Which Holds Water: Insurance Certificate Or Policy?


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When it comes to insurance coverage for a major telecom, how can a claim be denied when there’s a certificate on file? In the case of T-Mobile USA Inc. v. Selective Insurance Co. of America, the Washington Supreme Court ruled on just that question.

Here’s how it all began: T-Mobile Northeast (NE) hired a construction company to build a tower on a New York rooftop, and the building owner sued the contractor and T-Mobile USA for damage caused by the construction.

T-Mobile Northeast (NE) had an insurance policy with Selective Insurance Company, with T-Mobile USA added to the policy by the insurer’s agent as “additional insured.”

When USA filed a claim with Selective, coverage was denied, so T-Mobile then sued the insurance company in Washington federal court. Selective argued that the carrier was not an additional insured, notwithstanding the insurance certificate. T-Mobile USA countered that it was entitled to rely on Selective’s agent’s representation when issuing the certificate, according to court documents. 

The district court found that the agent had apparent authority to act on behalf of Selective. Yet the court agreed with Selective that USA was not an additional insured and dismissed the lawsuit. USA appealed to the Ninth Circuit Court, who asked the Washington State Supreme Court to determine which document governed USA’s claimed additional insured status: the certificate or the policy. The Ninth Circuit ruled in favor of  T-Mobile USA.

Here’s why: the Washington State Supreme Court determined that the agent’s representations bound Selective in the certificate under long-established state law. The law states that its agent’s representations bind the insurer if the agent acts within his or her actual or apparent authority and the third party reasonably relies on the representations in good faith. The court noted that permitting Selective to disclaim its agent’s representation that USA was insured would allow insurers to “mislead without consequence.”

October 21, 2019 

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