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Certificates of Insurance Laws and Regulations
Bill Wilson |
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Abstract
A number of states have enacted laws, regulations, or regulatory directives governing certificates of insurance and similar forms. On this page, we provide a state by state listing of the laws, regulations, and directives that we're aware of. As they change and new states come on board, we'll be updating this page. |
Important Information
This article supplements the following white paper:
Introduction
To address some of the problems outlined in our white paper, Certificates of Insurance...Issues and Answers, a number of states have taken legislative or regulatory action. Below is a summary listing of statutes, regulations, or other measures in states that we are aware of at this time. This is not an exhaustive list of all potentially relevant laws and regulations in states named, nor should the fact that some states are not named result in a conclusion that they have no potentially relevant laws or regulations. For example, the following is an excerpt from the NAIC model fraud law now in effect in many states:
"Fraudulent insurance act" means any of the following acts or omissions when committed knowingly and with intent to defraud:
Presenting, or causing to be presented, or preparing any information containing false representations as to a material fact with knowledge or belief that the information will be presented by or on behalf of an insured, claimant or applicant to an insurer, insurance producer or other person engaged in the business of insurance concerning any of the following:
• An application for the issuance or renewal of an insurance policy;
• The rating of an insurance policy;
• A claim for payment or benefit pursuant to an insurance policy;
• Payments made in accordance with an insurance policy; or
• Premiums paid on an insurance policy;
Presenting, or causing to be presented, or preparing any information containing false representations as to a material fact with knowledge or belief that the information will be presented to or by an insurer, insurance producer or other person engaged in the business of insurance concerning any of the following:
• A document filed with the superintendent or the insurance regulatory official or agency of
another jurisdiction;
• The financial condition of an insurer;
• The formation, acquisition, merger, reconsolidation, dissolution or withdrawal from one or
more lines of insurance in all or part of this State by an insurer;
• The issuance of written evidence of insurance; or
• The reinstatement of an insurance policy;
In addition, the information below could change at any time, so it is important that you be informed of potentially relevant state laws and regulations that may affect the issues discussed in this paper.
Note below that the regulatory directives (as opposed to statutes and regulations) issued by insurance commissioners generally take the form of all or part of this model insurance department bulletin:
Model Bulletin on Issuance of Certificates of Insurance
Certificates of insurance, evidences of insurance, and similar insurance policy-related documents (collectively "certificates") serve a valuable informational purpose and provide a courtesy summary of the terms of an insurance policy to an insured or third party. The department is aware, however, that some insurance producers and insurers have been asked to provide certificates that purport to amend, extend, or alter the coverage of the underlying policy. Although the insurance industry may feel pressured or obligated to provide certificates that revise or misrepresent the actual policy coverage, they are violating this state's insurance code when they do so.
Insurers and producers are violating the insurance code when they issue a certificate of insurance that obscures or misrepresents the insurance coverage provided under the insurance policy and may be subject to administrative penalties and/or license suspension or revocation.
State law - [insert proper citation to the state's form filing/approval requirement] - requires insurers to file insurance policies and forms intended for use in this state with the department, and, in most instances, a policy form cannot be utilized until approval is provided. When an insurer or insurance producer executes a certificate of insurance or other evidence of coverage which extends beyond offering a mere synopsis of the policy, the insurer or producer risks changing the policy's terms and is providing the recipient with a modified document that has not been filed or approved by the insurance department. In addition, if an insurer or its producer includes any statement in the certificate of insurance purporting to amend or extend coverage under the underlying policy, including references to construction contracts, service contracts or insurance requirements, the insurer or producer is, in effect, changing the policy terms. By issuing such a certificate, the insurer or producer is in violation of state law.
Furthermore, state law also prohibits a producer or insurer from intentionally or materially misrepresenting the terms of an actual or proposed insurance contract, and violations can result in the suspension or revocation of a license and in other administrative penalties. Any person who issues a certificate that amends, extends, or alters the insurance policy referenced or otherwise knowingly misstates the terms of the coverage could have his/her license revoked or suspended and/or face other penalties permitted by law.
The department urges all insurers to forward a copy of this bulletin to their agents and to remind their producers of the consequences of providing improper certificates.
If you have any questions concerning this bulletin please contact ______ at ______.
The following is a state by state listing of laws, regulations, and regulatory directives governing certificates of insurance. Simply click on the state link to access the information for that state. Please note that the information provided through this site may not include all of any individual state’s laws, regulations, and regulatory directives concerning certificates of insurance, and should not be considered a definitive listing since developments are evolving on an ongoing basis. If specific information is needed on applicable laws, regulations and/or regulatory guidance for a particular state, an appropriate, competent professional and/or the responsible governing regulatory authority should be consulted.
Last Updated: June 23, 2008
State Listing:
Alabama
Chapter 482-1-062, General Property/Casualty Binders, Certificates of Insurance or Indemnity Agreements was effective on June 5, 2004. This Department of Insurance regulation prohibits insurers and agents from issuing binders, certificates, indemnity agreements, or any other type of instrument which amends, extends, or alters the coverage provided by approved policy forms and endorsements without the written approval of the Commissioner of Insurance.
Each certificate or memorandum of insurance issued to non-policyholders must include the statement: “This certificate or memorandum of insurance neither affirmatively nor negatively amends, extends, or alters the coverage afforded by policy number ________ issued by ____________.”
The regulation also mandates that insurers must file any certificate or memorandum of insurance that is not the standard ACORD or ISO Form “Certificate of Insurance.” In other words, non-ACORD and non-ISO forms cannot be used unless filed with the Department of Insurance.
In addition, insurers and agents cannot issue an “Agent’s Opinion Letter” or any other correspondence purporting an insurance policy provides coverages which the policy does not provide. According to a September 22, 2003 letter to agents from the Deputy Insurance Commissioner, under Title 27-7-19, violations may be subject to a $10,000 fine and imprisonment of up to one (1) year for EACH violation.
California
California Insurance Code, Division 1, Part 1, Chapter 4, Article 1, Section 384 says:
384. (a) A certificate of insurance or verification of insurance provided as evidence of insurance in lieu of an actual copy of the insurance policy shall contain the following statements or words to the effect of:
This certificate or verification of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded by the policies listed herein. Notwithstanding any requirement, term, or condition of any contract or other document with respect to which this certificate or verification of insurance may be issued or may pertain, the insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of the policies.
(b) This section is not applicable to a surplus line broker certificate as defined in Section 48.
