Certificate of Insurance Does Not Confer Insurance Coverage

Posted on May 10, 2021 by Barry Zalma

Additional Insured Can Rely on Certificate

The trial court judgment granted the motion of defendant Philadelphia Insurance Companies for summary judgment declaring that it had no obligation to defend or indemnify plaintiff. In County Of Erie v. Gateway-Longview, Inc., et al., And Philadelphia Insurance Companies, 157 CA 20-00665, 2021 NY Slip Op 02631, Supreme Court Of The State Of New York Appellate Division, Fourth Judicial Department (April 30, 2021) the Appellate Division looked on the judgment with a jaundiced eye.

FACTS

Plaintiff commenced this action seeking a declaration that the Philadelphia Insurance Companies (defendant) were obligated to defend and indemnify it as an additional insured in the underlying actions. Defendant moved for summary judgment declaring that it had no obligation to defend or indemnify plaintiff on the ground that plaintiff is not an additional insured under the relevant policy.

ANALYSIS

It is well established that a certificate of insurance, by itself, does not confer insurance coverage, particularly where, as here, the certificate expressly provides that it is issued as a matter of information only and confers no rights upon the certificate holder and does not amend, extend or alter the coverage afforded by the policies. [Landsman Dev. Corp. v RLI Ins. Co., 149 AD3d 1489, 1490 [4th Dept 2017]]. A certificate of insurance is only evidence of a carrier’s intent to provide coverage but is not a contract to insure the designated party nor is it conclusive proof, standing alone, that such a contract exists.

Nevertheless, an insurance company that issues a certificate of insurance naming a particular party as an additional insured may be estopped from denying coverage to that party where the party reasonably relies on the certificate of insurance to its detriment. For estoppel based upon the issuance of a certificate of insurance to apply, however, the certificate must have been issued by the insurer itself or by an agent of the insurer.

The appellate court concluded, therefore, that there was an issue of fact whether the insurer is estopped from denying additional insured coverage to plaintiff. In its moving papers, the insurer did not present any evidence addressing plaintiff’s reliance on the certificate of insurance or establishing that neither it nor an authorized agent issued the certificate of insurance. Defendant’s failure to make such a prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers.

ZALMA OPINION

People, not necessarily insurance experts, rely on Certificates of Insurance as evidence that they are protected by the insurer who issued, or allowed the insurer’s agent, to issue a certificate of insurance showing it to be an additional insured. The Appellate Division made it clear that the only way the insurer can prove it did not add the Plaintiff as an additional insured only if it makes a case that the Plaintiff did not rely on the Certificate or that it was not issued by an authorized agent. I would, of course, prefer that no one rely on a Certificate of Insurance and demand the actual endorsement or policy with the endorsement showing it to be an additional insured.

? 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost

equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at https://www.zalma.com and [email protected].

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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