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COI Showing the Holder as Additional Insured Not Binding on the Insurer

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Facts: On June 16, 2016, the Federal District Court for the Northern District of Indiana affirmed the general rule that certificates of insurance cannot alter the terms of a policy. In Dynasty Int'l LLC et al. v. Lexington Ins. Co., No. 2:15-CV-374 JD, Dynasty owned property that it leased to Chrysler Realty Co. ("CRC"), a subsidiary of Chrysler LLC. The lease required CRC to obtain insurance covering the property and naming Dynasty as an additional insured. Chrysler obtained the policy but did not include Dynasty as an insured. AON issued a certificate of insurance indicating that Dynasty was an additional insured. After the property was damaged Dynasty sought coverage but Lexington denied the claim on the ground Dynasty was not a insured beneficiary under the policy. Dynasty filed a complaint alleging coverage based on the certificate's representation that Dynasty was an additional insured under the policy. Lexington moved to dismiss the complaint on the ground that the certificate cannot alter coverage.

Holding: The court agreed ruling that, without an endorsement to the policy adding a party as an insured, a statement in a certificate of insurance indicating additional insured status has no effect. Significantly, the court noted that the complaint failed to allege any agency relationship between AON and Lexington or that AON was authorized to prepare the certificate showing Dynasty as an additional insured. The court would further require facts apart from the certificate itself showing the insurer intended to add Dynasty as an insured. Thus, even if AON was an authorized agent of Lexington, the certificate would not bind Lexington without manifestation of intent to add Dynasty as an insured. The court dismissed the complaint without prejudice.

Take Away: Always demand a copy of the Additional Insured Endorsement with the Certificate.

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