Insurance Certificates – New Issue

As proof that questions about insurance certificates remain and are still a hot topic among insurance agents, the first item discussed at yesterday’s meeting of IIAG’s Commercial Lines committee was insurance certificates.  A new issue that I had not heard before concerned what should a Georgia insurance agency do when one of its insureds is performing work in another state and the person or entity for which the work is being performed asks for a certificate of insurance that contains language which would not be permissible under Georgia law.  The concern was expressed that the issuance of such a certificate by the Georgia agency would subject the agency to the penalties imposed by that law, because it was issued in Georgia.

Although not crystal clear, the Georgia insurance certificate statute does contain language that addresses the above situation.  In pertinent part, it states that its provisions “shall apply to all . . . certificate of insurance forms issued as evidence of insurance coverages on property, operations, or risks located in this state, regardless of where the certificate holder, policyholder, insurer, or insurance producer is located.”  Its that last clause about the location of the persons involved with a certificate that seems to have created some confusion in the minds of Georgia insurance agents.  The first part of the above language tells me that the requirements imposed by Georgia law only apply to certificates of insurance that are issued for things located, or activities taking place, in this state.  If the thing or activity for which the insurance certificate is issued is not in Georgia, Georgia law does not apply to that certificate, even though it is issued by a Georgia insurance agency or agent. Conversely, the last clause of the above language tells me that if that thing or activity is in Georgia, Georgia law applies to the certificate issued for it regardless of the location of the person issuing the certificate, the holder of the insurance policy that is the subject of the certificate, or the person to whom the certificate is issued.

The above application of Georgia’s insurance certificate law is consistent with the constitutional principle that a state government’s laws can only apply to persons, places, or things that are located, or activities that occur, within the borders of that state.  Thus, for agencies that have insureds who engage in business activities in other states, it is important to know what the laws of those states say about the issuance of insurance certificates.  Fortunately, the IIABA has compiled a list of such laws for every state.  That list was last updated in May of this year and can be found by clicking here.

There was some discussion at the Commercial Lines committee meeting about making changes to the regulation that has been issued by the Insurance Commissioner to clarify the scope of Georgia’s insurance certificate law.  Stay tuned for further developments.