Eight Myths About Insurance Certificates

[Mark Schlicher]

Recently I posed some questions about insurance certificates. Much confusion ensued as people tried to answer, and some incorrect and incomplete information was posted.

 

So I did my own research. I looked for the most reliable sources of information I could find, including publications by ACORD, the organization that created the forms we commonly use, and writings by attorneys who are specialists in equipment leasing law.

 

I’m posting what I learned, for the benefit of the community.

 

With the usual disclaimer that I am not a lawyer, am not offering legal advice, and you should do your own research and consult competent counsel, blah blah blah, here are:

 

Eight Myths about Insurance Certificates:

 

1. The ACORD 25 insurance certificate form that we all use is a legally binding contract. False.

2. If the Cert says something different from the policy, they have to honor the cert. False

3. If there is a claim, I won’t have to pay the deductible, because I’m listed as additional insured and/or additional loss payee. False.

4. ACORD forms are basically all alike. False

5. The ACORD25 form covers both liability and equipment. False, unless properly modified. Well actually, it doesn’t “cover” anything. It only provides information.

6. “Additional insured” and “additional loss payee” are interchangeable. Not quite that simple.

7. My attorney and/or the production company’s insurance agent assured me everything is in order. So I’m covered, right? Not necessarily.

8. So the form is worthless, then? No, it’s just LEGALLY worthless.

 

Details:

 

1. The commonly-used ACORD 25 Insurance cert. spells it out plainly right at the top, in BIG CAPITAL LETTERS, no less: “THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.” It is a “snapshot” of the coverage that was in force (and/or was added to the underlying policy) at the time that the cert was requested, nothing more, nothing less. The only legally binding contract is the underlying insurance policy. Incidentally, if their coverage is cancelled, the cert states that you “will” be notified, but confers no legal obligation to notify you as a certificate holder.

 

2. See #1 above. That’s precisely why they have the disclaimer. Actual court cases have upheld this. In other words, people have lost claims in court when the Insurance Certificate they received asserted they had a particular coverage, but it did not match the underlying policy.

 

3. See #1 above. The Insurance Cert doesn’t change anything about the underlying policy, including the deductible. If you are an additional insured and make a claim, you are paid according to the terms of the policy, the amount of the approved claim-minus the deductible. You may have a side agreement with production to pay the deductible to you, but nothing in the insurance cert compels the insurance company nor production to cover the deductible.

 

4. There are several ACORD forms in use, including 24 and 25. ACORD 24 is designed for property, ACORD 25 for liability. It is customary for ACORD 25 to be used to indicate both liability and leased property insurance, by adding leased property language to the form. Your insurance company could do the same with an ACORD 24, adding liability language, but this is rarely done. They usually just issue and ACORD 25. The ACORD 25 was updated in 2010, to clarify and further strengthen the “not a contract” language, and to revise/weaken the “cancellation notification” language. Older versions are still commonly used, in my experience.

 

5. Since the ACORD 25 was designed as a liability form, you should confirm that the agent has noted leased equipment coverage in either the “OTHER” section of “COVERAGES” or in the “DESCRIPTION…SPECIAL PROVISIONS”. As far as being listed as additional insured/additional loss payee, that is important to ask for also…as endorsements on the underlying policy.

 

6. There is some lack of agreement among attorneys I’ve read, as to the specific application of these two terms. The headline seems to be: they have different shades of meaning, depending on whether we’re talking about liability vs. equipment coverage, but there is not a downside to request endorsement as both Additional Insured and Additional Loss Payee on their policy.

 

7. There are other insurance considerations that this form doesn’t even try to address, such as: what if you are insured and production is insured, who’s insurance is primary in the event of a loss? Do you consider production liable for the deductible? What if their insurance refused to cover a loss, is production still liable? And always remember #1 above. The Insurance Cert. is only as good as the provisions of the underlying policy. All these are matters that you may want to address in a well-crafted standard deal memo.

