10 Ellicott Court Corp. v. Mountain Valley Indemnity Corp. (2nd Cir. December 23, 2010)
In 10 Ellicott Square Court Corp. v. Mountain Valley Indemnity Company, the Second Circuit noted the divergence between New York’s Appellate Divisions regarding whether a Certificate of Insurance can create coverage. In the First and Second Departments, courts have held that Certificates of Insurance are insufficient standing alone to provide a basis for estoppel. The Third and Fourth Departments have held that where a party seeking coverage reasonably relied on a Certificate of Insurance issued by an agent of the insurer, the insurer may be estopped to deny coverage.
The circuit court certified the following question: “In a case brought against an insurer in which a plaintiff seeks a declaration that it is covered under an insurance policy issued by an agent of the insurer that states that the policy is in force but also bears language that the certificate is not evidence of coverage, is for informational purposes only, or other similar disclaimers, estop the insurer from denying coverage under the policy.”
In the case before it, the additional insured endorsement required that a contract be executed before additional insured coverage attaches. Although a certificate of insurance was issued prior to the loss date, the contract was not signed. The court questioned whether the purported additional insured’s reliance on the certificate of insurance in allowing the named insured to commence work was a sufficient basis for estoppel where there was no evidence that the purported additional insured ever saw the policy, or have a relationship with the agent or insurer making reliance reasonable. On the other hand, the court questioned whether an insurer had an obligation not to issue false or misleading certificates if it is aware that parties will rely on the certificates.
We will follow the case and will update if the New York Court of Appeals accepts the certification.
For a copy of the certification click here
Sarah Delaney and Michael Saltzman
https://www.goldbergsegalla.com/attorneys/Delaney.html
https://www.goldbergsegalla.com/attorneys/Saltzman.html
case provided courtesy of Lexis.