Certificate Holder - "Endeavor to mail"...

[meytai]

Insurance Journal wrote an article on issuing certificates of insurance to additional insureds.. there is only an issue when they require specific language to be added or striked out.. well.. this particular client is a ice cream truck operator in the city of El Monte in CA...

They are requiring that the "endeavor to mail" be striked out along with the other text...

I called Progressive, and they say that they cannot strike that text out..

Usualyl when it comes to taht sort of text, and that sort of requirement by a CITY to have that language in the policy, do you think they need a GENERAL liability policy versus a regular commercial auto policy? I called teh person in charge of the permits.. she had no exact answer.. all she could read to me were the requirements.. so i am stuck, i can't give that certificate to those people with that language on it.. but i'm begining to wonder if only GL policies issue certifcates with that languag

Those in te know please advise

Meytai

[DarrenR]

An additional insured is not guaranteed any right of notice of cancellation of a policy. The only party entitled to notice of cancellation is the first named insured on the policy. Insurance companies may notify additional insureds of cancellation as a courtesy, but they are not obligated to. They "endeavor" to. Since there is no contract between the insurance carrier and the additional insured, the additional insured has no legal right to notice of cancellation and there is no policy endorsement that could add this obligation. Most of my policies have blanket additional insured endorsements and some carriers don't even want to see the certificates we issue. So how could they possibly give notice of cancellation?

Yet, despite this very basic concept, and the clear indication on the certificate to that effect, some additional insureds still insist that you cross out the wording on the certificate or guarantee this fictitious right on a bastardized endorsement, as if that somehow gives the insurance company any obligation to provide notice.

If you, as a broker, agree to strike this wording you are taking on this obligation. If a notice of cancellation is issued by the carrier you have to immediately notify any additional insureds to whom you have issues such certificates. And, many additional insureds insists on 30 days notice of cancellation while the insurance carrier only has to give 10 days notice of cancellation for non-payment, and there is no notice of cancellation if the insured decides to cancel. So how are you going to comply with the requirement that you give the additional insured 30 days notice? It's pretty much impossible. And yet people still ask for it. And as a result I have to do it all the time or my clients won't be able to do business.

Can you tell this is one of my biggest pet peeves?

[Insismypassion]

In some states, the certificate of insurance is considered a filed form and any alteration of the form's pre-filled wording is a violation of statute.

Some, but only a few, carriers do have a filed manuscript endorsement that removes the "Endeavor to.." wording; but it's rare that these carriers will use it - their back really has to be pushed to the wall. But in general, the previous post is correct, Additional Insureds have no rights in the policy beyond what is granted to them in the policy, and that does not include a right to notice of cancellation.

As to your question about having a GL as opposed to an auto; you still can't/shouldn't strike the "endeavor to..." wording regardless of the policies in effect unless the carriers specifically agree to it in writing. Short of that written confirmation from the carrier, you may be violating your contract with the carrier, and you have committed an intentional act (E&O issue).

I realize it's hard and time consuming to do the right thing by explaining to the city that what they are asking for just can't be done; especially when there are hundreds of agents doing it every day either becuase 1) they don't know better, 2) they don't care, or 3) they don't want the hassle. And the push back you'll get from the city, "We're getting it from everyone else." Well, wrong is wrong regardless of how many people are doing it.

The person you are taking with at the city probably has no authority to change or accept anything other than what they have been told to get; you may have to move the the city attorney.

In short, this is a nationwide battle between agents and additional insureds; if we all give in and stop fighting, the problems will only get worse. Luckily some state DOI's have stepped in and helped fix part of the problem.

[meytai]

With respect to the amount of time you people may have been in the industry, i am a newbie to this..

I thought about this one, and i want to educate that chick.. you're absolutely right.. it would be SO easy to just send it, and not queston it.. but it is an E&O exposure.. and it is also an impossibility.. 30 days.. it makes no sense at all

But i am pleased to have read your responses.. i didn't know this was rampant issue.

I hope tere is a fix this.. on Monday i will hae to explain to the girl and see what happens with my client..

Wrong is wrong,

Meytai

[Almost40]

If the insurance company is unwilling to endorse the policy to give notice of cancellation to a 3rd party (certificate holder), then any modification of the wording on the certificate will open up an E & O exposure for the agency issuing the certificate. If the agency strikes out the "will endeavor to" wording then the agency is on the hook for any coverage days beyond the policy cancellation date. E&O policies are not intended to extend coverage for any lines of insurance. Further if the agency did this intentionally (and many do) then this is not an error or an omission, it is an intentional act and would quite possibly not be covered under the E&O policy. This is a situation made worse because many agencies freely amend the wording on the certificates and the public perception is that it is no "big deal". Many wholesalers make it very clear that they do not endorse such a practice and do not want copies of any certificates. Many contracts require this amendment in the insurance requirements. I send a disclaimer letter to those cert holders outlining what requirements cannot be met with a copy to our insureds. To date, I have not had one insured lose a contract because I could not amend the cancellation wording.

[mccluney]

Darren, I can't believe that you strike out the "endeavor to mail". If the strike out is not authorized by the insurance company and your are sued as the result of the certificate you issued, even your E& O carrier will not provide coverage as you intentionally without authorization made this change. Sometimes it is better to say no, than to expose your agency to
an uncovered claim.

[etimer]

Do not strike it out.

[DarrenR]

Darren, I can't believe that you strike out the "endeavor to mail". If the strike out is not authorized by the insurance company and your are sued as the result of the certificate you issued, even your E& O carrier will not provide coverage as you intentionally without authorization made this change. Sometimes it is better to say no, than to expose your agency to
an uncovered claim.

I don't do it unless I am forced to and I don't do it without the underwriter's permission, but I know that even their permission doesn't change the fact that the additional insured is not entitled to notice of cancellation.

In some cases I simply have no choice. I explain to the additional insured and to my client why I can't do it, and that even if I do it, it doesn't make it so. But when I deal with hard headed risk managers, clueless attorneys, and mindless city clerks who will accept nothing less, and my client is begging me to issue the cert or they will lose a filming location which will result in the loss of hundreds of thousands of dollars, I have no choice. Luckily, the only time most of our clients are ever canceled is at their own request. (But, of course, the additional insured gets no notice in that case )

[mccluney]

Darren.
I wish you well. My experience as a small commerical agency owner is that the personal agency relationships with preferred
companies has eroded. In many cases we are dealing with company service centers or through third parties for access to preferred insurance companies. As a result, more companies are suing agents to pay claims for not providing 100% accurate info on an application or a certificate. For an example, we used to be able to make a good faith estimate of a building's age on an application for coverage. If the actual age is off by a few years, companies now seek repayment of claims paid from the agency. Due to this new relationship with our companies, we need to be more careful in completion of apps and certificates. Good faith and a feeling that you are a partner with your insurance carriers does not seem to apply in the current enviroment that we work in.