Sending a COI with AI status

[etimer]

Call me silly but I don't send out a COI with showing an AI status until the AI has actually been added.

I have a restaurant owner that is leasing a property that just changed ownership. The new Real Estate management company e-mailed me requesting AI status be given to them. I called the Real Estate guy and said, "I won't be sending you a COI until AI status has been given by the insurance company. He was not very thrilled because he said, other agents do it.

Question: Am I too much of a purist?

[MAG]

In today's insurance marketplace, most standard carrier coverage forms or coverage extension endorsements include (on a blanket basis), the landlord, property owner, property lender, equipment lender, etc. as additional insured. IF your policy includes such language and you do not have to request the change endorsement, then the certificate should be done right away. IF you have a policy that the additional insured interest must be endorsed to the policy and if you know that your underwriter will add the interest of the landlord, property owner, etc., why not do the cert the same day you request the endorsement? (This is usually something that was discussed during the underwriting process so you KNOW their position on specific coverage/endorsements) The only time we do not go ahead and do the certificate, if it is an endorsement that we know the carrier has to "review and approve" prior. I only do what I know for 100% sure is ok with my carriers.

[etimer]

That may be true but this guy sent me enough verbiage of how they want it, to fill an entire full sheet of paper. This is brokered business, no direct contract with the company, I'm not stepping into a deep dish of do-do. It is a new landlord that has bought the property. I am not going to make any attempt to interpret their legal department's wishes. I'll let someone else do that.

This I know, one of the insurance companies that I place cabinet makers, wood-shops, mill-work installers, etc. will not allow me to offer AI status before an underwriter approves it.

In recent years there are reams of paper written about the fight between those that want AI status, those that need AI status and what AI status does or doesn't do the the one given that right.

Checking int some court cases you'll find that brokers often over step their bounds. It mbe business as usual but.......illustrated below the insurance company lost the case but the broker should never have found themselves involved in the mess below. If you have the insurance company do it according to their rules, you won't find yourself in the hotseat. Even if you send a COI first naming AI status as informational, what happens if there is a break in the chain and someone along the way doesn't provide the AI status. That is an E&O exposure.

[b]American Casualty countered that it generally requires an additional fee, reviews proposed certificates of insurance and issues an endorsement to the policy before it agrees to add an additional insured. [/b]American Casualty also pointed out that the standard form certificate of insurance in question expressly stated that it was issued for informational purposes only and that it did not "amend, extend or alter the coverage afforded by the policies." The Court nonetheless found these facts irrelevant to the issue of whether SEIS had ostensible authority to issue certificates of insurance . which serve as notification to insureds that they are covered under a policy. The Court noted that evidence indicated that AON and American Casualty were aware that SEIS: (1) used standard form certificates to notify others that additional insured coverage existed; and (2) held itself out as authorized to issue such certificates. The Court found that silence in the face of such knowledge could create ostensible agency. The Court also observed that it was logical that one who has obtained insurance through a broker would ask the same broker to have an additional insured added to the policy "and that once that broker issues a certificate of insurance identifying the additional insured, the broker in fact had the carrier.s authority to bind coverage for that added risk."

In today's insurance marketplace, most standard carrier coverage forms or coverage extension endorsements include (on a blanket basis), the landlord, property owner, property lender, equipment lender, etc. as additional insured. IF your policy includes such language and you do not have to request the change endorsement, then the certificate should be done right away. IF you have a policy that the additional insured interest must be endorsed to the policy and if you know that your underwriter will add the interest of the landlord, property owner, etc., why not do the cert the same day you request the endorsement? (This is usually something that was discussed during the underwriting process so you KNOW their position on specific coverage/endorsements) The only time we do not go ahead and do the certificate, if it is an endorsement that we know the carrier has to "review and approve" prior. I only do what I know for 100% sure is ok with my carriers.

[rhare]

Ditto to MAG's answer. Whenver it falls within auto status of policy or pre-agreed by underwriter (which is usually same as our binding powers) we issue certs ASAP. Out the door. Esp. landlord of premises, that's a given. Most carriers build those in on blanket form, which requires written agreement or contract. If you doubt that there is a contract in place requiring it, or don't want to put your neck on line, then add a disclaimer "so-and-so is an Addtl Insd as respects lease of premises to the Insured if required by written contract or agreement." That "if required" part has only been questioned when I'm dealing with contractors...not landlords.

[rhare]

Aha! Yes, as per "etimer" if you broker the account you should NOT be including any wording at all on that cert! You techinically do not have the authority! Looka t the dec page, if Broker ABC is the Agent of record ON THE DEC, but you're AGENT XYZ, you should not be issuing any certs at all until there is some agreement from Broker ABC that a) Agent XYZ may issueplain certs only and b) when you need AI or other wording, youwill get prompt review and answer and BROKER shouldissue that cert, not you!

[etimer]

I should have started off saying that the account is brokered.

95% of the things I do are brokered. That's why I am so persistant on not stepping outside of my authority.

Due to the Real Estate persons prodding another broker may have issued a cert. How easy to step into the deep, deep, do-do.

