In T-Mobile USA Inc. v. Selective Ins. Co. of Am., No. 96500-5, — P.3d —, 2019 WL 5076647 (Wash. Oct. 10, 2019), the Supreme Court of Washington answered the Ninth Circuit’s certified question regarding whether an insurance company is bound by its agent’s written representation — made in a certificate of insurance — that a particular corporation is an additional insured under a given policy. Under Washington law, the answer is “yes” — an insurance company is bound by the representation of its agent in those circumstances where the agent acted with apparent authority even though that agent’s representation turned out to be inconsistent with the policy and the certificate included additional text broadly disclaiming the certificate’s ability to “amend, extend or alter the coverage afforded by” the policy.
An additional insured coverage dispute arose between Selective Insurance Company of America and T-Mobile USA arising from a construction defect lawsuit in connection with a cell phone tower on a rooftop in New York City. Selective did not dispute that a separate entity, T-Mobile NE did qualify as an additional insured and agreed that T-Mobile NE became an additional insured under the policy by virtue of its contract with the named insured and the policy terms. However, T-Mobile USA was not a party to the insured’s contract.
Selective’s agent issued a series of certificates of insurance over approximately seven years specifically stating “T-Mobile USA Inc., its Subsidiaries and Affiliates” were “included as an additional insured” for certain policy coverage. The certificate was issued on an industry-standard form and included preprinted industry-standard disclaimers. The agent signed those certificates as Selective’s “Authorized Representative.” (The words “Authorized Representative” were likely on the pre-printed Certificate of Liability Insurance Form directly above the space for the agent’s signature. See ACORD 25 (2010/05).)
The court recognized the “general rule” in Washington is that “an insurance company is bound by all acts, contracts, or representations of its agent, whether general or special, which are within the scope of [the agent’s] real or apparent authority notwithstanding they are in violation of private instructions or limitations upon [the agent’s] authority, of which the person dealing with [the agent], acting in good faith, has neither actual nor constructive knowledge.” Id. at *3 [quoting Pagni v. N.Y. Life Ins. Co., 173 Wash. 322, 349-50, 23 P.2d 6 (1933); additional citations omitted]. The court also found that public policy supports the application of the rule that an insurer is bound by its agent’s representation made with actual or apparent authority.
The court also considered that Selective’s agent issued several similar certificates of insurance over seven years, testified that the insured contractor told the agent that T-Mobile was required to be an additional insured, and provided a declaration that Selective never objected to the issuance of the certificates. Based on this evidence, the Ninth Circuit ruled that that the agent acted with apparent authority in issuing the certificate at issue, which “clearly lists T-Mobile USA as an additional insured under the policy.” The court clarified that when the Ninth Circuit determined that an insurance company’s agent acted with apparent authority in issuing the certificate to T-Mobile USA, under Washington law, that the insurer is bound by the agent’s representations made in the certificate of insurance.
Many policies provide prerequisites to additional insured coverage, including that an organization is entitled to additional insured status only if there is a written contractual requirement that the entity is an additional insured. Some policies provide similar terms for a written or oral contract that require that the entity be an additional insured and if certain policy terms are satisfied. The Washington Supreme Court’s conclusion contradicts the rule, adopted by numerous courts, that a certificate of insurance does not confer coverage not provided by the policy, especially in light of the certificates of insurance that are used today and that the certificates state that they neither confer coverage nor alter the terms of the policy. Whether other courts will adopt this rule, ignoring the plain language of the disclaimers and the policies, or whether Washington courts will hold this rule is applicable when the underlying facts are different is unclear.