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Colorado
Colorado insurance department Bulletin No. B 5.21, issued on December 1, 2007, prohibits the modification of policies by certificates. Specifically, the Bulletin states:
Existing law requires licensed property and casualty producers, agencies and insurers to be truthful in representing the benefits, advantages, conditions, or terms of any insurance policy. There is evidence that there is pressure on insurance producers to issue non-standardized or altering standard certificates of insurance, which incorporate "hold harmless" agreements or other types of clauses that attempt to modify the terms or conditions of the underlying insurance policy. Insurance producers should not issue a certificate of insurance that does not accurately represent the terms or conditions of the policy.
Certificates of insurance generally serve only as evidence of insurance in lieu of an actual copy of an insurance policy. An insurer is under no obligation to abide by any certificate of insurance; which has been modified or created by any person or entity that does not have the actual or apparent authority to do so. Distribution of a certificate of insurance that has been modified, without authorization or the use of a non-standard certificate of insurance not authorized by the insurer, would at the least be misleading and could be in violation of Colorado Insurance Laws.
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Florida
Florida has not yet addressed certificates from the standpoint of statutes or regulations, but the insurance department as issued two regulatory orders dealing with modification of certificates:
A Florida Office of Insurance Regulation Bulletin 94-014, dated June 17, 1994 said in part:
Many cities, counties and corporate insureds have preprinted or modified Certificates of Insurance that are not the same as those normally used by insurers. Some of those certificates have been modified to incorporate "hold harmless" agreements or other clauses that differ from the language in the policy.
Certificates of Insurance are merely evidence of insurance in lieu of an actual copy of the insurance policy. They are to be used to show evidence of insurance. They are not to be used to attempt to modify the terms of the policy itself. No insurer or agent should issue or sign a Certificate of Insurance that contains terms or conditions that differ from those in the underlying policy.
On February 21, 2003, the Florida Office of Insurance Regulation issued Information Memorandum OIR-03-003M “Certificates of Insurance” which said in part:
The purpose of this Memorandum is to address the improper practice of modifying certificates of insurance. It has been brought to the attention of the Office of Insurance Regulation that some individuals or entities may be printing or altering certificates of insurance to incorporate ‘hold harmless’ agreements or other types of clauses in an attempt to modify the terms or conditions of the underlying insurance policy.
Certificates of insurance generally serve only as evidence of insurance in lieu of an actual copy of an insurance policy. An insurer is under no obligation to abide by any certificate of insurance which has been modified by any person or entity which does not have actual or apparent authority to do so. Distribution of a certificate of insurance which has been modified without authorization and which purports to alter the provisions of the underlying policy, misrepresents the conditions or terms of the insurance policy in violation of Section 626.9541(1)(a)1, Florida Statutes, thereby subjecting the person or entity modifying the certificate to license discipline and administrative fines.
Insurers are requested to notify their agents regarding this Memorandum.
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Georgia
The following regulatory directive governs certificates in Georgia:
Georgia Insurance Department Directive 88-R-1
Certificates of Insurance
January 15, 1988
It has been called to the attention of this Department that in many instances large firms have preprinted “Certificate of Insurance” forms for their corporate use.
These forms, generally speaking, are designed to simplify their internal procedure and/or set forth the required insurance limits which the firm would require of a borrower, a contractor, subcontractor doing work for the firm, or other entity requiring evidence of insurance, and in many cases coverage Property, Workers’ Compensation, Employers’ Liability, General Liability, and Automobile Liability.
Our examination of several of these forms indicates that, in some instances, an “Indemnity Agreement” tantamount to a complete “hold harmless” agreement is incorporated within the body of these “Certificate of Insurance” forms. Additionally, some forms appear to have been designed to broaden policy coverages.
It is the opinion of this Department that when an insurance company executes such a “Certificate” which contains more than a synopsis of the actual insurance contract in existence, it is going beyond the scope of its filings and is, therefore, in violation of the Georgia Insurance Code. Therefore no insurer or agent should issue or sign a certificate of insurance that contains language that would alter any policy coverage, exclusion, provision or condition.
All insurers are directed to inform their personnel and agents of the contents of this Directive.
The validity of this directive was confirmed as recently as July 15, 2005 in a letter from Deputy Insurance Commissioner Allan Hayes:
Under O.C.G.A. §33-2-24 , the Commissioner of Insurance has the authority to take action against persons engaged in an act which is prohibited by the Insurance Code (including violations of O.C.G.A. §33-9-21) and also against persons engaged in practices prohibited by the Commissioner's orders (including Directives such as Directive 88-R-1). The Commissioner may issue a Cease and Desist Order or may fine licensed agents and companies ($1,000 per violation; $5,000 per intentional violation) or he may place any insurer, agent, broker, counselor, solicitor, or adjuster on probation or may suspend or revoke the person or entity's license to do business.
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Idaho
The following bulletin was issued by the Idaho insurance department in 2008:
BULLETIN NO. 08-03
DATE: March 27, 2008
TO: Property and Casualty Insurers and Producers writing Property and Casualty Business in Idaho
FROM: William W. Deal, Director
SUBJECT: Certificates of Insurance
The purpose of this bulletin is to remind writers and producers of property and casualty insurance that the purpose of a certificate of insurance is to provide evidence of insurance in lieu of an actual copy of the applicable insurance policy. As previously discussed in Bulletin 68-1, a certificate of insurance must clearly and accurately state the insurance coverage provided by the underlying policy and may not be used to alter, expand or in any way modify the terms of the underlying policy. It is not appropriate to issue an "open ended" certificate of insurance, and the certificate of insurance should clearly identify the policy expiration date.
A person who issues a certificate of insurance that is inconsistent with the underlying insurance policy is misrepresenting the terms of an insurance policy and may be subject to administrative or even criminal penalties for violating Idaho law. See, for example, Idaho Code Sections 41-1016 (illegal for producer to misrepresent the terms of an insurance contract), 41-1303 (illegal for any person to make a statement misrepresenting terms of a policy) and 41-293(1)(c) (insurance fraud includes presenting to a person, with intent to defraud or deceive, a false statement material to an insurance transaction).
In addition, any document intended to amend, add to or otherwise modify the terms of an insurance policy is considered a part of the policy under Idaho Code Section 41-1802 and is required by Section 41-1812 to be filed with the Department before it may be used in this state. It is a violation of this requirement for any person to issue a certificate of coverage that is not consistent with the underlying policy if the certificate has not first been filed with the Department of Insurance. Further, any change to the terms of the underlying policy should be accompanied by a filing of adjusted premium rates to reflect the changes in coverage terms.
