The AI and COI issue can be a PITA

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etimer
Insurance Journal Addict
Posts: 208
Joined: Fri Feb 11, 2005 5:53 am

The AI and COI issue can be a PITA

Post by etimer » Wed Jul 17, 2019 8:33 am

As IRMI says "Insurance certificates are one of the more dangerous documents that float between insureds, insurers, and a myriad of third parties. There are many landmines to watch out for." I for one would like to see legislation that ends this never ending risk transfer game playing.

Which camp do you reside in -

Protect us from E&O claims
or
Those that just want to write whatever on a COI just to get along

I've caught flak before on this forum about causing pain to those that request all the language. Sorry about that but I have a really, really good client retention because I go to bat for them. Will I make every shareholder of a BIG chocolate factory additional insured. It was on a contract I read. So a phone call to the choco factory attorney, I said, we may consider it but only if you supply us with the names and addresses of every shareholder. Since they (shareholders) are being granted rights, it seems good legal consideration that in case the insurance company has to contact them, we should have their names and addresses. Miraculously the request was penciled out of the contract. Yep --- they will push us!

The sample below was sent to me as an example that the GC wants me to write on Acord 101 and is quite wordy. Because it is my COI I write it how I feel it should be written. I am consistent on the who, what and where that goes on the COI.
Sorry about that but consistency allows me to always know what I wrote.

Since I am not privy to the Prime Contract, I wonder --- who are "and all parties required of ____ by the Owners Prime Contract," Does the Prime Contract say architects and engineers are to be additional insureds and is the Prime Contract thinking AI covers professional liability for the architect? I don't know -- we can only wonder about it? But when I see a request for archs and engineers to be named as AI I make sure everyone knows "It does not require the contractor's insurer to provide coverage for claims arising solely from the acts or omissions of the design professional. Since CGL policies contain professional liability exclusions, the policy will not respond to claims caused by an architect?s or engineer?s professional services." Think promissory estoppel.

Example A
BLANKET STANDARD:
All liability policies contain Blanket Additional Insured provision. Coverage afforded the Additional Insuerd(s)
are on a Primary and Non-Contributory basis before any other insurance maintained by them. General Liability
coverage provided to the Additional Insureds includes completed operations coverage. All policies contain a
Blanket Waiver of Subrogation provision. The Workers Compensation policy includes coverage for all employees
including owners and officers and provides coverage for WC benefits of the state where the project is located.
The Umbrella Liability policy is follow form. The policies above have been endorsed to provide a 30 Day notice
of cancellation, non renewal or reduction of coverage to ________, LLC.
JOB SPECIFIC STANDARD
Project: (Name of Job)
______ Construction, LLC and its affiliated companies, owner, and all parties required of ____ by the Owners Prime
Contract, are named as Additional Insured(s) as respects General Liability, Automobile Liability and Excess
Liability. Coverage afforded the Additional Insured(s) is on a Primary and Non Contributory basis before any
other insurance maintained by them. General Liability provided to the Additional Insured(s) does include
Completed Operation coverage. A Waiver of Subrogation applies in favor of certificate holders with respects to
all policies. Workers Compensation provides coverage for WC benefits to the state where project is located and
includes coverage for all employees including owners and officers. The Umbrella Liability policy is follow form.
The policies above have been endorsed to provide a 30 Day notice of cancellation, non renewal or reduction of
coverage to ____ Construction, LLC.
----------------------------------------------------------------
Example B
BLANKET EIFS COVERAGE:
No EFIS Exclusions are included in the General Liability policy referenced above- plus Blanket Standard Wording
Above
JOB SPECIFIC EIFS COVERAGE
Project: (Name of Job)
NO EFIS Exclusions are included in the General Liability policy referenced above- plus Job Specific Standard
Wording Above
----------------------------------------------------------------
Example C
BLANKET RESIDENTIAL
NO Exclusions for Residential Projects are included in the General Liability policy referenced above -plus Blanket
Standard Wording Above
JOB SPECIFIC RESIDENTIAL
Project: (Name of Job)
NO Exclusions for Residential Projects are included in the General Liability policy referenced above- plus Job
Specific Standard Wording Above
----------------------------------------------------------------
Example D
BLANKET ASBESTOS ABATEMENT
No Exclusions for Asbestos Abatement are included in the General Liability policy referenced above- plus Blanket
Standard Wording Above.
JOB SPECIFIC ASBESTOS ABATEMENT
Project: (Name of Job)
No Exclusions for Asbestos Abatement are included in the General Liability policy referenced above- plus Job
Specific Standard wording Above.

