Introduction

A certificate of insurance is an informational document, usually prepared by an insurance broker, representing that the insurer has issued a policy to an insured.  Typically, certificates of insurance are issued to third-parties as evidence of insurance in lieu of providing an entire copy of the policy.  The certificate broadly outlines the policy’s content, usually lists the insured parties, policy period, effective date, and policy limits.  See 43 Am. Jur. 2d, Ins. § 189; Black’s Law Dictionary (5 Ed. 1979).

This article summarizes case law addressing the effect of certificates of insurance on insurance coverage.  As discussed below, in most states, a certificate of insurance is only evidence of insurance coverage and is not a separate and distinct contract, nor is it considered part of the underlying insurance contract.  Nevertheless, courts have held that insurers may be estopped from denying coverage if the recipient of the certificate of insurance has relied to its detriment on the representation of coverage made in the certificate. 

Certificates of Insurance Generally Do Not Create Coverage

A certificate of insurance is not an insurance policy, and generally cannot contradict, amend, extend, or alter the coverage afforded by the actual policy. See Cont’l Cas. Co. v. Signal Ins. Co., 580 P.2d 372, 376 (Ariz. App. 1978) (“a Certificate of Insurance cannot contradict the terms of a policy; it only provides information as to the policy’s contents”). A certificate of insurance “serves merely as evidence of the insurance and is not a part of the insurance contract.”  Gen. Acc. Ins. Co. of Am. v. Am. Nat’l Fireproofing, Inc., 716 A.2d 751, 756 (R.I. 1998) (“a certificate of insurance is not a separate and distinct independent contract but rather evidence of the underlying agreement that references the coverage of the policy in general terms”).  Accordingly, the issuance of a certificate of insurance alone does not create coverage or legal obligations between the insurer and the certificate holder. See e.g., Am. Hardware Mut. Ins. Co. v. BIM, Inc., 885 F.2d 132, 139–40 (4th Cir. 1989) (certificate of insurance cannot be relied upon as independent evidence of coverage); Moleon v. Kreisler Borg Florman Gen. Const. Co., 304 A.D.2d 337 (N.Y. App. Div. 1st Dep’t 2003) (certificate is insufficient to establish that a third party is an additional insured under a policy, especially where the policy itself makes no provision for coverage); Am. Ref Fuel Co. of Hempstead v. Resource Recycling, Inc., 248 A.D.2d 420 (N.Y. App. Div. 2d Dep’t 1998) (court held that the certificate was insufficient, by itself, to establish that the plaintiff was an additional insured). 

Disclaimer Language in Certificates of Insurance

Certificates of insurance typically contain disclaimers stating that the certificate is for information purposes only and does not change or alter coverage under the policy.  For example, the standard ACORD form specifically states that the certificate of insurance cannot extend or alter the coverage.  See ACORD 25, Liability Certificate of Insurance. The ACORD form also states that additional coverage requires an endorsement, and includes a disclaimer that “if the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed.”  Id.

Most courts refuse to bind an insurer where a certificate of insurance contains a disclaimer indicating that it is for informational purposes only, confers no rights on the holder, and does not amend, alter, or extend the policy coverage.  Specifically, courts have held that where the certificate of insurance contains a disclaimer, the underlying policy determines the extent and terms of coverage, not the certificate.  See e.g., Mt. Fuel Supply v. Reliance Ins. Co., 933 F.2d 882, 889 (10th Cir. 1991) (“majority view is that where a certificate of insurance, such as the ACORD certificate, expressly indicates it is not to alter the coverage of the underlying policy, the requisite intent is not shown and the certificate will not effect a change in the policy.”); Penske Truck Leasing Co., L.P. v. Home Ins. Co., 674 N.Y.S.2d 400, 401 (N.Y. App. Div. 2d Dep’t 1998) (certificate of insurance does not make someone an insured if the certificate contains a disclaimer that it was issued as a matter of information and confers no rights); Ala. Electric Co-op., Inc. v. Bailey’s Constr. Co., Inc., 950 So. 2d 280, 284–86 (Ala. 2006) (third-party entity could not rely on a certificate naming it as an additional insured where the certificate stated: “if the certificate holder is an additional insured, the policy must be endorsed.  A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement”); McKenzie v. N.J. Transit Rail Operations, Inc., 772 F. Supp. 146, 148-49 (S.D.N.Y. 1991) (no coverage for plaintiff where the certificate stated that it was issued for informational purposes); T.H.E. Ins. Co. v. Naghtin, 916 F.2d 1082, 1085 (6th Cir. 1990) (applying Illinois law) (certificate of insurance was not evidence of coverage where the certificate clearly stated that it was subject to the terms of the policy).

