It is an issue that often surprises policyholders.  Company A obligates Company B to name Company A as an additional insured on Company B’s liability policy.  Company B obtains a lability policy and secures a Certificate of Insurance that states that Company A, the certificate holder, is an additional insured on Company B’s liability policy.  It seems OK so far.  Then Company A seeks coverage, as an additional insured, from Company B’s liability insurer.  Company B’s liability insurer responds that, despite what the COI may say, about Company A being an additional insured, Company A is not in fact an additional insured.  Company A’s response is to be perplexed -- and then some. 

Insurers usually win these cases.  First, while the Certificate of Insurance states that Company A is an additional insured on Company B’s liability policy, the COI also likely states, six ways from Sunday, and some are written in all caps, that the COI is issued for information purposes only, does not amend the policy and confers no rights upon the certificate holder, especially additional insured rights.    

Another reason insurers usually win these cases is that the party that issued the COI was often-times not authorized to speak for the insurer in the first place.  For example, the COI may have been issued by the named insured’s broker, which had no authority to bind the insurer.  

Thanks to the Ninth Circuit’s request in T Mobile United States v. Selective Insurance, No. 17-35932 (9th Cir. Nov. 9, 2018), the Washington Supreme Court may resolve this additional insured issue:  A party is listed as an additional insured under a Certificate of Insurance.  And, importantly, the COI was issued by the insurer’s authorized agent, and not simply a broker for the named insured.  However, the COI also contains all of the language noted above stating that it confers no rights on the party seeking coverage as an additional insured.   

The Ninth Circuit concluded that this issue involves two principles of Washington insurance law that are at “loggerheads:” First, “under Washington law, an insurance company is bound by all acts, contracts, or representations of its agent, whether general or special, which are within the scope of [the agent’s] real or apparent authority. The second is that under Washington law, the purpose of issuing a [COI] is to inform the recipient thereof that insurance has been obtained.  Accordingly, under Washington law, a COI is not the functional equivalent of an insurance policy, and it therefore cannot be used to amend, extend, or alter the coverage provisions of an insurance policy.”

Noting that this critical question of Washington law is not settled, the Ninth Circuit certified the following question to the high court of Washington (which can accept it or not): “Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party’s status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?”