In T-Mobile USA Inc. v. Selective Insurance Company of America, 908 F.3d 581 (9th Cir. 2018), the United States Court of Appeals for 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
In T-Mobile USA v. Selective Ins. Co. of America, Case No. 96500-5 (Oct. 10, 2019), the Washington Supreme Court answered the question "yes,"
holding that a certificate of insurance which purports to provide someone with additional insured (AI) coverage binds the insurance company to coverage,
so long as the agent acted with apparent authority, even if the certificate conflicts with the policy provisions.
The case involved the construction of a cell phone tower. The contract between the contractor and T-Mobile NE (the owner) required the contractor to provide
AI coverage for T-Mobile NE, and the contractor’s insurance had an additional insured by contract provision. Therefore, T-Mobile NE was covered.
However, the insurance company’s agent also issued additional insured certificates to T-Mobile USA, a company separate from T-Mobile NE, which stated that
it was “included as an additional insured.” The court described the agent as “Selective’s agent” and noted that the agent signed the certificates as
Selective’s “Authorized Agent.” The agent explained that it issued the AI certificate to T-Mobile USA because the contractor told it to do so and that
the contractor believed that T-Mobile USA was an additional insured. According to the agent, Selective Insurance never objected to the issuance of
When T-Mobile USA was sued, Selective Insurance rejected its tender of defense, and T-Mobile USA brought a declaratory judgment action that ended up in
federal court. The federal district court dismissed the case, holding that T-Mobile USA was not an additional insured, and T-Mobile USA appealed.
Based on the facts above, the Ninth Circuit held that the agent had acted upon apparent authority of Selective Insurance in issuing the certificate, but
that the agent's representation turned out to be inconsistent with the policy, thus raising the question as to whether an insurer is bound by the agent’s
representation in the certificate.
The AI certificate was on an industry-standard form and included statements that it was “issued as a matter of information only and confers no rights upon
the certificate holder,” “does not affirmatively or negatively amend, extend or alter the coverage afforded by the” policy, and “does not constitute
a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder.” It also stated, in bold, “If the certificate
holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. … A statement on this certificate does not confer rights to the certificate
holder in lieu of such endorsement(s).” (This is the language used on an Acord Certificate of Insurance.)
The Washington Supreme Court held that the certificate’s disclaimers were ineffective, finding that the purported grant of coverage along with the disclaimers
created an inherently contradictory document. The court found that the pre-printed disclaimers were general boilerplate while the filled in portions
purporting to grant coverage were specific. Because the specific prevails over the general in a contract, the certificate’s grant of coverage prevailed.
The court reasoned that public policy supports its conclusion, holding that an insurer should be bound by its agent’s representations, so long as the
agent acts with actual or apparent authority.
As the lone dissenter pointed out, the Washington Supreme Court decision in T-Mobile USA is contrary to the prevailing view of the courts that
have considered the issue. The majority view is that a certificate of insurance is not part of the policy, and when there is a conflict between the
terms of the policy and the certificate, the terms of the policy control.
The written opinion can be found here: https://www.courts.wa.gov/opinions/pdf/965005.pdf.