IIAT WEBCAST UPDATE

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IIAT WEBCAST UPDATE
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WELCOME
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David Surles Jim Gavin
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Best Practices for Certificates of Insurance
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IIAT Task Force
Randy Lee Swantner and Gordon Insurance Corpus
Christi Gina Jones Anco Insurance Services of
Austin Austin Bob Bentley Upshaw Insurance
Agency, Inc. Amarillo Todd Teitell Colemont
Insurance Brokers Dallas Phil Hagan Crump
Insurance Services of Texas Dallas Marty
Michell Admiral Insurance Company Austin David
Surles IIAT Staff Liaison Austin
David Wood, Chair Bogan, Dunlap Wood
Insurance Odessa Tom Ellis McQueary Henry Bowles
Troy, LLP Dallas Bob Holloway USI
Southwest Houston Jeff Jordan First Texas
Insurance Services, LC Arlington Dwayne
Baker Capitol City Insurance Agency Austin Joe
Clayburne IBTX Risk Services San Antonio Becky
Chapa Amerisure Insurance Dallas
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TIG Insurance Company and Safety Lights Sales and
Leasing, Inc. v. Sedgwick James of Washington
and Lumbermens Mutual Casualty Co.
Case No. 01-20235 U.S. Court of Appeals for the
Fifth Circuit January 9, 2002
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Agency Issued Certificates for U.S. Delivery
showing Safety Lights as additional insured
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Agency Issued Certificates for U.S. Delivery
showing Safety Lights as additional
insured Agency failed to request additional
insured endorsement from the insurer, Lumbermens
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Agency Issued Certificates for U.S. Delivery
showing Safety Lights as additional
insured Agency failed to request additional
insured endorsement from the insurer,
Lumbermens Independent Contractor of U.S.
Delivery injured on Safety Lights premises and
sued
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Safety Lights demanded defense from Lumbermens
who declined
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Safety Lights demanded defense from Lumbermens
who declined Safety Lights insurer (TIG) settled
for 235,000 plus defense costs of 38,650
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TIG Insurance Company v. Sedgwick James of
Washington
Facts
Safety Lights demanded defense from Lumbermens
who declined Safety Lights insurer (TIG) settled
for 235,000 plus defense costs of 38,650 TIG
and Safety Lights sued agency and Lumbermens
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TIG Insurance Company v. Sedgwick James of
Washington
Allegations

• Agency was negligent for failing to request
• additional insured endorsement
• Issuing the Certificate bound Lumbermens
• Violations of Insurance Code, DTPA, breach
• of contract, fraudulent and negligent
• misrepresentation, breach of duty of good
• faith and fair dealing and fraud

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TIG Insurance Company v. Sedgwick James of
Washington
Appeals Court Ruling
Agency Agreement with Lumbermens delegated
authority to issue certificates but not alter
policy terms therefore certificate did not
create coverage or obligate Lumbermens Safety
Lights could not reasonably rely on the
certificate which contained a disclaimer No
evidence agency committed fraud or negligent
misrepresentation
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TIG Insurance Company v. Sedgwick James of
Washington
A ruling in the agencys
favor. PRICELESS How much did
it cost to get there?......
INCALCULABLE
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Solutions
Managers must gain control of certificates Must
implement procedures to see that certificates are
checked and double checked Must educate
customers and certificate holders that
certificates and policies cannot always satisfy
certificate holders requests
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General Recommendations
Establish Written Procedures
Pages A-24 A-25
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General Recommendations
Perform a Self Audit
Page A-2
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General Recommendations
Follow the ACORD Forms Instruction Guide Follow
the Task Force Recommendations Do not alter
wording on ACORD or other printed forms
Follow company guidelines and your
agency authority
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General Recommendations
Document who requested the certificate and what
was requested. Obtain the insureds permission
before issuing Require the use of a checklist
when completing a certificate Designate
technically proficient people to double check
each certificate before it is delivered
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Recommendations accompany each section of
the ACORD form
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AuthorizedRepresentative
Admitted Carrier with which you have an
appointment
Agency Principal Employee with General Lines
License Employee with ISR License
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AuthorizedRepresentative
Admitted Carrier with which you have an
appointment
Agency Principal Employee with General Lines
License Employee with ISR License
Both must be appointed by agency and authorized
by agency principal to issue certificates
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AuthorizedRepresentative
Admitted Carrier with which the agency is not
appointed
The authorized signature must be a licensed agent
appointed by the insurer usually the managing
general agent or wholesaler
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AuthorizedRepresentative
Non-admitted (Surplus Lines)
Licensed surplus lines agent who has
been authorized by the originating surplus
lines agent or the insurer to execute
certificates of insurance
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AuthorizedRepresentative
Other Items
1. Facsimile or electronic signature of an
authorized representative is permitted 2. If you
are an authorized representative for one
insurer on the certificate but not for
another, you must prepare two certificates
and obtain the signature of an authorized
representative for the other insurer
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Cancellation
Leave number of days blank unless holder
insists Do not strike through endeavor or
attempt or alter the form in any way
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Cancellation
If the certificate holder insists on
receiving notice
We are pleased to attach a certificate of
insurance issued on your behalf for
the captioned client. Please note the
following The policy includes an endorsement
providing that __ days notice of cancellation or
coverage change will be furnished to the
certificate holder
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Cancellation
If the insurer refuses to add a
cancellation endorsement