To make certain that certificates of insurance do not mislead or result in confusion as to the terms of the underlying insurance policy, certificates of insurance used in this state are to include the following or similar statement:
This Certificate of Insurance neither affirmatively nor negatively amends, extends, nor alters the coverage afforded by the policy or policies numbered in this certificate.
Issued by: __________________________________________ (Company)
Issued to: __________________________________________ (Insured)
Policy Effective Date (s): _____________________________
Policy Expiration Date: _______________________________
Certificates of insurance that are in compliance with Bulletin 68-1 and this bulletin are not required to be filed with the Department of Insurance before being used.
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Illinois
Most recently, on February 11, 2008, the Illinois Department of Financial and Professional Regulation, Division of Insurance, issued a memo to insurers and agents which stated that any certificate of insurance that misrepresents the insurance coverage provided by the policy is a violation of the Illinois Insurance Code. With regard to cancellation, the memo states, "Any requests to include a notice provision that binds the carrier when such provision is not contained in the policy would not be in compliance with the Illinois Insurance Code. Specifically, the memo says:
The Division of Insurance is aware that some insurance producers or insurers are being asked to issue reprinted Certificate of Insurance forms which include language that may amend or alter coverage of the underlying policy. These certificates of insurance are typically used in lieu of providing a full copy of the policy and serve as proof of liability insurance and to summarize terms of the policy. This memorandum is to clarify the use of certificates of insurance by producers or insurers in Illinois.
Certificates of insurance must clearly and accurately state the insurance coverage provided. Any certificate of insurance issued by an insurer, broker or producer that obscures or misrepresents the insurance coverage provided under the insurance policy is a violation of the Illinois Insurance Code and may subject the issuer to administrative penalties and/or license suspension or revocation. Therefore, an insurance agent or broker may not issue a certificate of insurance that does not accurately represent the terms or conditions of the policy without written authority from the insurer to alter the terms or conditions of that policy or unless they have the written underwriting authority to do so. Any requests to include a notice provision that binds the carrier when such provision is not contained in the policy would not be in compliance with the Illinois Insurance Code.
When an insurer or insurance producer, acting as the insurer's agent, executes a certificate of insurance or other evidence of coverage which goes beyond a mere synopsis of the policy, the insurer, broker or producer may be exceeding the policy language filed with the Division. If an insurer, broker or its producer includes any statement in the certificate of insurance, the purpose of which is to amend or extend coverage under the underlying policy, including references to construction contracts, service contracts or insurance requirements, the insurer, broker or producer is, in effect, changing the policy terms. By issuing such a certificate, the insurer, broker or producer is in violation of the Illinois Insurance Code.
The Illinois Insurance Code authorizes the Insurance Director to place on probation, suspend or revoke a producer's license if the producer or broker intentionally misrepresents the terms of an actual or proposed insurance contract. A producer or broker who signs a certificate of insurance or issues an opinion that the producer or broker knows, alters or amends the coverages of the underlying policy, may be in violation of this section and thereby be subject to appropriate penalties under the Code.
Certificates of insurance whether using an Accord from or some other form of certificate of insurance can not provide false information.
All certificates of insurance shall contain the following or similar language: The certificate of insurance neither affirmatively nor negatively amends, extends nor alters the coverage afforded by the policies listed thereon. An industry standard setting organization may be authorized by the Director of Insurance to file certificate of insurance forms on behalf of authorized insurers.
The following guidelines should be reviewed and adhered to by insurers and producers when issuing certificates of insurance:
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No licensed insurer or its licensed broker or producer may issue a binder, certificate of insurance or indemnity agreement or any other type of instrument which either affirmatively or negatively amends, extends or alters the coverage provided by its approved policy forms and endorsements.
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Each certificate or memorandum of property or casualty insurance issued should contain the following or similar statement: "This certificate or memorandum of insurance neither affirmatively nor negatively amends, extends, or alters the coverage afforded by policy number ______ issued by ______ on ______.
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No certificate of insurance shall contain references to construction contracts, service contracts or insurance requirements for the purpose of amending coverage afforded by the policies to which the certificate makes reference. No certificate of insurance may be used to amend, extend, restrict or alter coverage afforded by the policies to which the certificate of insurance makes reference.
In a March 7 news release, our Illinois state association, added the following information:
According to the memorandum, “Certificates of Insurance must clearly and accurately state the insurance coverage provided. Any certificate issued by an insurer, broker or producer that obscures or misrepresents the insurance coverage provided under the insurance policy is a violation of the Illinois Insurance code and may subject the issuer to administrative penalties and/or license suspension or revocation.”
“Anything that is not actually stated in the insured’s policies cannot be shown on a certificate of insurance - period,” said Chuck Schramm, CIC, CPCU, AAI, ARM, CRM, nationally known instructor and consultant on certificates. “Any notice provision which binds the insurer when such provision is in the policy is not in compliance.”
For example, if no endorsement has been added to the policies the Certificate cannot show either Primary Noncontributory or Additional Insureds. In addition, an indemnification agreement or any other non-policy language can not be added to a Certificate. There is no endorsement to include a contract's indemnification clause in the definition of "insured contract." Moreover, none of the preprinted language on the Certificate may be deleted.
Producers found in violation may have their license placed on probation, suspended or revoked. In addition to suspension or revocation of a license a person may, after hearing, be subject to civil penalties of up to $10,000 for each cause of action.
“In Illinois 27% of Professional Liability claims are directly related to Certificates of Insurance, the number one source of E&O claims,” said Dennis Garrett, PIIAI Vice President, Errors & Omissions Program. “These practices end up costing everyone in the form of higher premiums as well as time lost.”
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Iowa
On August 7, 2007, the Iowa insurance department issued Bulletin 07-04 which includes the following prohibition on altering or removing language from ACORD forms:
The Department is aware that some insurance producers or insurers are being asked to issue preprinted certificate of insurance forms which include language that may amend or alter coverage of the underlying policy. These certificates of insurance are typically used in lieu of providing a full copy of the policy and service as proof of liability insurance and to summarize terms of the policy. This Memorandum is to clarify the use of certificates of insurance by producers or insurers in the State of Iowa.
Iowa Code 515.109 requires all polices prior to use in Iowa be reviewed and approved by the Commissioner of Insurance. If an insurer or insurance producer in any way alters or omits language of a pre-approved form, this may be in violation of Iowa Code (515.109). Furthermore, the practice of altering or removing language from any pre-printed forms such as Accord and ISO is also prohibited.
