Just before purchasing a policy, the insured subcontractor says "I need to provide something called a 'Certificate of Insurance' to my general contractor," and add them as an additional insured. What issues does this create from an underwriting or claims perspective?
Notable Timestamps
[ 00:15 ] - The adjuster is giving him the Coverage A limits to rebuild the house. But he is also making a claim for Fair Rental Value (Coverage D). ISO HO 00 03 05 11. Is there coverage?
[ 01:07 ] - The team diagrams the parties.
[ 01:43 ] - Employees, officers, and directors generally qualify as insureds while acting within the scope of their authority.
[ 03:36 ] - Endorsements may limit coverage for the additional insured to claims for vicarious liability of the named insured.
[ 04:35 ] - First, we must examine whether the insurer owes the additional insured a duty of defense and indemnification under the liability policy. The prime contractor is an insured for purposes of this analysis.
[ 06:00 ] - Second, we examine whether the prime contractor's tender of the defense under the indemnification provisions of the subcontract constitutes a covered claim against the named insured under the liability policy. The prime contractor is a claimant for purposes of this analysis.
[ 07:55 ] - Certificates of Insurance typically include the name of insured, the policy dates, the policy identification number, the coverage type, and limits.
[ 08:35 ] - What happens when the Certificate and the policy come into conflict?
[ 10:35 ] - Certificates of Insurance usually state: "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."
[ 11:17 ] - Let's say the endorsement making the Certificate-holder an additional insured was accidentally omitted from the policy. Case law is inconsistent, but the Certificate's disclaimer is often upheld.
[ 12:41 ] - Let's say the agent made representations on the policy. This would raise issues of actual authority (less likely) and apparent authority (possible).
[ 14:53 ] - Brennan provides a recap of the scenario and the points above.
Your PLRB Resources
CE Course: Underwriting Issues in Insurance Claims - https://www.plrb.org/courses/underwriting-issues-in-insurance-claims/
Handout: https://www.plrb.org/wp-content/uploads/2024/10/UnderwritingIssues-Scenarios.pdf
Coverage Question: Is a General Contractor Entitled to a Defense Based Solely on a Certificate of Insurance? - https://www.plrb.org/documents/is-a-general-contractor-entitled-to-a-defense-based-solely-on-a-certificate-of-insurance-2005-06-21/
Related Case Law: Mingji Ave4 Realty, LLC v. Colony Ins. Co. (2024) - https://www.plrb.org/documents/mingji-ave4-realty-llc-v-colony-ins-co-2024
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