In T-Mobile USA, Inc. v. Selective Insurance Company of America 194 Wn.2d 413, 450 P.3d 150 (2019), Washington’s Supreme Court was asked to determine if an insurance company can be bound by its agent’s representation of additional-insured status made in a certificate of insurance. Despite the familiar qualifying language in the certificate, the court bound the insurer to its agent’s representations and additional-insured coverage was found.
T-Mobile Northeast engaged a contractor to build a cellphone tower on a rooftop in New York City. The agreement between T-Mobile NE and the contractor required the contractor to obtain a general liability policy naming T-Mobile NE as an additional insured. The contractor obtained a policy from Selective Insurance Company of America, the terms under which provided automatic additional-insured status to T-Mobile NE.
Over a seven-year period, Selective’s agent issued other certificates to “T-Mobile USA, Inc. its Subsidiaries and Affiliates.” These certificates were issued on ACORD 25 forms and described those entities as “included as additional insureds” under the subject policy. Notably, T-Mobile USA is a related, but separate and distinct, entity from T-Mobile NE and was not a party to the tower contract. The agent signed the certificates as Selective’s “Authorized Representative.”
The Litigation
In 2018, the building owner sued the contractor and T-Mobile USA. Both the contractor and T-Mobile USA tendered the claim to Selective. Selective accepted the contractor’s tender, but denied T-Mobile USA’s. The contractor amended the complaint to assert claims against T-Mobile NE, and T-Mobile USA was dismissed from the suit. However, T-Mobile USA incurred attorney’s fees defending itself through dismissal. T-Mobile USA then filed suit against Selective in the Western District of Washington (where T-Mobile USA’s headquarters are located) based on Selective’s failure to recognize T-Mobile USA as an additional insured.
The district court granted summary judgment in favor of Selective, dismissing all of T-Mobile USA’s claims. The court also denied T-Mobile USA’s cross motion for partial summary judgment on its claims for breach of contract, declaratory judgment, and bad faith. After the court denied reconsideration, T-Mobile USA appealed to the 9th Circuit Court of Appeals, which, in turn, presented Washington’s Supreme Court with the certified question: Is an insurance company bound by its agent’s written representations—made in a certificate of insurance—that a particular corporation is an additional insured under a given policy?
The question was addressed by the Supreme Court in light of the 9th Circuit’s holding that: (1) The agent acted with apparent authority, but (2) the agent’s representations were inconsistent with the policy, and (3) the certificate included additional text broadly disclaiming the certificate’s ability to “amend, extend or alter the coverage afforded by” the policy.
The Holding
The court acknowledged that while T-Mobile USA did not have a contract with the contractor, Selective’s “Authorized Representative” acted with apparent authority on behalf of Selective in issuing the certificates. The court affirmed the 9th Circuit’s finding that “T-Mobile USA’s objectively reasonable belief that the agent had authority to issue the certificate necessarily makes its reliance on the certificate reasonable.”
Next, the court addressed whether the agent’s representations were binding in light of the pre-printed disclaimers and Selective’s arguments that the certificates amounted only to evidence of insurance. The ACORD 25 form contained the standard disclaimers that the certificate conferred no rights of coverage for the holder, did not affect coverage provided in the underlying policy, and did not constitute a contract between the insurer and the certificate holder.
The court noted that these disclaimers contradicted the representation that T-Mobile USA was an additional insured. T-Mobile USA argued—and the court agreed, citing to public policy in Washington—that the preprinted disclaimers were ineffective because they were general boilerplate, whereas the representation as to additional-insured status was specifically written into the certificate. Importantly, the court warned that its holding does not render all disclaimers ineffective. Rather, the disclaimers at issue were not enforceable because they completely contradicted the other, “more specific promises contained in that same certificate,” which provided that T-Mobile USA was an additional insured.
The Takeaways
For those seeking to enforce additional-insured status, T-Mobile offers improved coverage. Like a bad cellphone connection, however, we think the conversation could get fuzzy. The court’s holding was limited to the facts before it and suggests that careful agents and brokers can stop the ringing sensation in their ears following the decision.
The court’s decision to nullify the “boilerplate disclaimers” was based solely on the fact that they contradicted the specific terms handwritten into the certificate by the authorized representative. While the court agreed that certificates are intended to act as “information-only” evidence that a policy is in place and don’t actually confer coverage, the “information” in the certificate (such as who is an additional insured) can amount to a binding “representation.” Thus, a mistake in the “information” inserted into the certificate can result in an unintended upgrade to coverage.
Because certificates of insurance are so broadly relied upon in the construction community, and defense and indemnity obligations can quickly become the central focus in a lawsuit, another approach would be for ACORD and other industry professionals to modify their pre-printed forms to include:
- Language that provides that, to the extent disclaimers are contradictory to any representations or unique alterations to the standard certificate or the terms of the underlying policy, the disclaimers and policy are controlling.
- Language that specifically limits the scope of an agent’s authority to act on behalf of the insurer, for example outlining that the agent has no authority to make representations contradictory to the coverage provided under the policy, and has no authority to confer coverage that is not reflected in, or is inconsistent with, the policy.
Until then, certificate holders in Washington would do well to closely re-examine the forms issued to them by obligated parties and possibly renew outstanding tenders to take advantage of what may amount to improved additional-insured coverage.