 

8. Well, it’s useless as a legal contract, as noted above. But you should absolutely ask for one. It is quite valuable as a good-faith informational document of what insurance the production company carries, despite it’s lack of legal weight. If someone refuses to give a cert, it possibly means one of these things: 1) the production is not insured, 2) they don’t have a“blanket” endorsement, so adding an additional insured will cost them money, 3) your production contact is inexperienced and doesn’t know how to go about getting one or doesn’t want to go to the trouble, 4) they don’t understand why you need one. As a tool to address these questions, to get you the necessary policy and claim contact information, and to make sure you get added to the underlying policy if required, the Insurance Cert a valuable tool. It is not a legal contract, a waiver of deductible, nor a substitute for a deal memo or contract.

 

Want to know more?

Start here: http://www.acord.org/about/newscenter/news/pages/20110223_rims.aspx

[William Demeritt]

Good information to know and read, thanks for looking this up for everyone.

 

I've actually become quite militant about going beyond just receiving a COI, but also getting a signed Deal Memo, Rental Agreement and equipment list back from productions. I always interpreted the COI as proof their production had insurance (read: deep enough pockets) to cover the loss or damage of my equipment that they couldn't claim "Oh, we rain out of money, so we can't afford to replace your whole kit that burned up on the truck on the last day!"

 

The insurance proves they have the additional resources so as to not leave you without livelihood in a catastrophic event.

 

I think we all want to believe that productions will do "the right thing", but the rest falls on us to do our due diligence in creating a paper trail that assures us we don't gamble with that instance where they try to worm out of it.

 

Someone once told me the COI just proves they have insurance, but could be fraudulent, so you can call the insurance agency to be certain you're added to the policy. Does this explicitly link your equipment? No, but it does prove they didn't just forge an ACORD form to include your information.

 

Hence why I try to go with a Deal Memo and Rental Agreement with equipment list to accompany my hiring. Deal memo proves I was explicitly hired with my equipment for whichever shoot dates, the terms, and requests a COI be provided. Rental agreement has this opening paragraph (I did "borrow" this from another operator, hope he doesn't mind if/when he notices):

 

Renter(s) assumes full responsibility (see insurance requirements) for all rented items in their care and custody, whether William B. Demeritt III is operating said equipment or not, and agrees to compensate William B. Demeritt III for full replacement value should said equipment be lost, stolen, broken or damaged by any cause whatsoever. Renter further agrees to compensate William B. Demeritt III for costs incurred in the cleaning and maintenance of the equipment necessarily caused by use of the renter in inclement weather. William B. Demeritt III maintains the right to cancel the rental arrangement with renter on the basis of any safety or risk concerns with respect to the operator and/or the operation of the equipment, or any location that places the safety of the operator and/or equipment at risk.

 

Right up front, they sign a document that says they (and their production by agent by estoppel) assume full responsibility for all rented items (as indicated by the equipment list) whether I'm operating the gear at the time or not. Full compensation is in the contract, which means they have the option to pay me out of their pockets (lost an Anton Bauer battery, etc) or through insurance (my whole cart accidentally rolled off the edge of a cliff).

[Robert Starling SOC]

Ladies and Gentlemen, including Ron and BJ :blink:

 

Any contract is only as good as the word of the people behind them. A Deal Memo and Rental Agreement shows intent as does a COI. Both are simply good business practices. It doesn't matter if a contract contains 1,000 pages of details if the people behind those pages are not going to fulfill their responsibilities. At least if you have the unfortunate situation to need those contracts, a judge or jury if it got that far can see intent but there's always a loophole. Even if you win, the other party may default and with a default judgment you can have the Sheriff go collect property but they may have no property.

 

Will, I think being professional is a better way of putting it than militant. This is a professional business with recognized common standards and practices nationwide. There's nothing militant about setting policies about the way you conduct your business and sticking to them. We're all or most of us are self-employed so to speak running our own business, each entitled to setting our own policies and practices as we see fit. No one is forcing us to do specific paperwork, it's just good business practice to protect ourselves as best as we can.

 

When you rent a car or gear, buy something at a store or hire a plumber, it's not a personal thing that they want payment then or a guarantee, a contract and sometimes insurance, it's the way of the world, except it seems to those in a creative business. By and large, most small businesses run their businesses poorly; in film, TV and photography it is rampant.

