Product Update

Court Interpretation of Certificates of Insurance and 2 New Additional Insured Endorsement Discussions in CRT


This release of Contractual Risk Transfer (CRT) contains an updated discussion of court interpretation of certificates of insurance. This CRT release also contains new discussions of standard commercial general liability endorsements to provide additional insured status under a licensee's policy for licensor on either a scheduled or an automatic basis.

Court Interpretation of Certificates of Insurance

Certificates of insurance are used to verify to the indemnitee that the indemnitor has obtained the coverages required by the contract. Certificates of insurance can also serve as proof that the indemnitee has been named as an additional insured. However, where there is an unforeseen problem with the coverages provided by the underlying policy, such as if the policy has been canceled, the additional insured coverage does not apply, or there is an undisclosed exclusion, legal disputes can arise as to whether coverage can be enforced as represented in the certificate of insurance. In today's world, certificates of insurance usually contain disclaimer language, and it is rare to find a certificate of insurance that does not contain disclaimers. That said, certificates of insurance containing disclaimer language were not always the norm. In fact, prior to 1976, the year standard certificates were introduced, insurers generally developed their own certificate forms that verified the issuance of one or more policies but that did not contain any disclaimer language addressing the relationship between the certificate and the body of the insurance policy itself. Court interpretation of certificates of insurance, including the legal theories employed by the courts when analyzing such certificates, depends on whether the certificate of insurance contains disclaimer language. This CRT release contains an updated discussion of court interpretation of certificates of insurance, including the different methods that courts employ depending on whether the certificate of insurance contains disclaimer language.

Additional Insured Grantor of License

The manufacture of specialty merchandise bearing a logo or other image associated with another product, person, or institution frequently requires the granting of a license by the entity for whom the merchandise is made. The licensor typically requires insured status under the manufacturer's liability insurance program. Two standard endorsements, Additional Insured—Grantor of Licenses—Automatic Status When Required by Licensor (CG 20 35) and Additional Insured—Grantor of Licenses (CG 20 36), provide such status, on a blanket or scheduled basis, respectively. These endorsements are described and analyzed on new pages in this release.