A certificate of insurance summarizes the terms of coverage under an insurance policy. Typically, it is issued by the insurance company or a broker. While it is generally used to confirm insurance coverage to a third party, a certificate of insurance does not guarantee coverage by itself. The terms of the insurance contract govern the relationship. A recent New York appellate court decision illustrates this point. However, it also indicates that there may be other remedies allowing a plaintiff to recover despite not being insured under the insurance policy.
In County of Erie v. Gateway-Longview, Inc., et al., the Plaintiff sought insurance coverage from the Defendant, Philadelphia Insurance Companies (“PIC”), based on the fact that Plaintiff’s name appeared as an additional insured on a certificate of insurance provided to Plaintiff by a third party. PIC moved for a summary judgment claiming that it had no obligation to Plaintiff because the certificate of insurance was not conclusive proof of coverage. The lower court agreed and dismissed the case. Plaintiff appealed.
The New York Appellate Division, Fourth Department also agreed with PIC’s position that it is well-established that a certificate of insurance in and of itself does not guarantee coverage, especially where, as in the instant case, the certificate expressly states that it is being issued as a matter of information only and confers no rights upon the certificate holder.
However, the Court went on to state that the issuance of a certificate of insurance naming a particular party as an additional insured may require that the insurance company “. . . be estopped from denying coverage to that party where the party reasonably relies on the certificate of insurance to its detriment.” Essentially, the Court noted that it could find that Defendant was prohibited from denying coverage because it would not be fair to Plaintiff under the circumstances. However, Plaintiff must show it reasonably relied on the certificate of insurance and was harmed by that reliance. Further, the certificate must have been issued either by the insurer itself or by an agent of the insurer.
In reversing the lower court’s summary judgment award to Defendant PIC, the Court concluded that because PIC did not present any evidence addressing plaintiff’s reliance on the certificate of insurance or establishing that neither it nor an authorized agent of Philadelphia Insurance Companies issued the certificate, an issue of fact existed as to whether Defendant was estopped from denying additional insured coverage to the Plaintiff. Accordingly, the case was sent back to the lower court so the claim could be litigated.
The lesson learned here is that merely being named as an additional insured on a certificate of insurance provided to you by a third party does not mean that you are actually insured under their policy. You should request not only the certificate but also a copy of the policy in order to confirm that you are, in fact, insured thereby.
If you have any questions regarding insurance coverage issues or whether you are actually properly insured by a third party who is contractually bound to do so, please contact one of our attorneys.