In only a few more weeks, insurance producers who write construction accounts will have a new tool for satisfying demands for certificates of insurance. The form, New York Construction Certificate of Liability Insurance Addendum (ACORD 855 NY), will be available starting in June. IIABNY and a number of other insurance and construction trade groups worked together to create this form last year.
To put it in context, we worked on this form at the same time that the certificates of insurance bill was making its way through the New York State Legislature. That bill permitted the use of only standard ACORD and ISO certificates of insurance. The addendum form was supposed to meet that standard while providing all of the information that New York contractors are frequently asked to provide to third parties.
It all worked out as planned. The bill passed both chambers of the legislature. The ACORD membership approved the addendum form. Everything worked as planned, with one exception: The governor vetoed the bill. Consequently, ACORD and ISO forms are not the only game in town. Government agencies and municipalities are still free to insist on their own proprietary forms, many of which make statements that differ from the terms of the insurance policies listed on them. In my opinion, this significantly diminishes the usefulness of the new form.
Nevertheless, producers will be able to use it this summer should certificate holders demand it. As the title suggests, the addendum is a supplement to the familiar ACORD 25 Certificate of Liability Insurance; it is not a replacement. It attempts to answer these questions that certificate holders often ask:
- Is the insurer providing coverage admitted in New York, or is it an excess line insurer? If admitted, is the policy written in New York’s free trade zone?
- Is the commercial general liability policy the ISO form, a modification of that form, or some other proprietary form?
- What is the form number (ISO or other) of the additional insured endorsement on the policy?
- Does the CGL policy insure the additional insured on a primary and noncontributory basis? Does the excess or umbrella liability policy?
- Does it cover the additional insured for injuries to employees of the named insured or subcontractors?
- Does the CGL policy restrict or exclude coverage for:
- Certain specific operations?
- Contractual liability by altering the definition of “insured contract”?
- Earth movement; excavation; explosion; collapse; underground property damage?
- Suits by one insured against another?
- Property damage to work performed by subcontractors?
- Does it remove or modify the “insured contract” exception to the employer’s liability exclusion?
- Does the CGL policy guarantee advance notice to the certificate holder if the insurer cancels it?
This is pretty detailed information. If the agency personnel completing the form do not have a good knowledge of CGL insurance, they may answer the questions incorrectly. This in turn could expose the agency to errors and omissions lawsuits. Thorough training for account managers and customer service representatives on how to answer these questions will be essential.
I’ve had a few phone conversations with IIABNY members about the addendum, and reactions have varied. One member in Central New York told me he didn’t see it as much of a problem. Another member from the Lake George region told me he was glad that his retirement was imminent; he did not want to have to deal with the trouble he foresaw the form causing. What do you think? Drop your thoughts in the comments.