A person is injured on a sidewalk outside a building. Whose insurance policy responds?

The building owner insisted that the previous occupant’s insurance policy should respond because of a certificate of insurance that named the building owner as an additional insured. The certificate stated that the insurance company would endeavor to contact the building owner if the liability coverage was cancelled but the building owner stated that it did not receive any notice.

The tenant moved out at the end of its lease three months earlier and its policy was endorsed to delete both the building and the building owner.

The West Virginia Supreme Court decided that the building owner was not owed a notice of cancellation and that the tenant’s insurance company did not have any obligation to the building owner.

Click here for more details on this court case.

Certificates of insurance are hot topics of conversation. They are simply snapshots of a policy on the day they are issued but many certificate holders want much more. They are really more interested in tomorrow than today, but certificates were never intended to reflect the policy over an extended period.

Click here to review a Rough Notes Magazine article by Don Malecki illustrating concerns over certificates of insurance.

Some contract terms demand that one party name the other an additional insured on its policy. This is one way to reduce its liability obligations and pass them to the party that controls the liability exposure. The larger question is how long an additional insured should expect to remain on another party’s insurance policy.

Click here to review the PF&M description of the Insurance Services Office (ISO) Commercial General Liability additional insured endorsements.

ACORD introduced an updated ACORD 25–Certificate Of Liability Insurance in October 2009 that addresses a number of the points raised in this court case. The major changes include:

• Lead-in language that explains that it is issued as a matter of information only and does not represent a contract

• Additional language that explains that it represents only that the policy was issued and that it may be subject to exclusions and conditions

• Additional language explaining that the limits indicated may have been reduced by paid claims

• No area provided to list endorsements

• No statement that the insurance company will endeavor to notify the certificate holder. Wording added states that notice will be delivered in accordance with policy provisions.

Click here to review the ACORD 25 Certificate of Liability Insurance 2009/09 edition (16KB PDF).

ACORD has updated and replaced the following:
24–Certificate Of Property Insurance
25–Certificate Of Liability Insurance
38–Notice Of Information Practices (Privacy)
72–Mobile Home Supplement
80–Homeowners Application
81–Personal Inland Marine Section
83–Personal Umbrella Application Section
88–Personal Insurance Application Applicant Information Section
89–Residential Section
125–Commercial Insurance Application
126–Commercial General Liability Section
131–Umbrella/Excess Section
823–Additional Premises Information Schedule

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