Aha! Yes, as per "etimer" if you broker the account you should NOT be including any wording at all on that cert! You techinically do not have the authority! Looka t the dec page, if Broker ABC is the Agent of record ON THE DEC, but you're AGENT XYZ, you should not be issuing any certs at all until there is some agreement from Broker ABC that a) Agent XYZ may issueplain certs only and b) when you need AI or other wording, youwill get prompt review and answer and BROKER shouldissue that cert, not you!

[CATHIEA]

We occasionally get these property mgt guys that don't understand that some accounts aren't written in the prefered market and E&S requires the carrier issue the cert with the a/i. For those folks, I fax them the request I've sent to the GA to have them added with a note that as soon as I get it they'll get it. They usually back off and wait. All they want to know for sure is that the account has coverage - and in the case of a restaurant they have a valid point. I've already had the strip center burned down by the uninsured restaurant.

[pita3333]

The Big I just published a 53 page paper on the subject of certs and related items (Additional Insureds) The cost is $75.00 and is well worth it!

Bottom line....certs do not convey converage.....

[LadyBroker]

I am in the E & S side, and I can tell you, we DO NOT want the additional insured requests, most of our policies are issued with blanket AI, and it means just that, Blanket. Most of our carriers will not review a request to add an AI, unless it is a risk that would require it...contractors, land developers, Manufacturers.....these types of risks are ones where you want to have the carrier's input.

Etimer, while I appreciate your diligence, I do think you are being difficult. If the policy is in force, and it changes from one property manager to another, would there be a reason the carrier would not allow the new manager as an AI? Likely not. By being so stubbon, you are causing difficulty for your client, the insured, with his new landlord. Come renewal time, he may remember that...

[etimer]

I guess the issuing of COI's should never be considered pro or con?

BTW, yesterday I found out from the brokerage I go through, that the insurance company forbids any adding of an AI on a COI without their prior knowledge.

I once had a client that was issuing COI's out of her office. She was taking the original COI, whiting out the names the cert was issued to and then adding the new names. Eeeee! When I heard what she was doing I immediately said stop it.

If there is no authority granted in who can issue COI's, what can be placed on COI's then I guess she was OK in doing what she was doing. After all, they are just informational ....or are they?

I have a big fat book that twas given to me by an attorney friend titled, Insurance Law. It is amazing the many areas under the legal premise of Agency Law (that doesn't mean the agency you work for) that allows an attorney to file suit. If you ever read the book it could scare you into never ever lifting another finger to do anything. The only book I have that is bigger is, Tax Planning for Family Wealth Transfers by Zaritsky...second edition. Although my Modern Criminal Law book gives it a run for the money.

So I could do like my neighbor that has his contractor truck under his personal policy, pretend I didn't know and probably all things will be ok. Oh except for the part that the insurance company forbids it. Oops.

Now if this company was writing on new the newer ISO paper, the AI request would not be an issue. The requesting management company is a very big commercial management company. One would think the issue of the newer ISO forms would have already been handled by legal. The all they would need to ask for would be a copy of the certain policy pages.

[etimer]

Very good that the issue has finally been addressed.

http://www.contractormag.com/articles/c ... lumnid=483

The Big I just published a 53 page paper on the subject of certs and related items (Additional Insureds) The cost is $75.00 and is well worth it!

Bottom line....certs do not convey converage.....

[Rob]

I have some wholesale brokers that have me issue the cert and of course they do the endorsement. I always reference the endorsement on the cert i.e. "xyz is named as additional insured per company form gl123" or whatever.

[doyourhomework]

A study commissioned by the captioned found the following:

During the past year, E&O claims involving certificates of insurance have increased 28%.

Almost 1 in 20 E&O claims now involves a certificate of insurance.

The two main sources of certificate E&O claims are failure to add, or improperly identifying, additional insureds (36%) and misrepresenting coverage on the certificate that doesn't actually exist (21%).

As a matter of fact, recently, Freddie Mac announced that they will no longer accept ACORD Evidence of Insurance forms. Similarly, on 1-15-07 the Bank of America decided to no longer accept ACORD Certificates of Insurance or Evidence of Insurance forms.

[etimer]

Exactly the reason that I mentioned before about the E&O exposure. There are a lot of people out there grasping at powers / rights that are not theirs. Just because we are going about "business as usual" or that's how the rest do it, doesn't mean you aren't setting yourself up for a problem.

A study commissioned by the captioned found the following:

During the past year, E&O claims involving certificates of insurance have increased 28%.

Almost 1 in 20 E&O claims now involves a certificate of insurance.

The two main sources of certificate E&O claims are failure to add, or improperly identifying, additional insureds (36%) and misrepresenting coverage on the certificate that doesn't actually exist (21%).

As a matter of fact, recently, Freddie Mac announced that they will no longer accept ACORD Evidence of Insurance forms. Similarly, on 1-15-07 the Bank of America decided to no longer accept ACORD Certificates of Insurance or Evidence of Insurance forms.