Not long ago, I got the following email from a Louisiana agent (edited for brevity):
We have an insured with CGL policy form CG 00 01 04 13. The schedule of forms does not list any Contractual Limitation endorsements. A certificate holder is requiring that on the certificate of insurance we state one of the following:
“Contractual Liability as required by contract” or
“Contractual Liability is included on the General Liability and there is no Contractual Liability Limitation Endorsement” or
“Blanket Contractual included”
Our last COI attempt stated:
“General Liability includes Contractual Liability as required by contract”
However, this was rejected with the above three language choices being required.
We are not comfortable with either option 1 or 3 as the certificate contains multiple policies. In your opinion, is it acceptable for us to state option 2 above on the certificate?
This was my response:
Louisiana has one of the toughest COI laws in the country. Placing language on a COI that misrepresents policy terms can result in very serious penalties to the agent. It is HIGHLY advisable not to put ANY extraneous comments on the COI.
The comment you attempted to use, “General Liability includes Contractual Liability as required by contract” is likely a misrepresentation of the policy. Most contracts have unlimited indemnity requirements while NO general liability policies provide unlimited contractual liability coverage, so the CGL policy does not provide unlimited indemnity as likely “required by contract” (and, for that matter, WHAT contract?).
An inadequately covered claim could result in a claim against the agent on the basis of fraud, misrepresentation, or other grounds.
Looking at the 3 options they offer…
“Contractual Liability as required by contract”
As pointed out above, NO general liability policy I’ve ever seen will provide contractual liability coverage as required by most contracts because virtually all of them have unlimited indemnification requirements and sometimes may include other contractual liability that is uninsurable.
“Contractual Liability is included on the General Liability and there is no Contractual Liability Limitation Endorsement”
If we’re talking about the ISO CGL policy, it actually has a contractual liability EXCLUSION with some give-back for an “insured contract.” Just making the blanket statement that “Contractual Liability is included” could be misrepresentative. The term “Contractual Liability Limitation Endorsement” is an undefined term. ISO has the CG 21 39 – Contractual Liability Limitation endorsement that they are probably referring to, but there are non-ISO forms that do this or more under different names. ISO also has the CG 24 26 – Amendment of Insured Contract Definition that limits the contractual liability coverage but under a different form name…if you have the CG 24 26 and not the CG 21 39, if there is a contractual liability claim denial, is the contracting party then going to claim they meant ANY “contractual liability limitation endorsement”?
“Blanket Contractual included”
There is no such term used in the ISO forms. If you Google “blanket contractual,” one of the hits will be at Investopedia which defines this term to mean:
“Liability insurance that provides coverage for ALL contracts in which the insured is assuming liability….The policy is designed to be automatically applicable to ANY agreement that the business may sign.” [emphasis added]
Clearly that is NOT what “blanket contractual” means as used in our industry under standard forms. But by using the broad, ambiguous term “blanket contractual,” you open yourself up to claims of misrepresentation and fraud. I’ve seen many, many COI requirements and online certificate vendor entries demanding the use of the “blanket contractual” term. You should never use this undefined term.
None of the three statements they want are appropriate to show on a COI and, in my non-legal opinion, using any of them could be a violation of Louisiana’s COI or other laws.
Whether your customer’s insurance program complies with the third-party contract they’ve entered into is a question that can/should only be answered by the party that drafted the contract.
You can, with your customer’s permission, provide them with a copy of the policy forms and let them make that interpretation. Or you could make a business decision to use one of the descriptive phrases they are demanding you use and subject yourself to penalties under the laws of Louisiana.