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(Article from Insurance Law Alert, November 2018)

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The Ninth Circuit asked the Washington Supreme Court to address whether the rule that an insurer is bound by an authorized agent’s representations overrides the rule that certificates of insurance do not change the scope of coverage under a policy, where the certificate expressly echoes the latter rule.  T-Mobile USA Inc. v. Selective Ins. Co. of Am., 2018 WL 5905058 (9th Cir. Nov. 9, 2018).

The dispute centered on whether T-Mobile was entitled to coverage for property damage as an additional insured under a policy issued by Selective Insurance to an antenna contractor.  An agreement between T-Mobile and the contractor required the contractor to maintain insurance that listed T-Mobile as an additional insured.  Selective’s authorized agent issued a certificate of insurance to T-Mobile which stated that T-Mobile “is included as an additional insured” under the policy.  However, the certificate also stated that the certificate is for informational purposes only, “confers no rights upon the certificate holder,” and does not extend or alter coverage under the policy.  The certificate further warned that if the certificate holder is an additional insured, the policy must be endorsed and that statements on the certificate do not confer rights in lieu of such endorsements. 

When T-Mobile sought coverage as an additional insured under the contractor’s general liability policy, Selective refused to defend, arguing that T-Mobile was not named as an additional insured in the policy.  In ensuing litigation, a district court ruled in Selective’s favor, finding that the certificate could not confer coverage on T-Mobile.  On appeal, the Ninth Circuit found that this case implicated two competing principles of law:  (1) that an insurance company is bound by the representations of its authorized agents; and (2) that a certificate of insurance cannot be used to extend or alter the coverage provisions of a policy.  Noting that the Washington Supreme Court has not addressed how these two principles can be reconciled on the record presented, the court certified the following question:

Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party’s status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?