The Office of General Counsel issued the following informal opinion on September 8, 2000, representing the position of the New York State Insurance Department.
RE: Acord Form and Certificates of Insurance
May a "certificate of liability insurance" that is not filed with the Insurance Department expand the responsibility of the insurer to require notification of additional parties to effectuate mid-term cancellation of coverage?
No. A "certificate of liability insurance" may not expand the responsibility of the insurer to require notification of additional parties to effectuate mid-term cancellation unless the form is filed with the Superintendent.
This letter is in response to your recent correspondence directed to this office. You expressed dissatisfaction with the practice whereby liability insurers issue "Certificates of Insurance" with respect to coverage being provided to contractors and sub-contractors who have contracts to perform work for you. In most if not all instances, evidence of the existence of such coverage is a pre-requisite to execution of the contract.
In particular, you have questioned two clauses found in the "Acord 25-S Certificate of Liability Insurance." They are as follows:
- A provision found at the top of the form states that, "This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below."
- A provision found at the bottom of the certificate which states that "Should any of the above polices be cancelled before the expiration date thereof, the issuing insurer will endeavor to mail ____ days written notice to the certificate holder named to the left, but failure to do so shall impose no obligation or liability of any kind upon the insurer, its agents or representatives."
It is our understanding that certificates such as the Acord 25-S are necessary in order to let contracting parties have work performed in a timely manner. You desire to avoid having to wait for the issuance of actual policies of insurance to contractors and sub-contractors before work on the project can begin.
The first quoted provision merely conforms the certificate to the Insurance Law, which prohibits an insurer from making "any contract of insurance other than as plainly expressed in the policy or other written contract issued or to be issued as evidence thereof. . . ." N.Y. Ins. Law §2324(a) (McKinney 1985). A certificate of insurance that merely lists the pertinent coverage terms as they appear in the actual policy is not considered a policy form that must be submitted to the Superintendent of Insurance for review. However, if the certificate were intended to amend, expand or otherwise alter the terms of the applicable policy or policies, it would need to be filed with the Superintendent pursuant to N.Y. Ins. Law §2307(b) (McKinney Supp. 2000).
The second provision that you take exception to concerns notification of mid-term cancellation of coverage. N.Y. Ins. Law §3426(c) (McKinney Supp. 2000) establishes the rules and procedures governing mid-term cancellations of commercial policies. The statute requires that written notice be "mailed or delivered to the first-named insured and to such insured's authorized agent or broker. . . ." To the extent that the Acord form seeks to expand the responsibility of the insurer to require notification of additional parties to effectuate mid-term cancellation of coverage, it would need to be filed with the Superintendent.
In your letter, you state that you have been successful in having contracting parties "amend" the Acord form, specifically with regard to eliminating any language which states that the certificate does not create any rights or obligations beyond those provided in the underlying policy. Absent participation in this process or subsequent ratification, we do not believe the insurer would be bound by the "amendment."
If the insurer wished to assume obligations beyond those required by the applicable statute(s), it would need to make an appropriate filing pursuant to N.Y. Ins. Law §2307(b) (McKinney Supp. 2000).
For further information, you may contact Associate Attorney Sam Wachtel at the New York City Office.