The office of General Counsel issued the following informal opinion on June 11, 2001, representing the position of the New York State Insurance Department.
Re: Certificates of Insurance
Issue:
May a Certificate of Insurance contain a warranty by an insurance broker that the insurance policy in question, which has been issued to a contractor, includes the contractors customer as an additional named insured?
Conclusion:
It would be inappropriate to include such a warranty in the Certificate of Insurance.
Facts:
The inquirers client, a contractor, has been selected by a New York City Agency (Agency) to perform some construction. The contract between the contractor and the Agency requires the contractor to either purchase insurance indemnifying the Agency or to add the Agency as an additional named insured to an existing insurance policy. The contractor has opted for the latter option and has added the Agency as an additional named insured on a policy secured for it by the inquirer.
The Agency has informed the contractor of certain requirements relative to the insurance policy. The Agency requires, inter alia, that the following language be included in the Certificate of Insurance:
The above named broker/producer represents and warrants to the City that it is an Additional Insured under the insurance policies listed herein and that such policies are in full compliance with the contract, including Article 22 and Schedule A of the General Conditions.
The insurance wholesaler through which the inquirer secured the policy in question has indicated that inclusion of the above language would be violative of Circular Letter No. 15 of 1997.
Analysis:
Circular Letter No. 15 of 1997, which was issued on January 27, 1998, supplemented Circular Letter No. 8 of 1995. The 1997 Circular Letter provided, in pertinent part:
A certificate of insurance which lists the pertinent coverage terms as they appear in the actual policy is not considered a policy form that requires the Superintendents prior approval. However, any document that amends, expands or otherwise alters the terms of the applicable insurance policy constitutes a policy form which must be filed with the Superintendent of Insurance in accordance with Section 2307(b) of the Insurance Law.
Licensed producers are advised that they may not add terms and clauses to a certificate of insurance which alter, expand or otherwise modify the terms of the actual policy unless authorized by the insurer which has filed an appropriate endorsement with the Superintendent of Insurance and obtained prior approval if required. The Department may seek disciplinary measures against producers who continue this practice without authorization from the insurer.
The purpose of a Certificate of Insurance is to inform a third party of the existence of an insurance policy and, possibly, some of its relevant terms. Such a Certificate is usually issued by the insurer, which may delegate that ministerial function to an insurance agent or broker. It is not the function of such a Certificate, if issued by an insurance broker, to contain a warranty by an insurance producer either that the policy is as represented or that the insurance producer has fulfilled all of the producers obligations.
Accordingly, while the language required by the Agency would not "alter, expand or otherwise modify the terms of the actual policy", it would be inappropriate to include it in a Certificate of Insurance. If the Agency requires a warranty by an insurance producer that it has been added as an additional named insured, such warranty should be a separate document.
It is noted that the Agency instructions indicate it requires "a 30 day notice of cancellation". Only if such a provision is present in the policy, may the inquirer note this in the Certificate of Insurance.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.