• We are pleased to attach a certificate of
  insurance
• issued on your behalf for the captioned client.
  We are
• unable to issue the certificate of insurance as
  requested
• for the following reasons
• The insurance company does not allow __ days
  notice
• of cancellation
• The insurance company will nor provide notice of
• cancellation to certificate holders
• The insurance company does not allow the
  certificate
• to be altered by removing the word endeavor
  from
• the cancellation wording

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Additional Insureds
Page 2 of the ACORD Certificate
If the certificate holder is an additional
insured the policy(ies) must be endorsed. A
statement on this certificate does not confer
rights to the certificate holder in lieu of such
endorsements
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Additional Insureds
Arising out of your work performed by or for you
CG 20 10 (1985)
Arising out of your ongoing operations
CG 20 10 (1993)
Caused by your acts or omissions or those working
on your behalf
CG 20 10 (2004)
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Additional Insureds
CG 20 26
Designated Person or Organization
CG 20 37
Additional Insured - Owners, Lessees, or
Contractors Completed Operations
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Additional Insureds
Recommendations
Check box for each section only when an
endorsement is attached to the policy Do not
enter anything in the DESCRIPTION section
concerning additional insureds Release
certificate only after confirmation
that endorsement will be issued
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Additional Insureds
Recommendations
Do not check the box when the policy includes a
blanket automatic additional insured endorsement
We are pleased to attach a certificate of
insurance issued on your behalf for the
captioned client. Please note the
following The General Liability policy
includes a blanket automatic additional insured
endorsement that provides additional insured
status only when there is a written
contract between the named insured and the
certificate holder that requires such status
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Additional Insureds
When endorsement doesnt match requirements

• We are pleased to attach a certificate of
  insurance
• issued on your behalf for the captioned client.
  We are
• unable to issue the certificate of insurance as
  requested
• for the following reasons
• The insurance company does not allow the
  inclusion of
• primary and noncontributory wording on a
  certificate
• Due to filing requirements of the Texas
  Department of
• Insurance, the insurance company is only
  permitted to
• use additional insured endorsement __________
• The insurance company allows only the certificate
  
• holder to be shown as an additional insured and
  does
• not allow listing of multiple additional insureds

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TDI Bulletin B-0035-06
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.
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TDI Bulletin B-0035-06
Section 541.051
Misrepresentation regarding Policy or Insurer
Section 541.061
Misrepresentation of Insurance Policy
Sections 401.051 and 401.052
Acts Constituting Acting as an Agent
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Texas Administrative Code 5.203
No insurer or agent may issue to a third party
any certification of insurance indicating the
amount and type of insurance held by an insured
unless the certificate contains the following
statement or a statement which is substantially
the same as the following "This Certificate of
Insurance neither affirmatively or negatively
amends, extends, or alters the coverage afforded
by Policy No. ____ issued by __________."
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Texas Administrative Proposed Changes

• Repeal the Current Rule

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Texas Administrative Proposed Changes

• Repeal the Current Rule
• Require certificate forms and opinion letters
• be filed and approved by TDI

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Texas Administrative Proposed Changes

• Repeal the Current Rule
• Require certificate forms and opinion letters
• be filed and approved by TDI
• Prohibit insurers and agents from issuing
• certificates that
• Have not been approved by TDI
• Obscure or Misrepresent Coverage

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Questions
In case you zoned out the operator said hit
01 if you have a question
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Next Webcast
March 8 830 CST Documentary Party 101
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Thank You

• Thank you for your participation. If you have
  comments, questions or other feedback regarding
  this webcast, send them toPaul MartinDirector
  of Educationpmartin_at_iiat.org