Estoppel as a Basis to Enforce a Certificate of Insurance

Nevertheless, because a certificate of insurance is an insurer’s written representation that a party has insurance coverage in place when the certificate is issued, an insurer may be estopped from denying coverage where the party reasonably relied on the certificate to its detriment. Blackburn, Nickels & Smith, Inc. v. Nat’l Farmers Union Prop. & Cas. Co., 482 N.W.2d 600, 603 (N.D. 1992) (“A Certificate of Insurance is an insurance company’s written statement to its customer that he has insurance coverage, and the insurance company is estopped from denying coverage that the Certificate of Insurance states is in effect”). See also, Marlin v. Wetzel Cty. Bd. of Educ., 569 S.E. 2d 462, 472 (W. Va. 2002) (“It is well settled that an insurer may be equitably estopped from denying coverage where the party for whose benefit the insurance was procured reasonably relied upon the provisions of an insurance certificate to that party’s detriment”); Bucon, Inc. v. Penn. Mfg. Assoc. Ins. Co., 151 A.D.2d 207 (N.Y. App. Div. 3d Dep’t 1989) (insurer was estopped from denying the existence of plaintiff’s coverage after issuing certificate of insurance identifying the plaintiff as an additional insured); Criterion Leasing Group v. Gulf Coast Plastering & Drywall, 582 So. 2d 799 (Fla. App. 1991) (insurer was estopped from denying workers’ compensation coverage to subcontractor’s employee where subcontractor was named as a coinsured on certificate of insurance).

Courts have also applied the estoppel doctrine despite the presence of disclaimer language in a certificate.  See, e.g., Bucon, Inc., 151 A.D.2d at 207.  (Despite form language stating that the certificate did not “amend, extend or otherwise alter the terms and conditions of insurance coverage contained in the policy,” the court found the contractor’s detrimental reliance on the certificate identifying it as an additional insured was reasonable); Bonner County v. Panhandle Rodeo Ass’n, Inc., 620 P.2d 1102 (Idaho 1980) (finding that plaintiff reasonably relied on the certificate conferring contractual liability coverage to its detriment, despite the certificate’s disclaimer that it was informational only and did not amend or extend the policy, and therefore, the insurer was estopped from denying coverage). For estoppel to apply, however, the insurer or the insurer’s agent must have issued the certificate of insurance.  See Chartis Seguros Mexico, S.A. de C.V. v. HLI Rail & Rigging, LLC, No. 11-civ-3238, 2014 WL 988574, at *4 (S.D.N.Y. Mar. 13, 2014); Sevenson Envtl. Servs., Inc. v. Sirius Am. Ins. Co., 74 A.D.3d 1751, 1753 (N.Y. App. Div. 4th Dep’t 2010).

Another issue occurs where policy exclusions exist that are either inconsistent with the coverage noted in the certificate of insurance or do not appear on the certificate.  In that regard, some jurisdictions have applied estoppel to preclude insurers from asserting policy exclusions to preclude coverage where the certificate of insurance failed to list those exclusions.  See e.g., Brown Mach. Works & Supply Co. v. Ins. Co. of N. Am., 659 So. 2d 51, 56 (Ala. 1995) (holding that an insurer that does not deliver a policy to a certificate holder is estopped from asserting exclusions contained in the policy but not listed in the certificate of insurance); Moore v. Energy Mut. Ins. Co., 814 P.2d 1141, 1144 (Utah App. 1991) (holding that exclusions are invalid unless they are communicated to the certificate holder in writing); J.M. Corbett Co. v. Ins. Co. of N. Am., 357 N.E.2d 125 (Ill. App. 1976) (terms of the certificate controlled because policy exclusion was not provided to certificate holder).

Statutes Governing Policy Delivery

Some states, such as Alabama and Louisiana, have enacted statutes that require an additional insured to receive a copy of the policy. See, e.g., Ala. Code § 27-14-19 (1975) (requiring delivery of a copy of the policy to an insured); La. Rev. Stat.-R.S. § 22:634 (“Every policy shall be delivered to the insured within a reasonable time after its issuance.”).  In these states, courts have found the disclaimer language contained in certificates ineffective if the policy delivery statute has been violated.  See Brown Mach. Works & Supply Co., Inc. v. Ins. Co. of North Am., 659 So. 2d 51 (Ala. 1995); La. Maintenance Servs., Inc. v. Certain Underwriters at Lloyd’s of London, 616 So. 2d 1250 (La. 1993).

Conclusion

So what effect does a certificate of insurance have on insurance coverage?  In most states, certificates of insurance convey information only and generally do not grant coverage, even if the certificate of insurance specifically names a party as an additional insured.  Nor do they amend or alter coverage under the insurance policy.   However, in situations where a party has reasonably relied on a certificate of insurance to its detriment, courts may find that an insurer is estopped from denying coverage.  In addition, some states have enacted statutes governing policy delivery, which might impact the binding nature of a certificate of insurance.  As a precaution, therefore, insurers should never rely solely on a certificate of insurance to determine coverage, and should always obtain a certified copy of the policy and policy endorsements.