OGC Opinion No. 11-01-08

The Office of General Counsel issued the following opinion January 31, 2011, representing the position of the New York State Insurance Department.

Re: Certificates of Insurance

Question:

May a licensed insurance producer, upon the request of a New York state agency, complete a certificate of insurance that effectively amends, expands, or otherwise alters the terms of the applicable insurance policy?

Conclusion:

No. A licensed insurance agent or broker may not complete a certificate of insurance that effectively amends, expands, or otherwise alters the terms of the applicable insurance policy.

Facts:

Inquirer states that certain public agencies ¹ have asked insurance producers to supply certificates of insurance that go beyond simply providing evidence that insurance coverage exists. As one example, the ABC Agency uses its own form that seeks to modify policy language with required certifications related to the insurance coverage. Another example is the Supplemental Insurance Certificate (“Certificate”) used by the DEF Agency, which asks several questions of insurers or insurance producers, modifies policy language because it appears, in the inquirer’s view, to be intended to act as an alternative basis of coverage in the event that the language of the insurance policy conflicts with the policy itself. This appears to be a valid concern, given the statement in the Certificate that reads “The Corporation is relying on the representations of coverages in the policies described, except as noted in this SUPPLEMENTAL INSURANCE CERTIFICATE.” This statement implies that the Certificate is intended to supersede the language of the referenced insurance policy.

Analysis:

A certificate of insurance is often presented to prove that an insurance policy is in effect. See Office of General Counsel (“OGC”) Opinion 06-05-02 (May 9, 2006) (concluding that the issuance of certificates of insurance that modified or altered the terms of the underlying policies was improper). A certificate of insurance is a document that summarizes the terms, conditions, and duration of an insurance contract, but it is not the contract itself. See id. A certificate is not required by law, and need not be filed with the Department. See id.

A certificate of insurance cannot confer new or additional rights beyond those set forth in the referenced insurance policy. See id. Thus, if any provision in the certificate of insurance purports to amend, expand, or otherwise alter the terms of an applicable insurance policy, then the certificate would constitute a policy form that must be filed with the Superintendent in accordance with N.Y. Ins. Law § 2307(b) (McKinney Supp. 2010). See Circular Letter 8 (1995). The foregoing statute states in relevant part:

Except as otherwise provided herein, no policy form shall be delivered or issued for delivery unless it has been filed with the superintendent and either he has approved it, or thirty days have elapsed and he has not disapproved it as misleading or violative of public policy.

In the scenario presented, the proffered certificates of insurance purport to amend, expand, or otherwise alter the referenced insurance policy. Any producer or insurer that were to agree to the terms set forth in the certificates would run afoul of Insurance Law § 2307(b).

Finally, the inquiry letter suggested that it may be helpful for the Insurance Department to obtain an Opinion of the Attorney General on the question of the proper use of certificates of insurance. While the Department does on occasion seek legal guidance from the Office of the Attorney General, it does so only when there is some genuine need for legal expertise from outside of the Department or where the issues in question are in need of clarification. In the instant case, the law is clear and definitive. Accordingly, the Department will not seek legal guidance from the Office of the Attorney General on this matter. The Department is, however, amenable to discussing the issue with the agencies and authorities in question, as it has done in the past with other agencies.

For further information you may contact Michael Campanelli at the New York City Office.

¹ Annexed to the inquiry were insurance certificate forms provided by the ABC Agency, the XYZ Agency, and the DEF Agency.