 

While we're each entitled to run our businesses as we please even without proper paperwork, the problem is that we're a small cottage industry of specialists, competitors on one hand but more importantly colleagues. When one person decides to accept the risk of no COI, Deal Memo or unreasonable rates it sets a precedent that hurts the entire group along the way. That is where most of us have a problem with poor business practices among our colleagues, however it's none of our business in the end.

 

Mark, you can dissect things like COIs or any contract until you're blue in the face. Myth, reality, truth and common sense are irrelevant in our society and our judicial system these days.

 

Folks, if you can't do right for yourself at least try to do right for our profession else there won't be one in the future. The top operators in our business didn't get there by being lax, they got there by being professional in their dealings, managing risk and of course great work as well.

 

Robert

[Eric Fletcher S.O.C.]

 

Aw hell I'm not going to quote all of that, it's easy enough to refer to it without a page of re-quoting

 

 

Well..... I'd really like to know where you did your research and who you talked to or if this is all your conjecture.

 

First off you seem to not be versed in "Common Business Practice" How much production have you done where you have asked and received a certificate of insurance? did you submit a complete itemized inventory before the certificate was issued? If you didn't your gear wasn't insured. I've been doing this for 27+ years and unfortunately have had a few claims, since I ALWAYS get a cert issued from the insurance company after the production company has submitted my itemized inventory My gear is now under their umbrella coverage JUST like the camera equipment, the grip truck, the electric truck, locations, Personal injury etc etc. according to your post NO insurance cert is valid. Yet I've never had an issue getting a claim paid. Never was there a question about deductible (After all I am listed as insured UNDER productions umbrella policy) If the production company typed your name on a insurance cert you were not covered. Insurance certs are provided to the production company by the insurance company with your name included as "Additionally Insured" That in it's self takes care of the deductible question and the insured question.

 

Your other points are nullified as long as you submit the correct information and get a cert issued by the insurance company. Of course they are not going to cover any gear that they don't know about, that's why the production company can't make a xerox and add your name to the cert. Oh and you're insurance is always a good idea and is good protection against a company that doesn't do it right since they will pay your loss and then THEY will sue to recover. Your personal insurance is secondary coverage when you're on a show and primary coverage when your gear is at home since your homeowners insurance won't cover it against loss or damage for two reasons. First it's over their coverage limit and secondly it's professional business equipment (and they don't have a itemized list of your gear)

 

27+ years and 12 claims all paid all because I've made sure that the correct information has been provided to the correct people and in return I've received a correct and valid certificate of insurance

[Osvaldo Silvera SOC]

Always contact the insurance company listed on the certificate and verify they know about you and that you got a certificate from the prod co. Some production companies will do what Eric said they can't do which is XEROX a certificate and add your name to it.

 

Some may remember what happened to me with the fake producer (SIXX), and multiple fake Acord COI's. No equipment was lost or damaged but if it were to have happened I would have been up the creek.

 

If the company hasn't sent you a COI the day before the shoot, and all of a sudden when you tell them your not showing up they email you one at 10pm on a Sunday, STAY HOME or at least KNOW, YOUR ON YOUR OWN.

[Jess Haas SOC]

did you submit a complete itemized inventory before the certificate was issued? If you didn't your gear wasn't insured.

I generally send an itemized list but I have had insurance agents issue the cert without an itemized list just "Steadicam Package" and a dollar amount. Do you have any experience with this leading to things not being covered even though the insurance agent said it would be?

[Jess Haas SOC]

If the company hasn't sent you a COI the day before the shoot, and all of a sudden when you tell them your not showing up they email you one at 10pm on a Sunday, STAY HOME or at least KNOW, YOUR ON YOUR OWN.

I know of atleast one insurance company has an online system that producers can use to generate the certificates themselves. Of course I am sure their validity is dependent on the producer entering all of the necessary information correctly.

[Robert Starling SOC]

That is true Jess. Before I sold my production company we had insurance through Marshall Entertainment Insurance and an online system of creating, faxing and emailing valid ACORD COIs any time day or night as long as we had Internet service. I think we paid an extra $500 a year for that service / option but when we needed a Cert, we needed one now. I don't issue COIs as much as I did then but it would be nice if Walter P. Dolle would add that as an option to the GL policies.

