The Office of General Counsel issued the following opinion on May 20, 2003, representing the position of the New York State Insurance Department.
Re: Certificates of Insurance and Endorsements
Question Presented:
What is the meaning of the following statement contained in Circular Letter No. 15 (1997) regarding Certificates of Insurance:
[I]t has come to our attention that some licensed producers may complete these certificates of insurance forms on behalf of their clients and add terms or clauses that the public entity requires but which are not contained in the insurance policy.
Conclusion:
See "Analysis" below.
Analysis:
A Certificate of Insurance is often used as proof that a policy of insurance is in effect. It is merely a document used in business to summarize information about the insurance coverage. It is usually a brief summary of the essential terms, conditions and duration of the contract of insurance that is in effect between the insured and the insurer. The Certificate of Insurance is not a contract and is not required by statute or regulation. However, the Certificate of Insurance must contain the same information as the insurance policy. It is not intended to confer to a certificate holder new or additional rights beyond what the insurance policy provides. Thus, if any provision in the Certificate of Insurance is not contained in the policy and it imposes an obligation or liability not presently existing upon an insurer, such difference would alter, expand or modify the rights between an insured and the insurer and would constitute a policy form which must be filed with the Superintendent pursuant to N.Y. Ins. Law § 2307. Therefore, licensed producers may not add terms or clauses to a Certificate of Insurance that alter, expand, or otherwise modify the terms of the actual policy. As stated in Circular Letter No. 15 (1997), the Department may seek disciplinary measures against producers who act in this manner.
N.Y. Ins. Law § 2307(b) (McKinney Supp. 2003) provides 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.
If a Certificate of Insurance amends, expands or otherwise alters the terms of the applicable insurance policy, it constitutes an endorsement that is a policy form, which subject to certain exceptions, must be filed with the Superintendent of Insurance pursuant to section 2307(b).
The inquirer states that, "For the party requesting the insurance certificate, that party must really obtain and review the entire policy in order to ensure that the certificate of insurance prepared by the producer actually reflects all of the terms of the policy. How else will one ever know if the producer has issued a proper insurance certificate?" A producer is in violation of the Insurance Law if he amends, expands or alters the terms of the policy without authorization from the insurer and, where required, approval from this Department. However, it is always prudent to review the entire policy in order to ensure that the Certificate of Insurance prepared by the producer actually reflects the terms of the policy.
For further information you may contact Associate Attorney Meredith Kaufer at the New York City Office.