As discussed in the April 2015 issue of The E&O Report, New York Insurance Law was amended with regards to Certificates of Insurance. The primary provisions of Insurance Law Sections 501 and 502, which went into effect on July 28, are as follows:

1. The new law limits what is an acceptable form to be used for Certificates of Insurance. An acceptable form, such as the ACORD 25 Certificate of Insurance form, must be specifically approved by the New York State Department of Financial Services;
   
2. Additional insureds cannot require conditions or language be added​ to certificates except for specific policy terms. “No person or governmental entity shall willfully require the inclusion of terms, conditions or language of any kind, including warranties or guarantees” unless the insurance policy specifically includes such terms, conditions or language;
   
3. A certificate shall not amend, extend or alter the coverage provided by the insurance policy that is referenced in the Certificate.
   

No Problems So Far

We anticipate the application of the new law will be a work in progress as it becomes known to additional insureds throughout New York. There will be a learning curve as businesses, individuals and governmental entities become aware of the certificates law and change their insurance requirements in order to comply with the law’s restrictions.

To date, we are aware of very few requests by a business, individual or governmental entity that violates the new certificates law. However, a review of insurance requirements posted online by several governmental entities, including the New York City Department of Transportation and the New York City Mayor’s Office of Film, Theatre and Broadcasting, continue to include certification requirements that violate the new Certificate of Insurance law. We assume many other entities have also failed to update their insurance requirements.

Enforcement

The new certificates law is, however, a relatively toothless law. The statute merely makes it illegal to “require” a non-approved Certificate or warranty of coverage; it does not prevent an additional insured from “requesting” that a condition or language be added to a certificate. Further, although the statute provides a penalty of up to $2,000 for a violation of the new law by private individuals and businesses, governmental entities are not subject to the enforcement penalty. Since it is governmental entities that most frequently require improper certificates, guarantees or warranties, it renders the statute toothless in many instances.

Conclusion
Despite the law’s shortcomings, it does provide insurance agents and brokers ammunition to respond to improper requests by their customers or, more specifically, their customers’ additional insureds. Please keep our firm advised if you encounter individuals, businesses or governmental entities that require illegal certificates or demand unlawful certifications, guarantees or warranties.

Further, be sure to continue to use the most up-to-date ACORD Certificate of Liability Insurance Form (ACORD 25 (2014/01). Finally, whenever possible, deliver a copy of the policy with the Certificate of Insurance. This will put the additional insured on notice of the full terms, conditions, exclusions and limitations contained in the policy. It will also prevent the additional insured from successfully blaming or filing a claim or lawsuit against the insurance producer when a carrier denies coverage to an additional insured. Please keep us advised as to any individual, business or governmental entity that requests the issuance of a certificate that might violate New York’s new law.

Submitted by
Stephen C. Cunningham, Esq.
Keidel, Weldon & Cunningham, LLP