Never Rely on a Certificate of Insurance

A Certificate Conferred No Rights Upon the Holder

The plaintiffs relied on a certificate of insurance advising that Chipotle was an additional insured of a policy issued to a vendor. The insurer, RLI, proved that Chipotle was not named as an additional insured nor was it an additional insured by reason of a contract with the vendor. The trial court granted RLI’s motion for summary judgment and the plaintiffs appealed.

In Chipotle Mexican Grill, Inc., et al. v. RLI Insurance Company; Fireman’s Fund Insurance Company, Nos. 2018-11057, 2018-11361, 2018-14847, 2019-00473. Index No. 700712/16, Supreme Court of New York, Second Department (November 24, 2021) the issue of additional insured status devolved to a statement made in a certificate of insurance provided by the vendor to Chipotle.

FACTS

The plaintiffs hired the defendant Piece Management, Inc. (hereinafter PMI), to perform rodent prevention services at its restaurant located in the Roosevelt Field Mall. Afmat Wazadally was employed by PMI and was injured in the course of his work when he fell from a ladder. Wazadally commenced a personal injury action against the plaintiffs and others (hereianfter the underlying action). The plaintiffs sought to obtain insurance coverage from PMI’s insurer, RLI Insurance Company (hereinafter RLI), contending that they were additional insureds under the policy. RLI denied coverage.

Soon thereafter, the plaintiffs sued RLI and others for a judgment declaring that RLI is required to defend and indemnify them as additional insureds in the underlying action. The underlying action was settled for $2,675,000. The plaintiffs moved for summary judgment declaring that RLI is required to defend and indemnify them as additional insureds in the underlying action.

The trial court granted RLI’s cross motion and denied the plaintiffs’ motion, concluding that the plaintiffs were not additional insureds under the RLI policy since they were not named as additional insureds on the policy and they were not entitled to coverage under the additional insured endorsement since there was no written contract between the plaintiffs and PMI.

ANALYSIS & CONCLUSIONS

The trial court correctly determined that the plaintiffs were not additional insureds on the RLI policy. The policy contained an additional insured endorsement, which added to the insured persons covered under the subject policy “any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.”

The four corners of an insurance agreement govern who is covered and the extent of coverage. Where a third party seeks the benefit of coverage, the terms of the policy must clearly evince such intent. The law in New York is well settled that whether a third party is an additional insured under a policy is determined from the intention of the parties to the policy, as determined from the four corners of the policy itself.

Here, as noted, the additional insured endorsement of the RLI policy afforded coverage to parties that PMI agreed in writing in a contract or agreement to add as an additional insured on the policy. There was no such written contract or agreement between the plaintiffs and PMI containing any requirement that PMI name the plaintiffs as additional insureds under the RLI policy. Therefore, RLI demonstrated its prima facie entitlement to judgment as a matter of law based upon its submissions

The Plaintiffs submitted a certificate of insurance in opposition to RLI’s motion. The Certificate listed the plaintiffs as additional insureds under the subject policy. However, the appellate court concluded that the Certificate was insufficient to alter the language of the policy itself, especially since the certificate recited that it was for informational purposes only, that it conferred no rights upon the holder, and that it did not amend, alter, or extend the coverage afforded by the policy. Moreover, the trial court correctly determined that PMI’s vendor profile which indicate that the client is typically listed as an additional insured, do not constitute agreements or contracts between Chipotle and PMI to name Chipotle as an additional insured.

The appellate court concluded that the trial court should have denied the cross motion with respect to the cause of action for a declaratory judgment, and instead should have declared that RLI is not obligated to defend or indemnify the plaintiffs as additional insureds in the underlying action. Since the court did not do so, the appellate court modified the judgment accordingly.

The appeal from the order entered July 17, 2018, was dismissed; and added to the judgment was a provision declaring that RLI Insurance Company is not obligated to defend or indemnify the plaintiffs as additional insureds in the underlying action.

ZALMA OPINION

This case is a perfect example of parties failing to read a certificate of insurance and relying on a statement in a certificate that did not exist in the policy. Since the Certificate, clearly and unambiguously stated that it was for informational purposes only, that it conferred no rights upon the holder, and that it did not amend, alter, or extend the coverage afforded by the policy. If a party wishes to be assured that it has been named as an additional insured it should obtain a copy of the policy and never rely on the Certificate. At best, if they could overcome the obvious disclaimer in the Certificate, the parties may have an action against the person or entity that issued the Certificate for negligence, misrepresentation or fraud that the Plaintiffs relied upon to their detriment.