Now I am in Pennsylvania and in Pennsylvania as is the same in most places a COI is not meant to be written as a contract, it is only representative of the policies.

NOTICES

Property and Casualty Insurance Companies and Producers Issuing Certificates of Insurance in Pennsylvania; Notice No. 2009-02
[39 Pa.B. 918]
[Saturday, February 14, 2009]
''Certificates of Insurance'' regarding Property and Casualty coverage are typically used to provide proof of liability insurance to and summarize the terms of a policy for a third party in lieu of providing the third party with a complete copy of the policy. This notice clarifies the acceptable use of certificates of insurance with respect to Property and Casualty insurance policies in Pennsylvania.
Certificates of insurance that clearly and accurately state the insurance coverage provided to an insured or third party are not forms subject to filing with the Insurance Department (Department) because these certificates do not in any context amend, extend or alter coverage of the insurance policy. They simply summarize the coverages provided by that policy.
Where an insurer or insurance producer uses a certificate of insurance or other evidence of coverage that goes beyond or does not accurately summarize the policy, the insurer or producer may be misrepresenting the policy language, terms, conditions or coverage limits as issued by the insurer. Similarly, language included in a certificate that amends or extends coverage of the underlying policy or states that coverage is actually in force when it is not constitutes a misrepresentation of the coverage provided by the policy; as such, any insurer or producer issuing such a certificate would be in violation of Pennsylvania insurance statues and regulations. Additionally, when a certificate of insurance is used in such a manner that it attempts to modify the terms and conditions of coverage this may subject the certificate to the filing requirements of 31 Pa. Code Chapter 89b (relating to approval for life insurance, accident and health insurance and property and casualty insurance filing and form). Violations of Pennsylvania statutes and regulations may be subject the person issuing or providing the certificate to administrative penalties including possible license suspension or revocation and civil monetary penalty.

Questions regarding this notice may be directed to Jack Yanosky, Director of Licensing and Enforcement for the Department at (717) 783-2627.
JOEL SCOTT ARIO,
Insurance Commissioner
[Pa.B. Doc. No. 09-281. Filed for public inspection February 13, 2009, 9:00 a.m.]

To make my E&O carrier happy, to make me happy, to make my client happy I do supply copies of the required endorsements. Why? Because it stops the need for lengthy wording on a COI and shows that the coverage truly does exist. Court cases back up such thought-

"Later, the Texas Supreme Court, in Via Net, US v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) rejected a third party’s claim that it was injured because it relied upon a Certificate of Insurance to show that it was provided additional insured coverage. In that case, the third party argued that it had acted diligently by obtaining a Certificate of Insurance listing it as an additional insured. The Texas Supreme Court rejected this argument stating:

“[The third party] argues, with some force, that there is little use for Certificates of Insurance if contracting parties must verify them by reviewing the full policy. But the purpose of such Certificates is more general, ‘acknowledging that an insurance policy has been written and setting forth in general terms what the policy covers.’ Black’s Law Dictionary, 240 (8th Edition 2004). Given the numerous limitations and exclusions that often encumber such policies, those who take such Certificates at face value do so at their own risk. Via Net, 211 S.W.3d at 314.”

In other words, the Texas Supreme Court explained that the purpose of a Certificate of Insurance is to provide a simple and efficient way to provide some proof of insurance, but that recipients of such Certificates cannot rely upon them to prove or establish coverage. The third party must follow through and obtain copies of the insurance policy if there is any question as to the scope or applicability of coverage as the policy itself controls."

Are you involving yourself in promissory estoppel? The numbers are high for being called into a suit over a COI. "In the final analysis, producers have to tread very carefully, because those producers who have been sued have said that being tied up in litigation is a timely and costly proposition that is worth avoiding at all costs."

When it comes to all things legal there may and often is, two sides to the story. I tend to live on the conservative side.

etimer
Insurance Journal Addict
Posts: 208
Joined: Fri Feb 11, 2005 5:53 am

Re: The AI and COI issue can be a PITA

Post by etimer » Wed Jul 17, 2019 9:40 am

Ha ha!! An hour ago I just received another one of my favorite requests from a GC to place on a COI for my client.

"There are a few items that I need from you prior to us entering contract. The first is a copy of your W9. The second is a copy of you COI with the following information included:

Additional insured:
For ongoing and completed operations for 3 years"

Now if you don't see the glaring issue......well what can be said about that one.

How can I place on a COI stating that my client will keep their policy with me and / or keep the same coverage for the next three years. Can I handcuff my client or use other methods to make them guarantee to keep their policy?

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