Important Court Cases Related to Certificates of Insurance

For the most part, Certificates of Insurance are a simple concept. They are a straightforward, non-complicated documents that merely summarize one’s insurance coverage and ultimately serves as a sort of proof that a specific entity or individual has adequate insurance coverage for a specific purpose.

While simple and informational in nature, these documents have faced many legal challenges over the years regarding the extent of their legitimacy and legal standing. Some of these challenges involve cases addressing the following questions:

• Are Certificates of Insurance contracts?
• What happens if coverage identified on a certificate does not match the actual coverage?
• Does the “will endeavor to” language on the ACORD form create any rights to notice of cancellation for a certificate holder?

Below are a few of these COI related cases that address these specific questions.

United States Pipe & Foundry Co. v. United States Fidelity & Guaranty Co., 505 F.2d 88 (5th Cir. 1974)

In the question of whether COIs are considered contracts, the court ruled that the Certificate of Insurance didn’t grant contractual rights since there had been no exchange of consideration as required to affect a valid, enforceable contract.

Lezak & Levy Wholesale Meats, Inc. v. Illinois Employees Insurance Co., 460 N.E.2d 475 (Ill. Ct. App. 1984)

To answer the question of what happens when the coverage on the certificate doesn’t match the coverage in the policy, the court in this case, determined that the coverages stated on the Certificate of Insurance did not supersede the actual coverages identified in the policy, due to the language presented on the Certificate that says it was not part of the policy.

Bradley Real Estate Trust, et al. v. Plummer & Rowe Insurance Agency, Inc., 609 A2d 1233 (Sup. Ct. NH, 1992)

Additionally, in regard to the same question addressed above, in this case, the court stated, “In effect, the certificate is a worthless document; it does no more than to certify that insurance existed on the day the certificate was issued. We leave it to the legislature or to the future bargaining of the parties to rectify inequities in the notification process.

Nazami v. Patrons Mutual Insurance Company, Nos. 17537, 17539, Atlantic Reporter 2d 209, (December 5, 2006)

In regard to the question posed above of does the “will endeavor to” language on the ACORD form create any rights to notice of cancellation for a certificate holder, the Connecticut Supreme Court, in this case, ruled that failure to provide notice of cancellation under the ACORD certificate of insurance did not constitute fraud or negligence. According to the case, both the fraud and negligence allegations were dropped because of the disclaimer language on the certificate and that certificate was issued as “a matter of information only” and did not constitute a contract.

These are just a few of the many legal cases that have been decided around Certificates of Insurance. While they remain simple straightforward documents, they have had and will continue to have their complexities that we are sure will lead to additional legal cases and case law.