Insurance Certificates – the Insurance Commissioner’s Latest Actions

In a post a couple of weeks ago, I told my readers to stay tuned for further developments from the Insurance Commissioner’s Office on the subject of what could and could not be included in the Description of Operations section of the ACORD form 25 Certificate of Liability Insurance.  IIAG had been in touch with that Office about some inconsistencies that had come to light between its latest guidance on that subject and the instructions for that ACORD form.   In particular, the statement that it was illegal to include in the Description of Operations section ”any information other than a brief explanation of the operations of the insured; this section is not to be used for describing the insurance policy.”

That statement no longer appears on the website portal created by the Insurance Commissioner’s Office to facilitate the reporting of suspected violations of the law and regulation on insurance certificates.  Instead, it has been replaced by the statement that it is improper to use “a form that certifies that insurance coverage complies with the provisions of the insured’s contract with the cert holder, rather than summarizing the policy (a certificate is a synopsis of coverage under a policy; it is not (sic) document stating that a policy complies with the contractual obligations of the insured to obtain specified insurance coverage).”  This new statement forbids the inclusion of any language on an insurance certificate that does not purport to be a summary of the provisions of the insurance policy or policies referred to in the certificate.

Apparently, it is now permissible to include in the Description of Operations section of the ACORD form 25 statements that summarize a policy’s provisions.  However, the earlier guidance that it is improper to require “that a summary of a policy provision be added to the certificate which varies from the precise and complete language of the provision” remains.  My interpretation of these two statements is that an agent cannot put language on an insurance certificate that is requested by a third party unless that language is the “precise and complete language of the provision” of the insurance policy in question.  However, an agent is free to put language on a certificate that summarizes the provisions of the insurance policy in question, if that language is the agent’s own language and otherwise complies with the instructions for the completion of the ACORD form 25.

In deciding how to summarize the provisions of the insurance policy in question, an agent needs to keep in mind that it is illegal to put on a certificate “any false or misleading information” or anything “that purports to affirmatively or negatively alter, amend, or extend the coverage provided by the policy of insurance to which the certificate makes reference.”  Therefore, any summary of the provisions of the insurance policy in question must be completely accurate.  I would recommend that agents who don’t want to have to worry about whether their summary of such provisions meets this standard to instead refer to the specific part of the insurance policy or an endorsement to it where the requested information can be found and either attach a copy of that part of the policy or the endorsement to the certificate or offer to provide a copy of those documents upon request.