DON'S DISCUSSION

DON'S DISCUSSION IA&B Legal & Corporate Affairs Director Don Bankus Are you a member with a question? Contact Don to find the answer at 800-998-9644, ext. 603 or DonB@IABforME.com.

QUESTION:

Do I have a duty to provide an updated Evidence or Certification of Insurance if I independently become aware that information in a previously issued form is no longer valid?

ANSWER:

Sometimes a producer becomes aware that a previously issued Evidence or Certificate of Insurance contains information which is no longer correct or valid. Examples might be where:

• A residential real estate closing is postponed for several weeks, so the referenced coverage policy period would change as a matter of course as to the purchaser’s HO coverage;

• A new customer/insured cancels his or her coverage shortly after having placed it via the agency, and the agency has issued certificates as requested; or

• A carrier subsequently cancels a policy due to non-pay.

The short answer to the question is that, if not requested to do so, there is neither a duty nor a requirement to unilaterally and independently revise and resend updated forms. There are no regulatory and/ or statutory requirements to do so; there is no industry wide duty, express or implied, to do so; and, the instructions for such forms do not include a requirement that producers engage in such a practice.

As has often been said, these forms, while important in both their purpose and content, merely represent a snapshot in time, with the information provided therein intending to evidence applicable information as of the date and time the respective form was prepared and issued by the producer/ agency. Absent a mistake as to applicable information during your initial preparation, your duty as to that form ends with its transmission to the respective recipient, whether the cert holder, mortgagee, loss payee, and/or additional insured, etc., as the case may be.

DANGER OF UNILATERALLY IMPLEMENTING SUCH A PRACTICE On the flip side, there is no express prohibition against engaging in such a practice. So if, out of the goodness of your heart, you implement or engage in such a practice, what you end up doing is creating a duty of care which did not previously exist. Meaning if you unilaterally begin to issue updated forms of your own volition and at no-one’s request, even if it’s with regard to a single insured/account, you hypothetically should be engaging in such a practice under all such similar circumstances and for all insureds or former insureds when you become aware of a change of information.

FINAL THOUGHTS Given the countless circumstances and unforeseen events which can crop up on a day-to-day basis, be mindful that a solution you choose to implement, especially if it’s repeated, may unwittingly create a duty of care which otherwise may not exist.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.