A certificate of insurance is a document which evidences the existence of insurance. In many instances, certificates of insurance are used to show that one person is an additional insured under another's insurance policy. However, as a general rule, a certificate of insurance is not a contract between the insurer and the certificate holder, and the terms of the insurance policy prevail over any conflicting terms in the certificate.

Interestingly, in many circumstances, the certificate of insurance is internally inconsistent. Analysis of a certificate of insurance begins with the language included on the standard form which reads (in the upper right corner) as follows:

"This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend, or alter the coverage afforded by the policies below."

Although this limiting language exists, alteration to the "description of operations/locations/vehicles/special items" and certificate holder section can potentially make the certificate into what is, in effect, and additional insured endorsement. This section (lower left) may identify the certifiate holder as an additional insured with respect to work performed by the insured. Thus, while one portion of the certificate does not confer coverage, another portion of the certificate appears to confer coverage for the additional insured.

In and of itself, a certificate of insurance arguably does not confer additional insured status to the certificate holder. However, certain exceptions do apply. Under certain situations, a certificate of insurance can confer additional insured status upon the certificate holder. These circumstances include the following situations:

1. Where the producer (agent or broker) has binding authority for the insurer (authorized agent/broker theory);
2. Where the insurer negligently or intentionally allowed the agent or broker to portray that they had the authority to bind the insurer (ostensible authority theory); or
3. Where the insurer has a practice of accepting tenders under certificates of insurance that have been altered to confer additional insured status on the certificate holder.

With regard to ostensible agency, a relatively recent case in the Ninth United States Circuit Court of Appeals entitled American Casualty Co. v. Krieger (1999) 181 F.3d 1113, addressed this theory. In that case, the court interpreted a California Civil Code section to find that there was at least a material question of fact as to whether or not an insurance broker was an "ostensible agent" with regard to the issuance of an altered certificate of insurance.

It is relatively safe to conclude that if the agent or broker issuing the certificate has an agency appointment on file with the Department of Insurance or a written agency agreement with the insurer, then the representations conferring additional insured status will be binding on the insurer. However, to be on the safe side, if you are entering transaction involving certificates of insurance, here are a few practical suggestions:

1. Insist on receiving an actual additional insured endorsement.
2. Obtain a copy of the policy.
3. If a certificate of insurance is not accompanied by an additional insured endorsement, contact the insurer identified on the certificate and specifically request an additional insured endorsement.
4. Try to confirm that the agent/broker issuing the certificate is licensed and that he or she has an agency appointment with the Department of Insurance or a written agency agreement with the insurer.

If an issue arises over whether the certificate of insurance confers additional insured status, always check the insurance policy. Many insurance policies contain specific blanket additional insured endorsements or provisions specifically conferring additional insured status on a person or organization with whom the name insured agreed, by means of a written contract, to provide insurance as afforded by the policy.