To ensure that those who are requesting a certificate of insurance are aware that the certificate is neither expanding or restricting coverage, an insurer or producer should include on the certificate a statement such as, "This certificate of insurance neither affirmatively nor negatively amends, extends, or alters the coverage afforded by policy number ______ issued by ______ on ______." A similar statement is included on the preprinted certificate of insurance forms available from ACORD and ISO. The ACORD and ISO forms will be accepted by the Department so long as the forms are not altered to modify terms of the underlying policy.
Iowa Insurance Code 505.8 gives the Commissioner of Insurance general control, supervision, and direction over all insurance business transacted in the state, and allows the commissioner to take administrative action against any Insurance Companies or Producers who intentionally misrepresent terms of an actual or proposed insurance contract.
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Kansas
In 2007, Kansas became one of a number of states that seek to regulate certificates of insurance in a manner similar to policy forms. Whereas most of these states regulate the use of certificates of insurance via insurance regulations or insurance commissioner edicts, Kansas could be the first state to do so in statute. The law requires certificates of insurance forms be filed and approved by the Kansas Insurance Department prior to use. Statutory language states that a certificate cannot be used to modify, alter or amend an insurance policy.
The law allows standard setting organizations like ACORD to file their forms as industry standards. Here is the actual statutory language:
KSA 40-955(b)
Certificate of insurance forms must be filed with the commissioner of insurance and approved prior to use. Notwithstanding the ‘‘large risk’’ filing exemption in subsection (j), a certificate of insurance cannot be used to modify, alter or amend the insurance policy it describes. The certificate of insurance shall contain the following or similar language: The certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by the policies listed thereon. An industry standard setting organization may be authorized by the commissioner of insurance to file certificate of insurance forms on behalf of authorized insurers.
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Kentucky
Kentucky’s statute KRS 304.14-120 says, "Prior to its use, each insurer shall file with the commissioner the form of certificate or memorandum of insurance which will be used by such company."
806 KAR 14:100. Certificate not to alter contract
RELATES TO KRS 304.14-120
Statutory Authority: KRS 304.2 - 110
Necessity, Function, and Conformity: KRS 304.2 - 110
Provides that the Commissioner of Insurance may make reasonable rules and administrative regulations necessary for or as an aid to the effectuation of any provision of the Kentucky Insurance Code. This administrative regulation requires that memoranda or certificates of insurance, as herein defined, shall not amend, extend or alter the coverage of an existing contract. Section 2. Prior to its use, each insurer shall file with the commissioner the form of certificate or memorandum of insurance, which will be used by such company. (1 Ky.R. 1082; Am.2 Ky.R. 26; eff. 7-2-75.)
Here is a clarifying opinion published by the insurance department on September 2, 2004:
Kentucky Office of Insurance
Advisory Opinion 2004-03
Regarding: Certificates of Insurance
RELEVANT FACTS AND STATUTES: Questions persist regarding altered certificates of insurance that do not accurately reflect the actual coverage provided by the identified policy contracts. There seems to be a continuing misunderstanding by agents and insurers in the Commonwealth on this subject.
The purpose of this Advisory Opinion is to remind insurers and agents of Kentucky law and to clarify the position of the Office of Insurance.
A certificate of insurance is an informational document that provides evidence of insurance in lieu of an actual copy of the identified policy of insurance at the time the certificate is issued. A certificate confers no rights upon the certificate holder that do not exist in the policy contract.
806 KAR 14:100 states: “Sec. 1. Each certificate or memorandum of property or casualty insurance when issued to any person other than the policyholder shall contain the following or similar statement: "This certificate or memorandum of insurance neither affirmatively nor negatively amends, extends, or alters the coverage afforded by policy number ____ issued by ____. Section 2. Prior to its use, each insurer shall file with the commissioner the form of certificate or memorandum of insurance which will be used by such company.”
Agents and insurers who use Certificate of Insurance forms which have not been filed and approved are in violation of 806 KAR 14:100.
Most insurers utilize, or permit their agents to use, certificate of insurance forms printed by ACORD or ISO which have been filed with the Kentucky Office of Insurance. Insurers may file to adopt these forms by reference pursuant to 806 KAR 14:006. Or insurers may develop and file their own certificate of insurance forms.
It is contrary to law for an agent or insurer to issue, or permit to be issued, a certificate of insurance in a form not previously filed by the insurer and approved by the Office of Insurance or that contains terms or conditions that differ from those in the underlying policy.
KRS 304.14-120(1) provides “No basic insurance policy or annuity contract form, …or printed rider or endorsement form or form of renewal certificate, shall be delivered or issued for delivery in this state, unless the form has been filed with and approved by the commissioner.“
KRS 304.12-020 provides in part “No person shall make or disseminate orally or in other manner any advertisement, information, matter, statement, or thing: (1) Misrepresenting the terms of any policy…”
The law provides the following penalties for agents and insurers who engage in the practice of altering certificates of insurance:
KRS 304.9-440(1) provides the commissioner may place on probation, suspend, or may impose conditions upon the continuance of a license for not more than twelve (12) months, revoke, or refuse to issue or renew any license or may levy a civil penalty in accordance with KRS 304.99-020, or any combination of actions for any one (1) or more of the following causes: (b) Violating any insurance laws, or violating any administrative regulations, subpoena, or order of the commissioner or of another state's insurance commissioner; (e) Intentionally misrepresenting the terms of an actual or proposed insurance contract, viatical settlement contract, or application for insurance;
KRS 304.3-200 provides: (1) The commissioner may, in his discretion, refuse to continue or may suspend or revoke an insurer's certificate of authority if he finds after a hearing thereon, or upon waiver of hearing by the insurer, that the insurer has: … (b) Willfully violated or willfully failed to comply with any lawful regulation of the commissioner; or (c) Willfully violated any provision of this code other than those for violation of which suspension or revocation is mandatory.…In lieu of or in addition to such suspension or revocation, the commissioner may, in his discretion, reprimand the insurer, which shall be made a part of the insurer's record, or may levy upon the insurer, and the insurer shall pay forthwith, an administrative fine as specified in KRS 304.99-020. (2) The commissioner shall suspend or revoke an insurer's certificate of authority on any of the following grounds, if he finds after a hearing thereon that the insurer: …(e) Has actual knowledge by the chief executive officer or person in charge of Kentucky operations that an agent employed by the insurer has engaged or is engaging in conduct in violation of this code and the insurer has failed to report such conduct to the department.
POSITION OF THE OFFICE OF INSURANCE: The Office of Insurance will not attempt to enforce the coverage provided in an altered certificate as the plain language of 806 KAR 14:100 and the certificate state that a certificate can neither amend, extend, nor alter the coverage afforded by the policy.
The Office of Insurance stands ready to investigate and take appropriate administrative action should altered certificates be brought to our attention.
