate. The producer for the account is an obvious answer. They should understand the exposures and coverages well enough to know whether it's appropriate to issue a certificate. 

Why is that important? A request for a certificate is frequently a tip-off that something new is happening, such as a new contract, lease, or project, that may call for a change in coverage. If certificates are processed by clerical personnel and simply copied from recent certificates, this important review will probably be overlooked.

Response 4: The person signing the form must be authorized by the carrier. Authorization can be written or it can be in the form of an appointment with the carrier. An insured can perform operations and have locations in multiple states. The commercial general liability policy is not state or location specific. The person signing the form only needs to be appointed and licensed in the state where the insured's primary location is.

Response 5: Ask your errors & omissions insurer for guidance and follow ACORD guidelines. The ACORD Forms Instruction Guide recommends that ACORD forms be signed by an authorized representative. An authorized representative is usually determined by the carrier's legal and underwriting department.

This is not just an ACORD question but also a question of compliance with the various states' insurance codes that require persons transacting insurance to be licensed. Our practice is that the person signing the certificate should be licensed in the state where the named insured is domiciled and in the state for which they are providing coverage confirmation via the certificate. In other words, if you are in Colorado sending a certificate to a party in California for the insured's California activities, then you should be licensed in Colorado and California. 

Response 6: A certificate of insurance is not providing or binding coverage so the individual issuer does not need to be licensed. The agency should, however, educate all issuers very well because the agency will be liable for potential damages caused by errors or mis-issuance.

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.

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Friday, November 20, 2020
Agency Operations & Best Practices