(Article from Insurance Law Alert, October 2019)
For more information, please visit the Insurance Law Alert Resource Center.
The Washington Supreme Court ruled that an insurer is bound by representations made by its authorized agent with respect to a party’s additional insured status, even where the insurance certificate expressly stated that it does not expand coverage beyond the terms of the policy. T-Mobile USA Inc. v. Selective Ins. Co. of Am., 2019 WL 5076647 (Wash. Oct. 10, 2019).
The dispute centered on whether T-Mobile was entitled to additional insured coverage for property damage 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. A Washington district court ruled in Selective’s favor, finding that the certificate could not confer coverage as to T-Mobile. As discussed in our November 2018 Alert, the parties appealed, and the Ninth Circuit certified the following question to the Washington Supreme Court:
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?
The Washington Supreme Court answered the question in the affirmative. It explained that an insurance company is bound by the representations of its agents, and that T-Mobile’s reliance on those representations was reasonable. The court further held that the certificate’s disclaimers were ineffective because they were “general boilerplate,” whereas the additional insured statements were specifically written into the certificate.
Notably, the court deemed it irrelevant that the representation was made in a certificate, which, under Washington law, is not a binding insurance policy. As the court explained, the case turns on whether an agent’s representation (whether “via letter, email, certificate of insurance or something else”) is binding on an insurer, not whether a certificate itself can confer policy rights.