On November 9, 2018, the Ninth Circuit certified an important coverage question to the Washington Supreme Court about whether a certificate of insurance (COI) purporting to add T-Mobile as an additional insured on another company’s insurance policy binds the insurance company listed on the certificate. T-Mobile USA Inc. v. Selective Insurance Company of America, 908 F.3d 581 (9th Cir. 2018).
The case should serve as a reminder that businesses may not be able to rely on, and should not rely on, a certificate of insurance alone when they sign agreements with third parties who are supposed to add them as additional insureds.
In the T-Mobile case, a regional subsidiary of T-Mobile entered into an agreement with a company called Innovative Engineering, relating to the construction of rooftop cellular antennae towers in New York City. The agreement required Innovative, among other things, to maintain general liability insurance naming the T-Mobile subsidiary as an additional insured. T-Mobile was provided with a certificate of insurance that appeared to show that T-Mobile was covered as an additional insured under Innovative’s insurance policy. When a property damage claim later arose, T-Mobile tendered the claim to Innovative, requesting that Innovative notify its insurance company, Selective Insurance Company of America. Selective denied T-Mobile’s claim on the grounds that T-Mobile was not named as an insured and did not qualified as an additional insured.
The Ninth Circuit acknowledged that a certificate of insurance alone under Washington law does not change the terms of an insurance policy, where the insurance policy does not also provide coverage for an additional insured: “[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.” 908 F.3d at 585 (emphasis in the original). See also Postlewait Constr. Inc. v. Great Am. Ins. Cos., 106 Wn.2d 96, 100-01 (1986); Int’l Marine Underwriters v. ABCD Marine, LLC, 165 Wn. App. 223, 233 (2011). Here, however, it was the insurance company’s own agent that had assured T-Mobile that it would be covered as an additional insured. As such, the Ninth Circuit recognized that Washington law also provided that “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.” 908 F.3d at 585, quoting Chicago Title Ins. Co. v. Wash. State Office of Ins. Comm’r, 178 Wn.2d 120, 136 (2013). In light of these competing Washington authorities, the Ninth Circuit certified the question to the Washington Supreme Court.
The T-Mobile case is unique because it turns on representations made by the insurance company’s own agent. But, for the vast majority of certificates out there, and uniformly across U.S. jurisdictions, the COI itself does not actually provide any insurance.
How do you protect yourself? Insist on seeing the insurance policy endorsement that actually extends coverage to your business and adds you as an additional insured. If the third party promised to add you, and obtained a certificate for you, you might think you are covered. But unless you actually confirm the coverage, you may be out of luck. You might have a claim for breach of contract against the third party, but that might only go so far if the third party has limited assets. It is much better to have the financial resources of an insurance company to protect you. By reviewing the underlying policy or endorsement, you will also be able to make an informed decision about whether you need to beef up your own insurance to address future risks.