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Louisiana
This 1969 Louisiana law establishes that any certificate that purports to change coverage under the policy must be filed as required of any endorsement of coverage, and certificates must include certain language:
Chapter 81. Regulation 30C
Certificates of Insurance Coverage
§8101. Certificates of Insurance
A. It has come to the attention of this department that certificates of insurance for automobile and general liability insurance are being executed by companies or their agents. Certificates of insurance are pre-printed forms that many large corporations require persons or contractors employed by them to furnish to prove that they have insurance.
B. Some of these certificates purport to enlarge or vary the policy of insurance involved. When this is attempted, it is in violation of Louisiana Revised Statute 22:620 which requires that companies obtain approval of all endorsements that are used in the state of Louisiana.
C. Therefore, in order to avoid any misunderstanding of the effect of any certificate of insurance signed by an insurance company or its agent, any such certificate must contain the following or similar language:
This certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by Policy Number _______________issued by ________________________________.
D. Companies shall inform their agents of the contents of this regulation. Please acknowledge receipt of this regulation promptly.
AUTHORITY NOTE: Promulgated in accordance with R.S. 22:2.
HISTORICAL NOTE: Promulgated by the Department of Insurance, Commissioner of Insurance, April 23, 1969.
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Minnesota
The following is a June 2008 bulletin from the Minnesota insurance department. According to our state association, "The Department bulletin illustrates that certificates of insurance should be used to provide proof of insurance and summarize the terms of a policy. Their bulletin clearly states that it is a violation of state law for an insurance producer to misrepresent the terms of an insurance policy on a certificate of insurance. Insurance producers found to violate these laws could be subject to civil penalties and even license revocation.
"The bulletin also warns persons seeking amended certificates that altered or supplemental terms and coverages might not be contractually enforceable. We would encourage MIIAB members who receive requests to amend an insurance certificate that they know to be misleading or contrary to the policy or state law, to provide a copy of this bulletin to the requestor."
STATE OF MINNESOTA
DEPARTMENT OF COMMERCE
Bulletin 2008-03
Issued on June 20, 2008
To: All Property and Casualty Insurers, Insurance Producers, and Other Persons Engaged in the Business of Insurance in Minnesota
Subject: Certificates of Insurance Summarizing Terms of Insurance Policies
The Department of Commerce understands that, in some commercial contexts, parties will routinely enter a contract requiring one of the parties to have or obtain insurance with terms specified in the contract. To prove that such insurance has been obtained, the party often delivers to the party requiring such proof a Certificate of Insurance instead of the actual insurance policy. The Certificate of Insurance is issued by the party's insurer or insurance producer, and it summarizes the terms of the insurance policy. The Department understands that other circumstances give rise to the legitimate use of Certificates of Insurance as well.
However, insurers and insurance producers are sometimes asked to issue Certificates of Insurance that alter or supplement the terms and coverages of the insurance policy. Persons receiving such amended Certificates of Insurance should bear in mind that the altered or supplemental terms and coverages might not be contractually enforceable. Moreover, if such an amended Certificate of Insurance actually misrepresents the terms or existence of the insurance policy, then the insurer or insurance producer that issued the Certificate would be violating MINN. STAT. §§ 60K.43, subd. 1(5) or 72A.20, subd. 1 (2006). Violation of these laws could subject the insurer or insurance producer to administrative enforcement, including civil penalties and license revocation.
If you have any questions about this Bulletin, please contact Mr. Robert Commodore at (651) 296-4026 or Robert.Commodore@state.rnn.us.
EMMANUEL MUNSON-REGALA
Deputy Commissioner
Nebraska
Nebraska Department of Insurance Bulletin CB-118 was issued on June 20, 2008:
BULLETIN
SUBJECT: ISSUANCE OF CERTIFICATES OF INSURANCE
Certificates of insurance, evidences of insurance and similar documents (collectively "certificates") serve a valuable purpose by providing a summary of the terms of an insurance policy to a third party. The Nebraska Department of Insurance ("Department") is aware, however, that insurers and insurance producers are asked upon occasion to provide certificates that purport to amend, extend, or alter the coverage of the underlying policy. The purpose of this Bulletin is to advise insurers and insurance producers that certificates are not the proper method by which to amend a policy, that amending such certificates may create an errors and omissions exposure, and that this activity violates Chapter 44 of the Nebraska Revised Statutes.
Nebraska law, specifically Article 75 of Chapter 44 of the Nebraska Revised Statutes, requires insurers to file insurance policies and endorsements thereto intended for use in this state with the Department. When an insurer or insurance producer executes a certificate that attempts to do more than offer a synopsis of the policy, the insurer or producer risks the creation of obligations that are not payable by the underlying policy. This violates Article 75, as insurers are not to enter into insurance obligations, except as are provided through properly filed insurance policies. The Department urges all insurers to forward a copy of this Bulletin to their appointed producers and customer service representatives and to remind them of the consequences of providing improper certificates.
If you have any questions concerning this Bulletin please contact the Department's Property and Casualty Division at (402) 471-2201.
Ann M. Frohman
Director
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New Jersey
According to Bulletin 98-5, Certificates of Insurance, issued by the New Jersey Department of Insurance on February 18, 1998:
Certificates of insurance are used in many commercial contexts as proof that a policy of insurance is in effect, and usually summarize the essential terms, conditions and duration of the policy. Certificate forms are not filed with the Department, even though the policy form they summarize are filed and approved by the Department pursuant to the Commercial Insurance Deregulation Act, 17:29AA-l et seq. Use of certificates of insurance is particularly prevalent to provide proof of liability and workers' compensation coverages.
It has come to the attention of the Department that some public or commercial organizations may be requesting that contractors produce certificates of insurance that evidence terms or conditions of coverage that may be inconsistent with the underlying policy or contract. Certificates of insurance should be used only to provide evidence of Insurance in lieu of a copy of the actual policy, and cannot be used to amend, expand or alter its terms.
N.J.S.A. 17:22A-17a(7) prohibits material misrepresentation of the terms and conditions of insurance contracts or policies to any person. Providing a certificate of insurance that materially misrepresents policy terms or conditions would violate that statute and subject a producer to penalties that may include suspension or revocation of the producer's license. Additionally, if the producer providing an improper certificate of Insurance were an agent of the insurer, civil liabilities may be created.
The Department urges all insurers to review their oversight procedures regarding certificates of insurance in order to avoid misrepresentations of the terms and conditions of their policies, and to remind their producers about the consequences of providing improper certificates..
