OGC Opinion No. 07-07-16

The Office of General Counsel issued the following opinion on July 20, 2007 representing the position of the New York State Insurance Department.

Certificate of Insurance

Question Presented:

Does Office of General Counsel (“OGC”) Opinion No. 07-05-09 (May 17, 2007) prohibit an insurance agent or other individual from providing a municipality with a certificate of insurance confirming that the coverage possessed by the organization does not contain a liability exclusion for injury to participants in connection with the organization’s use of the municipality’s facilities?

Conclusion:

No. OGC Opinion No. 07-05-09 (May 17, 2007) does not prohibit an insurance agent or other individual from providing a municipality with a certificate of insurance confirming that the coverage possessed by the organization does not contain a liability exclusion for injury to participants in connection with the organization’s use of the municipality’s facilities, provided that such confirmation is accurate. That opinion simply provides that a certificate of insurance cannot be used to expand, amend or otherwise alter the terms of the referenced policy.

Facts:

An insurance agent for an upstate New York municipality reports that many organizations and schools wish to use the municipality’s facilities for a variety of purposes (such as games, races, or parades). Part of the usual procedure in addressing such requests is to inform the organization of the municipality’s insurance requirements. In this connection, the municipality requires that the organization possess insurance coverage that does not contain a liability exclusion for injury to participants and that a statement to this effect¹ is reflected on the certificate of insurance provided to the municipality.

On occasion the municipality has run into resistance from insurance agents working on behalf of the organizations that wish to use the municipality’s facilities. Specifically, certain agents have cited OGC Opinion No. 07-05-09 (May 17, 2007) as prohibiting them from providing the requested certificate. The municipality maintains that it is not asking anyone to amend, expand or alter their policy of insurance; rather, the municipality is instead seeking to ascertain the actual coverage held by the organization that seek to use its facilities.²

Analysis:

OGC Opinion No. 07-05-09 (May 17, 2007) (the “May 2007 Opinion”) noted that a certificate of insurance is often presented to prove that an insurance policy is in effect, and that it summarizes the terms, conditions, and duration of an insurance contract, but that it is not the contract itself. The May 2007 Opinion further noted that a certificate of insurance does not confer new or additional rights beyond what the insurance policy provides, and that 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 become a policy form that must be filed with the Superintendent in accordance with N.Y. Ins. Law § 2307(b) (McKinney Supp. 2007).

In the scenario addressed by the May 2007 Opinion, a public authority presented prospective contractors/vendors with a preprinted certificate of insurance that appeared to amend, expand, or otherwise alter the original insurance policy. When the proffered certificate of insurance was compared with the original insurance policy, it appeared that Note 1 to the certificate of insurance purported to void exclusionary provisions of the insurance policy, and that Note 2 sought to impose an additional obligation on the subscribing company not set forth in the insurance policy. Thus, the Department concluded that the public authority’s certificate of insurance amended, expanded, or otherwise improperly attempted to alter the terms of the insurance policy, and that an agent, broker, or insurer that was to agree to the terms set forth in the certificate would risk running afoul of Insurance Law § 2307(b).

The situation presented herein, however, is distinguishable from that presented in the May 2007 Opinion, in that the municipality does not require the execution of a form that amends, expands or alters the terms of any policy of insurance. Rather, the municipality is simply requiring any organization that seeks to use the municipality’s facilities to confirm that its insurance coverage does not exclude liability coverage for bodily injury to participants. This is evident from the municipality’s Certificate of Insurance Requirements, which state that both the certificate of insurance and the policy itself must provide that there is no exclusion for liability coverage for bodily injury to participants.

Accordingly, an insurance agent or other individual is not prohibited from providing a municipality with a certificate of insurance confirming that the coverage possessed by the organization does not contain a liability exclusion for injury to participants in connection with the organization’s use of the municipality’s facilities.

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

¹ Specifically, the municipality’s “Certificate of Insurance Requirements” provide: “IF ANY SPORTS CONTESTS OR PHYSICAL ACTIVITIES INVOLVED, the certificate and policy must specifically state “The policy does not exclude Liability Coverage for Bodily Injury to participants or athletic participants.” (Emphasis in the original).

² You note further that if an organization cannot provide evidence of coverage consistent with the municipality’s requirements then the municipality would likely not allow the organization to use its facilities.