OGC Opinion No. 07-05-09
The Office of General Counsel issued the following opinion on May 17, 2007, representing the position of the New York State Insurance Department.
Re: Certificate of Insurance
Question Presented:
May a licensed insurance agent or broker be compelled to 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 be compelled to complete a certificate of insurance that effectively amends, expands, or otherwise alters the terms of the applicable insurance policy.
Facts:
The inquirer reports that he is a licensed insurance agent and broker. The inquirer further reports that a public authority asked him to supply evidence of individual, general liability insurance that the inquirer secured for his client, on a preprinted certificate of insurance supplied by the public authority that effectively amends, expands, or otherwise alters the terms of the inquirer's client's policy. The general liability insurance policy provides coverage for liability stemming from bodily injury and property damage, personal damages, advertising damages, fire damage, explosion damage, smoke damage, and damage as a result of leaks from sprinklers. The insurance policy also sets forth a number of restrictions on the liability coverage, and establishes maximum payments under the policy.
Analysis:
A certificate of insurance is often presented to prove that an insurance policy is in effect. See OGC Opinion 06-05-02 (May 9, 2006). It is a document that summarizes the terms, conditions, and duration of an insurance contract, but it is not the contract itself. See id. It is not required by law, and it need not be filed with the Department. See id.
To be sure, a certificate of insurance does not confer new or additional rights beyond what the insurance policy provides. 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 becomes a policy form that must be filed with the Superintendent in accordance with N.Y. Ins. Law § 2307(b) (McKinney Supp. 2007). See Circular Letter 8 (1995). That 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 the inquirer presents, the public authority's preprinted certificate of insurance appears to amend, expand, or otherwise alter the original insurance policy. In comparing the certificate of insurance with the original insurance policy, it appears that Note 1 in the certificate of insurance voids exclusionary provisions of the insurance policy, and that Note 2 imposes an additional obligation on the subscribing company not contained in the insurance policy. Therefore, the public authority's certificate of insurance amends, expands, or otherwise improperly attempts to alter the terms of the insurance policy, and an agent, broker, or insurer that were to agree to the terms set forth in the certificate would risk running afoul of Insurance Law § 2307(b).
For further information you may contact Attorney Joana Lucashuk at the New York City Office.