New York’s Highest Court Asked By Federal Court: Can Certificates of Insurance Estop An Insurer From Denying Coverage Under a Policy?

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Insurance brokers, which may or may not be agents of an insurer, commonly issue certificates of insurance to policyholders, like subcontractors, who then furnish the certificates to third parties, such as owners or contractors, as evidence of insurance or that a particular policy of insurance also covers the third parties. However, certificates of insurance, on the commonly used ACORD form, generally contain a disclaimer which states:

"This Certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below."

Whether a certificate of insurance can bind the insurance company to provide coverage, for example, additional insured coverage to an owner or general contractor, is often a subject of dispute. This issue arose in an opinion in the case of 10 Ellicott Square Corp. v. Mountain Valley Indemnity Co., 10-0799-CV, which was issued on December 28, 2010 by the United States Court of Appeals for the Second Circuit. The case concerns a certificate of insurance which lists certain Mountain Valley insurance policies and shows 5182 Group and Ten Ellicott as additional insureds on the policies. The Mountain Valley primary policy required that the construction agreement be executed before the additional insureds could be defended indemnified under the primary policy. The agreement was not signed until September 12, 2003 which was after a September 9th roof collapse at the construction site injuring one of the workers of a subcontractor.

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