Earlier this month, the Ninth Circuit Court of Appeals asked the Washington State Supreme Court to resolve a conflict between two Washington state insurance law principles, namely, the conflict between (1) the rule that an insurance company is bound by representations made by its authorized agents, and (2) the rule that certificates of insurance cannot affect insurance coverage, at least not when the certificate states that it does not change the terms of the underlying insurance policy.

The conflict of those two principles arose recently in the lawsuit between T-Mobile USA and Selective Insurance Company of America. As I wrote in a prior blog, that dispute has its genesis in a lawsuit that was filed in New York, which generated a related lawsuit in the state of Washington. The Washington suit is now pending before the Ninth Circuit Court of Appeals.

In T-Mobile USA, Inc. v. Selective Insurance Company of America,1 T-Mobile USA contends that it is entitled to coverage as an additional insured under an insurance policy issued by Selective Insurance Company of America (“Selective”). Although the policy does not identify T-Mobile USA as an additional insured, Selective’s authorized agent and insurance broker, Van Dyk Group, Inc. (“VDG”), issued a Certificate of Insurance (“COI”) to T-Mobile USA which indicated that T-Mobile USA was an additional insured under the policy issued by Selective.2

For its part, Selective contends that VDG was only authorized to issue certificates that “reflect the then-current terms and limits of the relevant policy.”3 In addition, under well-established Washington law, the language of a COI cannot alter the terms of the underlying insurance policy, especially if the certificate states that nothing contained in the COI alters the terms of the associated policy, as was clearly stated in the T-Mobile USA certificate.4 Therefore, according to Selective, despite being identified as an additional insured in the COI that VDG issued to T-Mobile USA, T-Mobile is not entitled to coverage under the respective policy because the policy does not identify T-Mobile as an additional insured. The District Court agreed with Selective and dismissed T-Mobile USA’s claims against Selective, holding that T-Mobile USA was not a named insured under Selective’s policy and the COI issued by VDG could not confer such coverage in contravention of the terms of the policy.5

On appeal, the Ninth Circuit held that even though VDG may not have had actual authority to issue COIs that did not reflect the terms of the underlying policy, under the facts and circumstances surrounding the certificate that VDG issued to T-Mobile USA, VDG had apparent authority to issue the certificate, and therefore, with respect to T-Mobile USA, the effect of the certificate was the same as if VDG had actual authority to issue the certificate.6

The Ninth Circuit concluded that there is a direct conflict between the laws under which (1) an insurer is bound by the representations of its authorized agents and (2) the terms of a COI cannot alter the terms of the underlying insurance policy. Finding that the conflict is unresolved in the State of Washington and “potentially affects an untold number of Washington citizens and businesses,” the court decided the appropriate course of action was to certify the issue to the Washington Supreme Court.7

The specific question the Ninth Circuit Court of Appeals has asked the Washington Supreme Court to decide is the following:

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?8

The Washington Supreme Court has the discretion to accept or decline the Ninth Circuit’s request, as well as to reformulate the question.

This case involves several important issues that could affect policy holders in many states. I will continue to follow it and report any significant developments.
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1 T-Mobile USA, Inc. v. Selective Ins. Co. of Am., — F.3d —, 2018 WL 5905058 (9th Cir. Nov. 2018).
2 2018 WL 5905058, *1-2 (citing Chicago Title Ins. Co. v. Wash. State Office of Ins. Comm’r, 178 Wash.2d 120, 309 P.3d 372, (2013)).
3 Id., fn. 5.
4 Id., *3 (citing Postlewait Const., Inc. v. Great Am. Ins. Cos., 106 Wash.2d 96, 720 P.2d 805, 807 (1986) and Int’l Marine Underwriters v. ABCD Marine, LLC, 165 Wash.App. 223, 267 P.3d 479, 484 (2011)).
5 Id., *4.
6 Id., fn. 5.
7 Id., *4-5.
8 Id., *5.

  • Bill Wilson

    Seems like the claim would be against the agent on the basis of detrimental reliance, or promissory estoppel. This is one of the reasons insurance companies don’t want their agents to copy them on certificates of insurance…if the insurer gets a copy of the certificate, it would be harder for them to say that they did not know the COI indicated AI status on a policy.

  • Ivan G Sequeira

    Are Certificates of Insurance worthless pieces of paper? Do Certificates of Insurance need to be ratified by Insurance Co?