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New York
The State of New York has issued at least two regulatory directives dealing with certificates of insurance. The first was Circular Letter No. 8, date June 7, 1995, which was distributed to all licensed P&C insurers in the state:
It has come to our attention that some cities, counties, and other organizations require as a condition of doing business that insured parties produce certificates of insurance on forms that appear to alter the terms of the actual policy. Some of these certificates incorporate "hold harmless" agreements or other clauses that alter the language of the policy, or include statements that the wording of the certificate will control in the event of any inconsistency or conflict between the certificate and the policy.
Insurers are advised that certificates of insurance should be used only to provide evidence of insurance in lieu of an actual copy of the applicable insurance policy. Certificates should not be used to amend, expand, or otherwise alter the terms of the actual policy.
A certificate of insurance that lists the pertinent coverage terms as they appear in the actual policy is not considered a policy form that requires the Superintendent's prior approval. However, one that amends, expands or otherwise alters the terms of the applicable insurance policy constitutes a policy form, which must be filed with the Superintendent of Insurance in accordance with Section 2307(b) of the Insurance Law.
The second was Circular Letter No. 15, dated January 27, 1998, which was sent to all licensed producers, P&C insurers, and city, state and municipal agencies and other public authorities and corporations:
This supplements Circular Letter No. 8, June 7, 1995
It has come to our attention that city, state and municipal agencies and other public authorities and corporations require, as a condition of doing business, that insured parties supply evidence of insurance on preprinted forms supplied by the agency. These forms may appear to alter, expand or modify the terms of the subject insurance policy. In other cases, the Government agency may require the insured to add terms to the standard ACORD certificate of insurance form which do not appear in the insurance policy.
In addition, it has come to our attention that some licensed producers may complete these certificate of insurance forms on behalf of their clients and add terms or clauses that the public entity requires but which are not contained in the insurance policy.
A certificate of insurance which lists the pertinent coverage terms as they appear in the actual policy is not considered a policy form that requires the Superintendent’s prior approval. However, any document that amends, expands or otherwise alters the terms of the applicable insurance policy constitutes a policy form which must be filed with the Superintendent of Insurance in accordance with Section 2307(b) of the Insurance Law.
Licensed producers are advised that they may not add terms or clauses to a certificate of insurance which alter, expand or otherwise modify the terms of the actual policy unless authorized by the insurer which has filed an appropriate endorsement with the Superintendent of Insurance and obtained prior approval, if required. The Department may seek disciplinary measures against producers who continue this practice without authorization from the insurer.
City, state, and municipal agencies, and other public authorities and corporations are advised that a certificate of insurance, even one completed by a licensed producer, is not the best evidence of the terms of an insurance policy and may not accurately reflect the actual terms of the policy.
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North Carolina
North Carolina General Statute §58-3-150(a) states the following:
It is unlawful for any insurance company licensed and admitted to do business in this State to issue, sell or dispose of any policy, contract or certificate, or use applications in connection therewith, until the forms of the same have been submitted to and approved by the Commissioner . . . [emphasis added]
In an Important Note to the instructions for the ACORD 25, the ACORD Forms Instruction Guide references North Carolina as one of several states where the certificate of insurance is a filed form and that it “has filed all of its certificates in these states.”
No agent or insurer writing admitted business can alter a filed ACORD certificate without a re-filing and re-approval of the amended form by the Department of Insurance. This interpretation coincides with that of the North Carolina Department of Insurance, as outlined in a May 22, 2006 letter from Commissioner Jim Long.
As an example, alteration or deletion of the words “endeavor to” from the Notification Section at the bottom of the ACORD 25 would require that the form be re-filed and approved by the DOI before it could be used.
One issue that has yet to be fully resolved is whether or not proprietary forms required by large corporations, government entities, major contractors, and others are required to be filed or, if not, whether completing such forms would be a violation of the law. Until that issue has been fully resolved, it is suggested that agents NOT complete non-ACORD/non-filed certificates without the express authority and direction of the insurer.
In addition to this issue, the Commissioner’s letter cautioned against the fraudulent issuance of certificates or other documents. It is believed that several statutes offer punitive measures, possibly including NC GS §58-3-150 and GS §58-2-161.
Subsequently, Commissioner Long issued a memorandum to all licensed insurers dated September 15, 2006 regarding "Properly Addressing the Special Insurance Needs of Insureds in North Carolina" which said:
The North Carolina Department of Insurance has been receiving complaints concerning the inappropriate handling of special insurance needs of insureds. It has come to my attention that some insurance agents have been altering certificates of liability insurance and adding terms and conditions to certificates of liability insurance that do not appear in the insurance policy. For example, in some certificates of liability insurance where the insured is a general contractor engaged in construction projects in North Carolina, some agents have been altering certificates so that it appears that a certificate holder has a right of notice of cancellation against the insurer when there is no such notification provision in the policy itself. I am writing to notify you of the problem of agents altering insurance certificates, to request your assistance in educating your agent force and to request that you offer policies and policy endorsements that are designed to properly address the special needs of insureds and certificate holders in North Carolina.
Education of Your Agents
Please advise your agents that the North Carolina Department of Insurance has a longstanding position that insurance agents may not alter Certificates of Insurance. This position is based in part on North Carolina General Statute 58-3-150(a) which states "[i]t is unlawful for any insurance company licensed and admitted to do business in this State to issue, sell, or dispose of any policy, contract, or certificate, or use applications in connection therewith, until the forms of the same have been submitted to and approved by the Commissioner, and copies filed in the Department..."
Alteration of insurance certificates can have serious ramifications for agents. Such alterations may give rise to adverse administrative proceedings being initiated against an agent's insurance licenses. These proceedings would be based in part on the following statutes:
• NCGS 58-33-46(a)(5): The Commissioner may place on probation, suspend, revoke, or refuse to renew any license issued under this Article, in accordance with the provisions of Article 3A of Chapter 150B of the General Statutes, for intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance.
• NCGS 58-33-46(a)(8): The Commissioner may place on probation, suspend, revoke, or refuse to renew any license issued under this Article, in accordance with the provisions of Article 3A of Chapter 150B of the General Statutes, for using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this State or elsewhere.
It should also be noted that certain alterations of certificates of insurance may also raise issues of possible criminal misconduct under a variety of criminal fraud statutes.
The bottom line is that no agent should engage in alterations of insurance certificates and companies should make sure that its agents refrain from such activity.
Properly Addressing the Special Insurance Needs of Contractors
If an insured wants special insurance provisions, the insured's insurance agent should request that the insurer write an insurance policy which contains the special provisions that the insured requires. Whether this is done through a policy endorsement or through an individual risk policy will depend on the situation. If and only if the policy contains such special provisions, then the insurance agent may properly insert an accurate statement of the special policy provisions in the special provisions block of the certificate of insurance.
