New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following opinion on May 11, 2001 representing the position of the New York State Insurance Department.

Re: Certificates of Insurance

Question Presented:

Is compelling a subcontractor, licensed producer or insurer to modify the language on an ACORD or AON certificate of insurance to require that a commercial liability insurance policy may not be cancelled without providing 30 days written notice to the certificate holder "altering expanding or otherwise modifying the terms of the actual policy" as stated in Circular Letter No. 15 (1998) and Circular Letter No. 8 (1995)?

Conclusion:

It depends upon the terms and conditions contained within the insurance policy at issue and any endorsements to same. Any certificate holder has a legal right to notice of cancellation provided such holder is actually named within the policy or endorsement as an additional insured. The extent of the notice to be provided is determined by statute (e.g., NY Ins. Law § 3426 (McKinney 2000)) and by the insurance policy, not by a certificate of insurance. If the insurance policy does not provide for such notification, this obligation can not be imposed by a certificate of insurance.

Facts:

ABC Construction Company ("ABC") works on real estate projects in New York City, employing subcontractors who must furnish ABC a certificate of insurance providing that ABC be named an additional insured and that ABC receive a minimum of 30 days written notice of insurance cancellation. The ACORD and AON forms of certificates of insurance generally do not guarantee that the insurer would provide 30 days written notice of cancellation to the certificate holder but that the insurer "will endeavor" to make such notice, without any obligation or liability for failure to do so. I note that the ACORD sample that the inquirer sent to the Department shows an alteration of its typical language insomuch as it indicates without qualification that the insurer "will mail 30 days written notice to the certificate holder." I assume that this is the type of language that the inquirer seeks, not an instance where the inquirer complains that the insurer refuses to change the extent of cancellation notice.

It is the inquirer’s contention that requesting a guarantee of 30 days written notice does not "alter, expand or otherwise modify the terms of the actual policy" as stated in Circular Letters No. 8 (1995) and No. 15 (1997).

Analysis:

The extent of the notice to be provided to the certificate holder is based either in statute or by an insurance policy. A certificate of insurance is merely a document used in business to summarize information about insurance coverage but it is not a contract and is not required by statute or regulation. It is not intended to confer to a certificate holder new or additional rights beyond what the policy provides.

Thus, if the notice requirement in the certificate of insurance is not contained in the policy and therefore imposes an obligation or liability not presently existing upon an insurer, there is, by definition, an altering, expanding or modification of rights between an insured or additional insured and the insurer. With such a change in terms, a certificate of insurance would constitute "a policy form which must be filed with the Superintendent of Insurance in accordance with Section 2307(b) of the Insurance Law." (See aforementioned Circular Letters).

For further information, you may contact Associate Attorney Jeffrey A. Stonehill at the New York City office.