 

Robert

[Mark Schlicher]

Eric,

I explained where I did my research. I stand by everything I said. None of it is conjecture. I pointed out that the cert is informational only and does not have any legal force in the event of a claim. The policy is the only thing that matters ultimately. The cert is "valid" only to the extent that it accurately summarizes the coverage that underlies it.

 

Thanks for pointing out that it is important that the insurance agent or carrier actually fills out the cert, not production. That give reasonable assuance that coverage is not being negligently or fraudulently represented.

 

It's also valuable to highlight that an operator should insure their gear, so thanks for pointing that out, along with the reasons it's important. To that I'd add that, for the same reasons, having your own general liability policy is also "mandatory."

 

 

Jess,

whether an itemization is necessary would depend on the underlying policy that is summarized on the COI. Different policies differ. The insurance agent probably correct, as they are not going to willingly mislead you, but without seeing the policy you are ultimately relying on their word.

 

Robert,

The value of dissecting, demystifying, and clarifying the COI is, I think, precisely because the legal/judicial system rolls the way it does these days. The deck is stacked against us unless we have a clear-eyed understanding of what the documents we rely on do, and do not, actually mean...and not rely blindly on the competence of the production company, or our own assumptions.

 

Real world situation that recently happened to me: first-time client, a small local prod. company were surprised I required a COI. I gave the "I'm like a rental company" speech, they said "oh, okay, no problem." The next day, ACORD 25 comes back from their insurance agent....only liability coverage listed, no equipment coverage, no "additional insured/additional loss payee language". I politely ask them to fix the problems. "Oh, okay". Next day, COI comes back with equipment coverage listed in the appropriate box, but still no "additional insured/loss payee" language. Finally, it came back correct. People of integrity and goodwill who nonetheless didn't have a grasp on the COI because they seldom rented gear from others.

 

So, I thought I was covered. Now, if their underlying insurance endorsements actually require itemization of rented equipment in order to cover my gear, that was not disclosed on the COI, nor noted by the prod. co. nor the insurance agent. Which is exactly my point. If it did, and there was a loss, their insurance company would have no obligation to pay the claim. So my "faith" in the COI would be misplaced.

[Eric Fletcher S.O.C.]

Eric,

I explained where I did my research. I stand by everything I said. None of it is conjecture. I pointed out that the cert is informational only and does not have any legal force in the event of a claim. The policy is the only thing that matters ultimately. The cert is "valid" only to the extent that it accurately summarizes the coverage that underlies it.

 

No you didn't, you stated that you researched it and here's what you learned. Cite sources, your post's makes some pretty serious claims and most of them happen to be wrong. Whether intentional or from a lack of understanding/proper research you need to provide your sources

 

 

Thanks for pointing out that it is important that the insurance agent or carrier actually fills out the cert, not production. That give reasonable assuance that coverage is not being negligently or fraudulently represented.

 

It's also valuable to highlight that an operator should insure their gear, so thanks for pointing that out, along with the reasons it's important. To that I'd add that, for the same reasons, having your own general liability policy is also "mandatory."

 

Yes, that's pretty basic info on both parts

 

Jess,

whether an itemization is necessary would depend on the underlying policy that is summarized on the COI. Different policies differ. The insurance agent probably correct, as they are not going to willingly mislead you, but without seeing the policy you are ultimately relying on their word.

 

Incorrect. it doesn't depend on the underlying policy, it's required for a proper claim. same concept as insuring a modified car, it get's totaled and unless you also claimed yore mods the insurance company is going to pay you off based on a stock car. Without an inventory the insurance company may assume that you fly a 3A (maybe that was the last time they updated their database or paid a claim) and that's what they are basing your claim on and your rig happens to be on the bottom of the ocean, how are they supposed to know that you're flying a XCS ultimate/Pro 3/U2? The inventory that's how.