Agents confronted with demands for special provisions must pass these market demands on to the insurance companies with an explicit request that these special provisions be included in the insurance policy. It is only the insurance carriers that can effectively address the insured's special insurance needs.
I am personally requesting that insurance companies offer policies and policy endorsements that fully and properly address the special insurance needs of insureds and that are in accordance with North Carolina insurance laws. In particular, I am personally asking that insurance companies offer policies and policy endorsements that fully and properly address the special insurance needs of general contractors and other entities and that are in accordance with North Carolina insurance laws. My staff and I are committed to expediting any insurance company policy and form filings that seek to offer such special provisions in their policies which are designed to address the special insurance needs of insureds in North Carolina.
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Pennsylvania
Pennsylvania Statute Section 40 P.S. § 477b (2006) requires that certificates be filed for use:
It shall be unlawful for any insurance company, association, or exchange, including domestic mutual fire insurance companies, doing business in this Commonwealth, to issue, sell, or dispose of any policy, contract, or certificate, covering life, health, accident, personal liability, fire, marine, title, and all forms of casualty insurance, or contracts pertaining to pure endowments or annuities, or any other contracts of insurance, or use applications, riders, or endorsements, in connection therewith, until the forms of the same have been submitted to and formally approved by the Insurance Commissioner, and copies filed in the Insurance Department, except riders and endorsements relating to the manner of distribution of benefits, and to the reservation of rights and benefits under any such policy, and used at the request of the individual policyholder, and except any forms which, in the opinion of the Insurance Commissioner, do not require his approval. [emphasis added]
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Tennessee
Beginning on June 10, 1974, Tennessee insurance department rules, Chapter 0780-1-22, based on authority from the Tennessee Code Annotated §56-2-301, governed certificates. However, the rule was repealed by the commissioner effective October 23, 2004.
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Texas
On September 8, 2006, the Texas insurance department issued COMMISSIONER'S BULLETIN #B-0035-06 which stated:
The Department reminds all carriers and agents that a certificate of insurance must clearly and accurately state the insurance coverage provided. A certificate of insurance that obscures or misrepresents the insurance coverage provided under the insurance policy is a violation of the Insurance Code, including §§541.051, 541.061, and 4005.101(b)(5) and (6). Additionally, agents are reminded that they are prohibited from altering the terms or conditions of a policy under Insurance Code §§4001.051(c) and 4001.052(b). Violation of the provisions of Chapter 541, 4001, or 4005 may result in administrative penalties and/or license revocation.
The Department is issuing this bulletin because it has received information that indicates some certificates of insurance provided to contractors are either obscure as to the types of coverage contained in the policy or misrepresent the coverage under the policy.
As provided in the Department’s previously issued General Casualty Bulletin No. 369, Automobile Series No. 417, and W.C. Circular Letter No. 392, dated February 1, 1968, the Department again highlights sample language that may be used on each certificate of insurance issued:
In compliance with Texas law, this Certificate of Insurance neither amends, extends, or alters any term or condition of the coverage afforded by Policy No. _______ issued by _______________ on __________(date).
Instances of a company or agent issuing or executing a certificate of insurance that obscures or misrepresents coverage under the insurance policy should be reported to the Consumer Protection Division of the Texas Department of Insurance at 1-800-252-3439 or ConsumerProtection@tdi.state.tx.us.
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West Virginia
In February 1969, the West Virginia insurance commissioner distributed West Virginia Informational Letter No. 3 which said:
Certificates of Insurance are being executed by some companies and agents which extend coverage beyond that afforded by or intended in the insurance contract being certified. Certificates that go beyond designating the property of the risk insured and the type and limits of coverage provided may become in effect another or separate insurance policy. Many certificates appear to be so broad in their scope as to guarantee a hold harmless status against almost any kind of liability.
Issuance or execution of certificates of insurance enlarging on authorized or prescribed forms which extend coverage not afforded by the original contract is in violation of the Insurance Code. We call your attention to Chapter 33, Article 6, Section 8, "Approval of Forms." No insurance policy form, rider, endorsement, or other form to be attached to any policy shall be issued or delivered in this state without having prior approval of this Department.
When such a certificate is executed by a company or agent, the company or agent responsible for this act will be subject to the penalties provided under the West Virginia Insurance Code.
Each certificate of insurance issued should contain the following or similar language:
"This certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by policy number ______, issued by ______."
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Wisconsin
From our Wisconsin state association:
WISCONSIN INSURANCE COMMISSIONER ISSUES BULLETIN ON CERTIFICATES OF INSURANCE ABUSES
Wisconsin Commissioner of Insurance, Sean Dilweg (“OCI”), has issued an April 23, 2008 Bulletin regarding the issuance of Certificates of Insurance. The Bulletin warns agents and companies that certain alterations can result in violation of Wisconsin insurance laws, which in turn can lead to license suspensions, forfeitures and fines.
Certificates of Insurance are routinely issued by agents in the context of many commercial transactions. However, the incidents of amending or altering certificates of insurance that do not represent actual policy language or that are contrary to the certificate’s instructions are increasing. Such alterations and modifications can constitute a misrepresentation of the coverages provided. The Bulletin sets forth OCI’s view of such alterations and modifications.
Certificates of Insurance are not insurance forms requiring preapproval by OCI, if used for the purpose intended. The Certificate of Insurance is a document that simply describes insurance in effect for a particular risk, as of the date of issuance of the certificate. When used in the foregoing manner, with appropriate notices and disclaimers, there is no issue whatsoever. However, when agents or others alter the certificate, problems can arise. The listing of persons as “additional insureds” without the issuance of a corresponding endorsement and the altering the language of the notice provisions are examples of modifications to the certificate which can result in the certificate altering the terms and provisions of the underlying policies. In this event, the certificate becomes a document that now purports to extend insurance coverage, contrary to its stated purpose, and may at times be contrary to the actual policy. For this reason, OCI has issued the Bulletin to give clear instruction to Wisconsin companies and agents that certificates should only be used for the purpose intended. Companies and agents who make modifications that alter the underlying policies will be deemed to be in violation of Wisconsin law. This violation can result in loss of license, as well as the imposition of fines up to $1,000 per day. Accordingly, when agents receive requests to modify certificates, they should be aware of the potential consequences of their actions.
