Insurance Law

The Trouble With Certificates

By Douglas M. Palais

Even though issuing certificates is an important part of the service that you provide to your customers, from an E & O standpoint, they must be handled with extreme care. The following points are not comprehensive, but demonstrate a few of the specific risks and offer some tips to avoid these pitfalls.

• First and foremost, never generate information on a certificate demanded by a customer or a third-party unless and until you are satisfied that the information is completely accurate.

• What are the best ways to accomplish this result?

• Have a written agency policy that mandates the internal procedures that must be followed before a certificate is issued|

• Make sure that all agency personnel read the policy and are periodically reminded of it

• Never manually generate certificates. Instead, be sure that they are generated from your agency management system AFTER the customer information has been checked

• In the event of a cancellation, re-issue any related certificates to reflect that the policy is no longer in force

• Can you rely on the disclaimer language that appears on the Acord form? From an E & O standpoint, you cannot.While the form makes it clear that the insurance policy provisions govern, far too many E & O claims arise from the issuance of an inaccurate certificate.In these instances, the agency must defend itself despite the disclaimer language.

• Workers compensation coverage on certificates is a hot area for E & O claims, particularly with respect to construction customers and third-parties.

Doug Palais has been the “lawyer of choice” for IIAV’s Professional Liability clients for over 25 years. Doug recently joined the Vandeventer Black LLP law firm, which is a full service, international business law firm operating for over 100 years. He is a seasoned trial lawyer and counselor with 35 years of experience and concentrates his practice in Professional Liability; Errors & Omissions Defense of Insurance and Securities Professionals; Directors & Officers Liability Defense; Securities Litigation and Arbitration; Insurance Coverage and Defense; Legal Malpractice Defense and Financial Institutions and Securities. Doug regularly writes and speaks on issues relating to insurance agents and brokers. He is also a frequent speaker for IIAV on professional liability and regulatory matters. Doug also makes himself available to member agents in connection with legal problems.

These articles are meant to bring awareness to these topics and are not intended to be used as legal advice.

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