Delaware’s New Legislation Adds Teeth to Certificate of Insurance Regulations

By Young Ha | March 27, 2014

Delaware legislature on Tuesday passed HB 104 (“An Act to Amend Title 18 of the Delaware Code Relating to Certificates of Insurance”) that aims to curtail the improper use of certificates of insurance.

Delaware Association of Insurance Agents & Brokers has been championing the measure throughout the past two legislative sessions. The association applauded the bill’s passage, saying that HB 104 would give teeth to certificate of insurance regulations for the benefit of insurance producers and consumers alike.

The legislation now goes to Delaware Gov. Jack Markell who is expected to sign the bill. It will take effect 90 days following his signature.

In Delaware, there were existing insurance statutes and regulations that generally prohibited producers from misrepresenting the coverage provided by a policy, Delaware Association of Insurance Agents & Brokers said.

But this new law “adds teeth” by further clarifying those statutes and by specifically defining a certificate of insurance and its appropriate use, said Rick Russell, president and CEO of Delaware Association of Insurance Agents & Brokers.

In addition, the new law deals for the first time with the issue of third parties by prohibiting a person from requesting the issuance of an inaccurate certificate of insurance, he said.

Certificates of insurance misuse has been plaguing agents nationwide, Russell said. “In Delaware, the statutes just weren’t strong and clear enough,” he added. “All too often, law-abiding producers were losing business to the agent down the street who would meet improper demands related to certificates.”

“The passage of HB 104 is a relief for law-abiding insurance producers throughout the state,” he said. “They were often torn between onerous requests from clients and third parties to amend certificates and the regulatory constraints that forbade it.”

HB 104 would make it unlawful to require, prepare, issue or provide a certificate of insurance containing false or misleading information. HB 104 amends Title 18 of the Delaware Code by prohibiting the:

  • Request of a certificate that does not accurately reflect the underlying policy
  • Issue of a false or misleading certificate or one that purports to alter, amend or extend the coverage provided by the insurance policy
  • Use of a certificate to warrant that a policy complies with the insurance or indemnification requests of a contract

The legislation also enables the Delaware Department of Insurance to issue cease-and-desist orders and to assess fines against those who request false or misleading certificates.

“A certificate provides proof of insurance and basic information about that policy,” said Russell. “HB 104 confirms that a certificate in and of itself is not a policy and doesn’t independently confer rights.”

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Latest Comments

  • March 27, 2014 at 3:11 pm
    Hmmm says:
    Yeah Delaware - one more state that helps clarify. Hope that more states will follow.
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