“Reasoned Analysis” – An Important Letter to the Editor
[FOREWORD] Steve Acunto
“Reasoned Analysis”
An important Letter to the Editor
RE: Jerry Trupin’s analysis of the ACORD 855NY form, Aug. 18
Dear Mr. Acunto,
Jerry Trupin gave Insurance Advocate readers a reasoned analysis of the ACORD
855NY form in the Aug. 18, 2014, edition of the magazine. While relevant from the certificate
holder’s point of view, I believe it will help to provide some background and clarification
on the purpose of this form.
A working group consisting of insurance industry representative and construction
industry representatives developed this form over several months of deliberation. The
problem arose when owners and general contractors in New York began to lack confidence
in the standard ACORD 25 Certificate of Liability because of the disruption of
customary insurance markets caused by unique circumstances in this state. Some safeplace-
to-work sections of the Labor Law, specifically, Sections 240, 241 and 241-a, impose
a “strict” liability standard (as opposed to a “negligence” standard) upon owners and
general contractors for workers injured at their job sites. Because of this law, it is very
difficult to procure comprehensive coverage for contractors performing certain kinds of
work and in certain locations.
Owners and general contractors began looking for more detailed information about
the coverage afforded contractors at the job site. In response to adverse experiences with
missing coverage, owners and general contractors (with their attorneys) began developing
their own certificate forms in an attempt to obtain more information. In addition, some
of these forms (often referred to as “attestation” forms) were designed to create legal liability
for the producer issuing them with regard to warranties of coverage. This became
a serious E&O problem for New York producers.
The ACORD 855NY is voluntary, but is standardized for ease of use and consistency.
When required by the certificate holder, this addendum should be used to supplement
the ACORD 25 with more information about the policy’s coverage. It bears the ACORD
25 disclaimer language and is not intended to answer specific coverage questions, but
merely to indicate areas of coverage where the solicitation of more details may be expedient
(e.g., examination of the actual policy forms).
Trust me when I say that no representative of producers on the working group favored
the idea of asking producers to disclose more coverage information on certificates—
adding to the already heavy administrative burden. This was a compromise to avoid the
attestation requests and consolidate multiple proprietary forms into a single form.
Below are my comments on some selected observations made by Mr. Trupin.
Under item A. Insurer, what certificate holders want to know is whether the insurer
files its forms for approval by the Department of Financial Services. Since Excess Line
and Free Trade Zone policies do not require filing, there’s a good chance some of these
forms will be nonstandard. Disclosing the licensing of the insurer will indicate to the
certificate holder when the forms may need a little more scrutiny. This item was not
intended to address the guaranty fund issue (which, by the way, only amounts to $1 million
per claim).
Under item D. Additional Insured Endorsement, it was decided not to show edition
dates on endorsements because it is a cumbersome process and takes a long time for
ACORD to revise its forms. It will be assumed that these endorsements are the most
current ISO editions, which at the present time is April 2013. If the endorsement is not
the most current, it should be shown under “Other.”
Finally, we are, no doubt, raising the bar on the amount and quality of the information provided to certificate holders in order to address unique circumstances in New York. Completion of the ACORD 855NY form will require greater sophistication on the part of its issuers, which is intended to increase the degree of coverage certainty for the certificate holder. However, we do not believe the form will result in more E&O exposures for producers. In fact, PIA’s investment in this project primarily was made to avoid producer culpability for errors when complying with certificate holder requests.
Dan Corbin, CPCU, CIC, LUTC
Director of Research, PIANY
