And the Cert Goes On: Certificate Holder Is Hereby Added as an Additional Insured

April 6, 2014


In this case, the agency CSr entered the above wording in the remarks section of the certificate of insurance.Unfortunately, the certificate holder had not been added as an additional insured on the policy by endorsement.
When a lawsuit was filed against the certificate holder after an accident on the job site, they demanded a defense from the insured’s general liability policy. The insurance company declined to defend or indemnify because the certificate holder was not an insured. When the plaintiff produced the certificate of insurance with the additional insured wording, the insurance company pointed to the disclaimer language on the certificate.
The agent’s E&O carrier took over defense of the case because the agency had obviously committed an error on the certificate and ultimately settled the underlying lawsuit. Result: $100,000 paid claim and $80,000 paid claim expenses
The Big Ones Get Complicated
What do you get when you mix together following?
• a certificate of insurance that shows the general contractor is an additional insured on the CGL and excess GL
• a CGL policy that contains a “blanket” additional insured endorsement requiring a written contract
• no written contract
• an excess GL policy that says nothing about additional insureds
• an accident involving catastrophic injuries and an underlying judgment of $10 million against     the general contractor
• an insurance agents E&O policy with a $1,000,000 limit.
You get a big, messy E&O claim no matter how well the agent handled the account or how many legal defenses might be available for the agent. Sometimes it just doesn’t matter, and this turned out to be one of those claims.
The E&O carrier decided to settle prior to a potentially very expensive trial.
Result: $350,000 paid claim and $95,000 paid claim expenses
In one recent case, the agent placed a CGL policy for a contractor that had successfully bid a project with the federal government. The agent issued a certificate to the government reflecting coverages as of a certain date. Shortly thereafter, the contractor allowed its coverage to lapse due to nonpayment of premium. Subsequently, the contractor negligently caused damage to government property. The government sued the agent for failing to advise of the cancellation.
Although the certificate is intended to be a snapshot of coverages as of the date of insurance, some certificates require notice of cancellation. Since the agent had unilaterally issued the certificate, the government argued that the language created a duty on the part of the agent. The government also argued that certain federal regulations imposed a duty on the agent to update the certificate for the lapse of coverage.

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