The IIAW supports the publishing of the “Issues Regarding the Use of Property and Casualty Certificates of Insurance” Bulletin. We have been aware for some time of the pressure put on agents to use certificates to list additional insured or to make other changes to the underlying policies. These pressures come from a variety of sources: banks, engineering firms, contractors, lawyers, municipalities, etc. These requests arise in a number of commercial transactions where insurance is a requirement. Agents are on the frontline when such requests are made and have to explain (many times unsuccessfully), why the requested certificate modifications are not appropriate. In most instances these explanations fall on deaf ears. The Bulletin will provide assistance to agents and will allow them to respond to inappropriate demands by providing OCI’s position on such demands. The Bulletin provides a useful enforcement tool. When agents receive requests to alter certificates by third parties which may affect the terms of the underlying policies, those agents can now articulate reasons why they should not do so. The Bulletin is an excellent educational tool for such third parties. No longer can they be deaf to agent concerns.
The IIAW has worked long and hard with the OCI to issue such a bulletin. We have been at the forefront of this issue long before others recognized its importance. The Bulletin addresses both education and agent protection. We congratulate OCI for taking a leadership position in addressing certificate of insurance abuses.
Date: April 23, 2008
To: All Property and Casualty Insurers and Agents
From: Sean Dilweg, Commissioner of Insurance
Subject: Issues Regarding the Use of Property and Casualty Certificates of Insurance
“Certificates of Insurance” are typically used to provide proof of liability insurance and to summarize the terms of the policy for a third party instead of providing a complete copy of the policy. This Bulletin is to clarify the use of certificates of insurance by intermediaries and insurers within the State of Wisconsin.
Section 631.20, Wis. Stats., generally requires insurers to file insurance policy forms with OCI prior to using the forms in Wisconsin. Section 628.34(1), Wis. Stats., provides that “No person who is or should be licensed … may make or cause to be made any communication relating to an insurance contract … which contains false or misleading information, including information misleading because of incompleteness.”
Certificates of insurance which clearly and accurately state the insurance coverage provided to an insured or third party are not forms subject to filing with OCI because these certificates do not affirmatively or negatively amend, extend or alter coverage of the underlying policy. They simply summarize the coverages.
Where an insurer or an agent acting on behalf of the insurer uses a certificate of insurance or other evidence of coverage which goes beyond an accurate summary of the policy, the insurer or agent may be misrepresenting the policy language as issued by the insurer and filed with OCI. Language included in the certificate that amends or extends coverages of the underlying policy or states that coverage is actually in force when it is not is a misrepresentation. An insurer or agent issuing these certificates would be in violation of s. 628.34(1), Wis. Stats., and may be subject to administrative penalties including possible license suspension or revocation.
To insure that consumers as well as those requesting certificates of insurance are aware that the certificate does not expand or restrict coverage, an insurer or agent should include on the certificate a statement such as: “This certificate of insurance neither affirmatively nor negatively amends, extends or alters the coverage afforded by the policies described herein.” A similar statement is included on the preprinted certificates of insurance forms provided by both ACORD and ISO.
OCI encourages insurers to notify their agents of this bulletin. If you have any questions regarding the information contained in this bulletin, you may contact Ronnie Demergian at Ronnie.Demergian@WI.Gov or 608-266-7077.
Thank you.
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Wyoming
The Wyoming insurance department issued Memorandum 01-2007 on June 19, 2007 which says in part:
The Department is aware that some insurance producers or insurers have been asked to sign and issue preprinted certificate of insurance forms which include language that may affirmatively or negatively amend, extend or alter the coverage of the underlying policy. Certificates of insurance are typically used to serve as proof of liability insurance and to summarize the terms of the policy in lieu of providing a full copy of the policy. The purpose of this Memorandum is to clarify the use of certificates of insurance by producers or insurers in Wyoming.
Certificates of insurance must clearly and accurately state the insurance coverage provided. Any certificate of insurance issued by an insurer or producer that obscures or misrepresents the insurance coverage provided under the insurance policy is a violation of the Wyoming Insurance Code and may subject the issuer to administrative penalties and/or license suspension or revocation.
Wyoming Statute § 26-15-110 requires insurers to file policies intended for use in Wyoming with the Department for review. A policy form cannot be used in Wyoming until the Department approves the form. When an insurer or insurance producer, acting as the insurer's agent, executes a certificate of insurance or other evidence of coverage which goes beyond a mere synopsis of the policy, the insurer or producer may be exceeding the policy language filed with and approved by the Department. If an insurer or its producer includes any statement in the certificate of insurance, the purpose of which is to amend or extend coverage under the underlying policy, including references to construction contracts, service contracts or insurance requirements, the insurer or producer is, in effect, changing the policy terms. By issuing such a certificate, the insurer or producer is in violation of the Wyoming Insurance Code.
To ensure that consumers as well as third parties requesting a certificate of insurance are aware that the certificate does not expand or restrict coverage, an insurer or producer should include on the certificate a statement such as, "This certificate or memorandum of insurance neither affirmatively nor negatively amends, extends, or alters the coverage afforded by policy number ______ issued by ______ on ______. A similar statement is included on the preprinted certificate of insurance forms available from ACORD and ISO. The ACORD and ISO forms are acceptable to the Department so long as the preprinted forms are not altered to modify the terms of the underlying policy.
The Wyoming Insurance Code, in Wyo. Stat. § 26-9-211, authorizes the Insurance Commissioner to place on probation, suspend or revoke a producer's license if the producer intentionally misrepresents the terms of an actual or proposed insurance contract. A producer who signs a certificate of insurance or issues an opinion that the producer knows alters or amends the coverages of the underlying policy, may be in violation of this section and thereby be subject to appropriate penalties under the Code.
The following guidelines should be reviewed and adhered to by insurers and producers when issuing certificates of insurance:
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No licensed insurer or its licensed producer may issue a binder, certificate of insurance or indemnity agreement or any other type of instrument which either affirmatively or negatively amends, extends or alters the coverage provided by its approved policy forms and endorsements.
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Each certificate or memorandum of property or casualty insurance issued should contain the following or similar statement: "This certificate or memorandum of insurance neither affirmatively nor negatively
amends, extends, or alters the coverage afforded by policy number ______ issued by ______ on ______.
No certificate of insurance shall contain references to construction contracts, service contracts or insurance requirements for the purpose of amending coverage afforded by the policies to which the certificate makes reference. No certificate of insurance may be used to amend, extend, restrict or alter coverage afforded by the policies to which the certificate of insurance makes reference.
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No licensed insurer or its producer licensed to do business in Wyoming shall have the authority to issue an "Agent's Opinion Letter" or any other correspondence purporting an insurance policy provides coverages which the policy does not provide.
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