In case you didn’t already know this, I’ll try to make it clear. Forget whatever you “used to know.” The rules have changed. The history isn’t important.
A Certificate of Insurance CONFERS NO RIGHTS on the Certificate Holder. It is not a contract between the insurance company and the Certificate Holder. The insurance company is not obligating itself to do anything for the Certificate Holder. The insurance company says it will “endeavor” to let the Certificate Holder know if the coverage is being terminated, but the Certificate Holder has no recourse against the insurance company if it doesn’t give such a notice.
I doubt there are any jurisdictions (states) left where you can get a custom form of Certificate of Insurance that would give you, the Certificate Holder, any of these rights. Successful pleas were made by the insurance industry to various legislatures and regulatory rule makers, and the highly supervised insurance industry succeeded in getting the “law” to protect insurance companies against themselves by barring them from issuing meaningful Certificates of Insurance.
Basically, a Certificate of Insurance is only a “snapshot” of what insurance was being carried at the very time the Certificate was prepared. And, a Certificate doesn’t, and never did, show the details of the coverages in sufficient form such that you would know what endorsements were included. And, if the insurance coverage changed the very next day, even if the changes were “in the works,” the Certificate would never reveal that.
So, what’s a concerned “mortgagee” or other form of “loss payee” or an “additional insured” to do?
To enjoy any one of those (perhaps) exalted statuses, the actual policy has to “know who you are.” In the case of a mortgagee who wants “mortgagee-loss payee protection,” you need to be named on the Declaration page of the policy and you’ve got to be sure that the actual policy form used includes, as part of its conditions, “mortgagee” coverage. The very commonly used ISO property insurance policy does.
In the case of any other type of “Loss Payee,” you’ve got to be identified on either the policy’s Declaration Page or on the Endorsement, which MUST be part of the policy itself. Further, you’ll want to make sure that the Declaration page of the policy ACTUALLY LISTS the Endorsement. One of the purposes of a policy’s Declaration page is to list every form that makes up the entire insurance policy. Essentially, all of the listed forms are “incorporated by reference” into the policy itself. And, as if all of that isn’t yet enough, the Loss Payable Endorsement itself has three “options,” and you’ll still have to make sure you’ve been designated under the right option. Lastly, just because you are properly named, doesn’t mean that you don’t have to make sure that your kind of interest in the insured property qualifies you for that particular Loss Payee status.
Now, Mortgageholder and other Loss Payee statuses are all “property insurance” interests. Being an Additional Insured is concerned with a whole other kind of policy or coverage – Liability Insurance. The basics are the same. Forget the Certificate of Insurance. Verify that there is an Additional Insured Endorsement, and the proper one at that. If the policy’s Additional Insured Endorsement is not in “blanket” form, make sure you are named as an Additional Insured on the policy’s Declaration page or on the Endorsement itself. If it is in blanket form, make sure your right to be an Additional Insured derives from a written agreement. Make sure you actually qualify for protection under the Additional Insured Endorsement. BUT HERE IS THE BIG ONE! There are more than 30 types of Additional Insured Endorsements, all for different situations. You need to make sure the policy includes the right one and that you qualify for coverage under it. Some endorsement forms are “blanket” in nature. Some require that the Additional Insured’s name be included. The standard ones for leases are CG 20 12 and CG 20 24 [and not the CG 20 10]. How will you know which one is the one you need? You’ll ask an insurance professional. You can expect a Blog entry on the topic, but “who knows when,” and it will not be a substitute for getting help from a real, true, genuine insurance expert. That’s not this lone Ruminator.
Oh, yes – there is one more thing. If you want to be really, really sure you have coverage, buy the policy yourself. Then, you control what you’ve bought. If you think being an Additional Insured affords you protection, then when the other party loses the policy or you find out the coverage wasn’t right, you’ll have a claim against that other party. But, if you felt the other party needed insurance in the first place (after all, insurance is primarily “credit enhancement”), then you shouldn’t expect that the other party can write you a check. If you own the building, carry your own property insurance. Charge the other party if you will, but control the policy.
Oh, yes – another “one more thing.” It isn’t enough to make the documents call for Loss Payee or Additional Insured status. It isn’t enough to look for the “right” papers at the outset of the deal. You’ve got to monitor the continued coverage and any changes to the coverage. There are services that do that for you. If the coverage was important, you ought to look into such services.