Insurance Certificates – Still More Questions

Nine years after the passage of a law governing the issuance and contents of insurance certificates,  I am still getting new and interesting questions about those documents.  In the past few weeks, callers to the Free Legal Service Program I operate for members of the Independent Insurance Agents of Georgia have posed two questions that are new to me, at least.  One of them involves a situation, the possible existence of which all insurance agents should be aware when they are asked to issue an insurance certificate.  The other was about a more mundane, but still important, issue.

ISSUANCE OF CERTIFICATE AFTER POLICY LIMITS EXHAUSTED

The first question involved a situation where the insured had an umbrella policy with an annual limit, which limit had been reached before the end of the policy period.  The insured was still asking that insurance certificates be issued for it.  The question was whether those certificates should continue to show the existence of the umbrella policy with its annual limit, which was in the millions of dollars.

A good argument can be made that issuing such an insurance certificate with no indication that the annual limit for the umbrella policy has been exhausted would be a violation of Georgia law.   That law specifically forbids the issuance of an insurance certificate  that “contains any false or misleading information.”  A certificate holder who was provided with an insurance certificate that stated the insured had a specified amount of coverage can reasonably be expected to assume at least some portion of that coverage remains available to cover any claims it may have or that may be made against it based on the acts or omissions of the insured.   If there is no such coverage available and the certificate makes no mention of that fact, the certificate holder could validly claim that such a certificate was at least misleading, if not actually false.

If an agent or agency knows the limits of coverage of a policy referred to on an insurance certificate have been exhausted, to avoid an allegation that an insurance certificate describing such a policy as being in force contained misleading information, the certificate should contain a statement that the coverage limits for the policy year shown have been exhausted.  Having said that, the next logical question is does an agent or agency have a duty to determine whether the limits of an insurance coverage specified on an insurance certificate have been exhausted before issuing the certificate.  As with most such legal questions, the answer is it depends.  While I don’t think there is any such general duty, in certain situations where the agent or agency had good reason to believe the limits had been exhausted, a court may well find there was a duty to determine whether, in fact, that was the case before issuing an insurance certificate covering the policy in question.

WHO CAN BE LISTED AS THE CONTACT PERSON

The second question involved who can be listed as the contact person on an insurance certificate.  In particular, does such a person have to be licensed?  My response was no, as long as any conversation about the insurance certificate does not touch on the sale of insurance.  Such a conversation must consist solely of explaining the meaning of the certificate and the insurance coverages referred to on it.  Any such unlicensed person should be instructed to avoid any mention of the sale of an insurance product in responding to questions about the certificate.  For example, if the certificate reveals the lack of a needed insurance coverage, an unlicensed person cannot discuss the sale by the agency of the type of insurance coverage needed to fill that gap.  Only a licensed agent can discuss the sale of insurance coverage with a third party.

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