1. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! What You and Your Client Need to Know About Certificates of Liability Insurance Presented By: Insurance Community Center, LLC Presenter: Marjorie L. Segale, AFIS, CISC, CIC, CRIS, RPLU, ACSR, CISR ICC Director of Education President Segale Consulting Services, LLC 1

2. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Disclaimer Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This book is intended as a general guideline and might not apply to a specific situation. Information which is copyrighted by any proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers. The author and any organization for which this seminar is conducted shall have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this book. Contact Info: 714.206.9583 www.insurancecommunitycenter.com marjorie@segaleconsulting.commarjorie@segaleconsulting.com www.segaleconsulting.comwww.segaleconsulting.com 2

3. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center We are happy to present this inaugural webinar from your Community Timely Topics and hope that you find the information helpful. Community Timely Topics  Presented once or twice per month  Notification will go out at least one week prior to the webinar date 3

4. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Community Timely Topics  Will cover timely topics such as:  New insurance issues  Lessons learned from current events  New case law that impacts insurance  Market update  What’s new in the insurance community

5. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Community Timely Topics  Powerpoint presentations AND audios on the topics presented are available after the webinar through the ICC University to University members and their staff  Surveys will be sent immediately following each session for you to comment on the webinar presented and to suggest topics you would like presented in the community

6. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Community Timely Topics  By popular demand we will be offering a second webinar on Certificates of Insurance on December 16 th at 11:00 AM PST

7. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! University Lecture Series  The ICC University will be offering a webinar to all members and staff on a monthly basis  The schedule of The University topics will be published on December 15, 2010  Each topic will include presentation and reference materials

8. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! University Lecture Series  The University Lecture series will begin with “How To Insure” lectures targeting specific industries such as:  How to insure a manufacturer  How to insure a winery  How to insure e-commerce risk  How to insure contractors

9. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! 9 Certificate Basics

10. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! What Is A Certificate? A certificate of insurance is a document issued by or on behalf of an insurance company to a third party who has not contracted with the insurer to purchase an insurance policy A business agrees to provide evidence of certain coverages, such as General Liability, Business Auto Liability or Workers’ Compensation due to a business agreement between themselves and another party 10

11. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Why Are Certificates Used? Certificates of insurance are crucial to transacting business Many types of situations: Leases Vendor agreements Construction contracts 11

12. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! ACORD Certificate of Liability Insurance This form is used as the insurance industry standard form Accepted by most entities Insurance companies typically do not create their own Certificates Insurance agents cannot create their own 12

13. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Policy: Contract Between Insurer and Insured Insured Enters Into Business Contract Agrees to Certain Insurance Requirements The Insurer Did NOT Enter Into That Other Contract Agent Issues Cert – NOT Company 13

14. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Primary Areas of Concern Changing the cancellation provision Listing parties on the Certificate as Additional Insured No endorsement to the policy 14

15. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! ACORD Forms Instruction Guide Agents or brokers should not change any provision on this form without prior consent of the issuing company. The ACORD Certificate should be issued only in compliance with company instructions. 15

16. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! ACORD Forms Instruction Guide Guidelines state NOT to use: To quote wording from a contract To quote any wording which amends a policy unless the policy itself has been amended (like ‘person named below is hereby added as additional insured’) 16

17. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Results of Improper Issuance Substantial litigation for decades Recipient / insurance company / agent Insurance company / agent State Insurance Departments are beginning to regulate use of Certificates ACORD company has revised the form 17

18. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! State Insurance Departments At least 3 states required change in language South Dakota / New Hampshire / New York These three states have been very “vocal” in their opposition to the old language – others are following 18

19. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! State Regulation of Certificates Some states expressly prohibit modification of certificates as they are filed with the state Kentucky Minnesota North Carolina Wisconsin In these states, any modifications must be filed 19

20. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! State Regulation of Certificates Virtually every other state will not allow any change in a certificate of insurance that would attempt to modify a policy unless the revised certificate is filed and approved. In these states, this form can only be changed to reflect the terms and conditions of the policy on which it is reporting. Such change(s) must be approved in advance by the insurance carrier that issued such policy. 20

21. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! State of Idaho – Department of Insurance Bulletin 08-03 21

22. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! State of Idaho – Department of Insurance Bulletin 08-03 22

23. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Department of Consumer and Business Services – Insurance Department 23

24. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Department of Consumer and Business Services – Insurance Department 24

25. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Indiana Bulletin # 170 – Issued 4-3- 2009 25

26. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Indiana Bulletin # 170 – Issued 4-3- 2009 26

27. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! California / Washington No bulletin as yet 27

28. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Certificate of Liability Insurance Let’s Compare a prior version of the ACORD Certificate to the 9-2009 edition 28

29. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Notice of Cancellation Notice of cancellation is a POLICY right, not a voluntary service The policy, often following state law, determines who gets notice of cancellation for what reason(s), and with how much advance notice NONE of the ISO additional insured endorsements provide for any notice of cancellation to the AI AND restrict notice to the First Named Insured 29

30. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Policy Cancellation Language A.Cancellation 1.The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation. 2.We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least: 30

31. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Policy Cancellation Language a.10 days before the effective date of cancellation if we cancel for nonpayment of premium; or b.30 days before the effective date of cancellation if we cancel for any other reason. 31

32. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Effect of Change Follows policy language Reduces improper issuance by insurance agents Compliance with state regulations Business contracts need to be reviewed by both contractual parties  The contract could require that the other contractual party be required to notify in the event of coverage cancellation 32

33. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! What Are Insurance Companies Doing? Will not review certificates MGAs / Wholesalers being more care ful about reviewing certificates At least one insurance company has just come out with an endorsement that changes the policy to allow the producer to issue notice of cancellation 33

34. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Authority of Producer to Issue Notice of Cancellation and Non-renewal on Behalf of the Insured In the event of cancellation or non-renewal of this policy by either you or us, the first named insured authorizes the producer of record to send notice of the applicable cancellation or non-renewal on its behalf to any person or organization which the first named insured or any other named insured has: agreed to provide notice of cancellation or non-renewal of this policy; and provided the name and address of such person or organization to the producer of record. The first named insured represents that the producer of record has agreed to provide such notice. Failure of the producer of record to provide the notice will not: impose liability of any kind upon us or the producer of record; or 34

35. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Related Issues Additional Insured Requirements Primary, Non-contributory wording Waiver of Subrogation 35

36. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Additional Insured Requirements Language on a Certificate was NEVER binding upon the insurance company The party requesting this coverage MUST have an endorsement to the policy  Wording on a Certificate is irrelevant 36

37. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Primary, Non-Contributory Wording Language on a Certificate was NEVER binding upon the insurance company The party requesting this coverage MUST have an endorsement to the policy  Wording on a Certificate is irrelevant 37

38. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Waiver of Subrogation Policyholder is allowed to waive subrogation in General Liability and Business Auto policies An endorsement is available with both of these policies for express agreement if desired Waiver of subrogation is not generally allowed on Workers’ Compensation policies 38

39. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Business Contract vs. Insurance Certificate of Liability Insurance May Not Match Requirements Must Match Insurance Policies Insurance Policies Often Do Not Match Requirements Business Contract Requires InsuranceRequires a Certificate 39

40. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Coverage Confirmation Help Your Client With Their Business Practices, Contracts and Agreements 40

41. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Receiving Coverage Confirmation Make sure the Certificate is unaltered Request copy of policy language to support insurance requirements  Policy  Endorsements  Additional Insured Endorsement  Waiver of Subrogation  Primary, Non-Contributory 41

42. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Receiving Coverage Confirmation Verify limits of liability insurance are at least equal those required by the contract Verify that any names shown on the endorsements are correct 42

43. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Match Contract With Coverage Check contracts for appropriate and available insurance requirements The agent/broker needs to educate their clients about these issues  Will not eliminate the push-back on these changes but may help going forward  Watch out for new language in contracts that the 2009 edition of the ACORD is no longer acceptable 43

44. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Match Contract With Coverage Insurance buyers will need to  Submit proper RFP identifying insurance specifications that will be provided  Teach your clients to review contract language before signing 44

45. Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Insurance Community Center A Center For Learning, A Community For Sharing www.InsuranceCommunityCenter.com Find us on LinkedIn & Facebook! Summary Requiring a document that incorrectly describes insurance coverages is not helpful  Could result in spending thousands of dollars in legal fees to pursue litigation or to defend oneself from litigation Agents, brokers or producers that continue to violate the guidelines of Certificate issuance do so at their own peril and possible loss of their livelihood. 45