 

Robert,

The value of dissecting, demystifying, and clarifying the COI is, I think, precisely because the legal/judicial system rolls the way it does these days. The deck is stacked against us unless we have a clear-eyed understanding of what the documents we rely on do, and do not, actually mean...and not rely blindly on the competence of the production company, or our own assumptions.

 

Yet what you have posted is wrong and tends to muddy the waters, and you claim to have dissected the issue.

 

 

Real world situation that recently happened to me: first-time client, a small local prod. company were surprised I required a COI. I gave the "I'm like a rental company" speech, they said "oh, okay, no problem." The next day, ACORD 25 comes back from their insurance agent....only liability coverage listed, no equipment coverage, no "additional insured/additional loss payee language". I politely ask them to fix the problems. "Oh, okay". Next day, COI comes back with equipment coverage listed in the appropriate box, but still no "additional insured/loss payee" language. Finally, it came back correct. People of integrity and goodwill who nonetheless didn't have a grasp on the COI because they seldom rented gear from others.

 

So, I thought I was covered. Now, if their underlying insurance endorsements actually require itemization of rented equipment in order to cover my gear, that was not disclosed on the COI, nor noted by the prod. co. nor the insurance agent. Which is exactly my point. If it did, and there was a loss, their insurance company would have no obligation to pay the claim. So my "faith" in the COI would be misplaced.

 

EXCEPT you would have been making an assumption. Congrats on creating a teaching moment, but shame on you for assuming that you knew better and not following thru especially since that info was here and would have been "Discovered" with proper research

[Janice Arthur]

Mark;

 

Thanks for bringing up such a complex subject and posting such information.

 

I have to say some of it and the back and forth gave me a headache at the density of subject matter.

 

I just got a certificate and the right stuff on it and forgot about it.

 

My thoughts are as follows, nothing is black and white, any longer. The shades of gray that work in large or small markets, the risk of a small shoot vs. a larger shoot and the ensuing amount of gear at risk has made this an even harder subject to "wrangle" on every job to the extent we all should.

 

I don't do deal memos or all that, its usually a friendly phone call, "Are you available etc.?"

 

Do I have insurance exposure on some shoots, probably, has it bit me--not yet thankfully.

 

It was my suggestion and insurance company, Walter P. Dolle, that got us under a really good group policy. (Our man Gene Taylor worked out the policy details.)

 

I thought I knew a lot but obviously I don't and will reread the posts again. I think it again comes down to your world.

 

I have to say I didn't the the need for the tone of this topic to get so cranky, can't we just have civil discussion, its just insurance after all.

 

Mark's posts are always thoughtful and helpful, we need more guys like him to step up and help.

Stifling input is a sure way to kill off the discussion we need.

 

Thanks.

 

Janice

[Bryan Trieb]

Just wondering if anyone has been confronted with a similar situation...

I request a COI from a large production company who have tried to deflect such requests in the past. I get the following reply:

 

"Attached is the certificate that our insurance is willing to provide. In return, they would like a certificate from you showing proof of coverage. Please send your certificate to me and I will forward it to our business affairs department and to our insurance company as well."

 

The attached document was a standard COI.....but I've never been asked to prove my own coverage in return. Ever.

Does this seem odd?

 

 

 

 

[Daniel Stilling DFF]

That seems very odd, as if something was to happen with your gear, their insurance would be liable for it.

[Victor Lazaro]

I've been asked the same thing for a Bollywood film to shoot in New Jersey...

[Robert Starling SOC]

Bryan,

 

I've ran into this situation a few times in the past. They are basically making sure you are insured as well and you should be.

 

They are probably concerned about Subrogation which in the case of your own neglect (assuming they could prove it) would mean their insurance company still pays the claim but then goes after reimbursement from you and your insurance company if it was your fault. As an example, you leave your gear unattended by the street where it could get damaged or stolen or you fail to take proper safety precautions and you injure or damage not only yourself and your gear but someone else and/or their gear. Just like if you file a L&D with your insurance, they might pay you but they will look to see if they can recoup that from another insurer or individual.

 

You are asking them to cover worse case scenarios and they are asking you to show you have the ability to do the same.

 

Is it ideal, maybe not but it's not completely unreasonable.

 

Robert