On December 18th, The New York State Department of Financial Services told the IIABNY that, where a liability insurance policy contains an automatic or blanket additional insured endorsement, certificates of insurance can name specific additional insureds, but only if the certificate refers to the specific endorsement that is conferring additional insured status.
We stated in our previous blog post, found here, that the IIABNY received an email confirmation from a department attorney regarding New York’s new certificates of insurance law. The email said:
“An insurance agent may not issue a certificate of insurance that lists the names of specific additional insureds when the policy referenced provides automatic coverage for additional insureds through a blanket or automatic additional insured endorsement. In addition, an entity may not require the insurance agent to list the names of specific additional insureds on the certificate of insurance in such a situation.”
There has been many queries to both the Big I and the Department of Financial Services as to the correct way to issue these Certificates of Insurance without jeopardizing coverage. What certificate requestors were asking for was a violation of NY State Insurance law.
Insurance Agents and Brokers argued that certificate requestors would reject certificates that did not specifically list them as additional insureds, which became problematic for the clients and brokers simply trying to comply with a very basic request. IIABNY sent a follow-up to the attorney who sent the original email, suggesting an alternative approach for handling additional insureds on certificates. On the 18th of December, the attorney responded with the following message:
“In a situation in which the policy referenced in a certificate of insurance provides automatic coverage for additional insureds through a blanket or automatic additional insured endorsement, it would not violate Insurance Law section 502 if an insurance producer includes on a certificate of insurance language such as:
- ‘Named Entity is an additional insured to the extent covered by the CG 20 33 ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU endorsement’;
- ‘ABC Company is an additional insured if required by written contract, per endorsement number XX XX XX; or
- ‘ABC Company would be covered as an additional insured per endorsement X , to the extent provided therein.'”
Additionally, the attorney noted that DFS had received many similar questions from other Agents and Brokers in which they provided these answers in response:
- “Can we check the Additional Insured box on an Acord 25 Certificate of Insurance (2014/01) with a ‘Y’ if there is a blanket additional insured endorsement? Yes.
- Does this apply only to New York Domiciled clients/customers? So, for our PA and CT offices or if we have clients domiciled in other states this does not apply. It applies when the person or governmental entity requesting the certificate is in New York State.
- Can we list/reference the blanket endorsement in the description of operations / locations / vehicles? Yes.”
Both the Big I and Metropolitan Risk Advisory strongly recommends that all agents and brokers follow these DFS guidelines when they issue certificates of insurance. DFS has acknowledged the real world realities and interpreted the ruling in a way that should satisfy the needs of certificate requestors, Agents & Brokers , and their clients. That siad it remains the law that certificate requestors may not require certificates to contain provisions pertaining to coverage if those policies referenced themselves do not confer those coverage provisions. Nor may they request Certificate forms that have not been approved by the DFS. Lastly it has been department policy for many years, and it is now the law, that insurance agents and brokers may not use certificates of insurance to change insurance coverage or grant any rights that the policies do not provide. That is to be doen by formal endorsement from the issuing carrier only.
In the April 2015 issue of IIABNY’s The E&O Report, attorney Stephen Cunningham wrote:
“Although the new law provides additional protections when certificates are being issued, prudent insurance agents and brokers should not only follow the new law but also continue to follow the best practices that we have recommended over the years regarding how to handle certificates of insurance.
First, be sure to use the most up-to-date ACORD Certificate of Liability Insurance form (ACORD 25 (2014/01).) Second, if you deliver a certificate of liability insurance to additional insureds via e-mail or other electronic means, if at all possible, include a copy of the policy with the certificate of insurance. The additional insured will then be on notice of the full terms and conditions of the policy, preventing a ‘misunderstanding’ as to the coverages provided by the policy.”
Finally, we urge to check out our first blog article (that you can access by clicking here) on this subject. It details the specifics of the DFS guidelines and New York State’s new law.
We also want to thank the Independant Agents Association of NY for their diligent work on this issue, and the DFS’ willingness to provide additional information and answer questions. They have provided a solution which still follows through with the law, but also takes some weight off of agents and brokers.
Please do not hesitate to visit www.metropolitanrisk.com/contact or call a Risk Advisor at (914)-357-8444 if you have any questions regarding this matter.
