Insurance Certificate Update

It’s been almost a year since my last post on insurance certificates.  That post dealt with the application of Georgia law to insurance certificates issued for property, operations, or risks that are located outside Georgia.  My conclusion was that Georgia law did not govern what could be put on such insurance certificates.  Instead, an agent must look to the law of the state in which the property, operations, or risks are located to determine what can and cannot be put on insurance certificates for them.

The subject of insurance certificates is a standing agenda item for each meeting of IIAG’s Commercial Lines Committee.  At last week’s meeting, the consensus was that the number of problems with insurance certificates had dropped off as everyone became more familiar with the requirements of Georgia law.  It appears that most of the problems now concern certificates for out of state projects, which is understandable given the variety of the rules in other states for insurance certificates.

However, there was a recent article in Property Casualty 360 about an  International Risk Management Institute study that found over 90% of the hundreds of insurance certificates that were audited over a period of four years contained at least one misrepresentation of the coverage actually provided by the underlying policy.  That study focused on the construction industry and found most mistakes were made with additional insureds and the scope of environmental coverage.

The majority of the mistakes regarding additional insureds were due to a misuse of a blanket endorsement for additional insureds and the failure to properly complete endorsements that named the additional insureds.  Both of these mistakes were the result of the agent failing to read the endorsements in question to make sure they provided the coverage required by the construction contract.  A simple review of the latter type of endorsement (e.g., ISO CG 20 10 and CG 20 37) would have revealed that it failed to actually name or otherwise identify those entities who were additional insureds under the policy in question.

The problem with the blanket endorsement (e.g., ISO CG 20 33) is that it only applies to entities with whom the named insured has a written contract that requires that entity to be named as an additional insured and that status only exists for as long as the named insured is actually performing services for the entity.  The use of such an endorsement will not provide additional insured status for anyone else.  If the contract requires that such status be given to any of the contracting entity’s subcontractors or affiliates, a blanket endorsement for additional insureds will not do that.

If the insurance certificate contains anything that indicates the policy underlying it provides coverage for all the additional insureds required by the policyholder’s contract with the certificate holder and either of the above problems exist, the agent who issued that certificate will have a problem.   This is one more reason for agents not to make any such representation on an insurance certificate.  Such a certificate should only refer to any additional insured or other endorsements by name or identifying number and leave it to the certificate holder to review those endorsements and decide if the contract’s requirements have been met.

Update on Agency Handling of Subpoenas

I received a call recently on the Free Legal Service program that I run for members of the Independent Insurance Agents of Georgia that caused me to take another look at the law governing the service of subpoenas and how they can be contested.  Some of my readers may remember a post that I did on this subject a little over two years ago.  In that post, I stated the Georgia Civil Practice Act required any objection to a subpoena to be filed within 10 days after its service.  That statement was correct as far as it went, but did not cover the possibility that the date specified in the subpoena for the production of documents was less than 10 days after its service.  In that situation, an objection to the subpoena, known as a motion to quash, must be made on or before the date and time specified in the subpoena for the production of the documents described in it.

My earlier post was focused on the use of subpoenas and requests to produce documents in the time period before trial, during what is known as the discovery phase of litigation.  My recent call was about the service of a subpoena to testify and produce documents at the trial itself.  The caller had been served with a subpoena only a little over 24 hours before the date and time that he was supposed to appear in court at the trial and did not have enough time to get together all the documents requested and some of those documents concerned customers who were not parties in the trial.

While Georgia law does mandate that a subpoena must be served a minimum amount of time before the person served must produce documents or appear to testify, that time is only 24 hours.  Beyond that, it is up to the trail court to decide if “under the circumstances of each proceeding the subpoena was served within a reasonable time” before the person served was required to appear.  There is not much that can be done to get out of a subpoena to testify, if it is served within “a reasonable time”, unless the trial will be held in a county other than the one in which the person served resides.  If that is the case, for the subpoena to be enforceable, the person served must also be given payment for one day’s witness fee ($25), “plus mileage of 45 cent(s) per mile for traveling expenses for going from and returning to his or her place of residence by the nearest practical route.”   This extra requirement does not apply if the subpoena is issued on behalf of a government agency or the defendant in a criminal proceeding.

If, as in my caller’s case, the subpoena also requires the production of documents or other things, a motion to quash it can be filed on the grounds that its requirements are “unreasonable and oppressive.”  That can be the case if not enough time was given to gather the documents requested or the number requested is excessive in light of what the person serving the subpoena actually needs, as well as other reasons.

The advice given in my earlier post about what to do when served with a subpoena for discovery purposes also applies in the trial situation, if the documents requested involve a customer who is not a party to the trial.  If they involve a party to the trial, that party will have an opportunity to object to their use at the trial.





What You Missed at the IIAG Fall Conference

I was able to spend some time last week at the Independent Insurance Agents of Georgia Fall Insurance Extravaganza, which was held in Macon.  Next to the opportunity to network with other agents and company representatives (there were over 150 in attendance), the best thing about this event is that it is free for IIAG members and provided an opportunity for agents to get up to eight hours of continuing education credit at no cost.  I arrived in time for lunch on Thursday and stayed for the afternoon education sessions and the evening dinner.

Apparently, the conference started with a bang, as everyone I met mentioned  the opening general session at 8 a.m. that morning.  A fellow insurance agent, John Immordino, spoke on Cyber Liability exposures for insurance agencies and agents and said some things that had everyone concerned.  After that, it was on to less scary topics, although the E&O Loss Control presentation had some things in it that should cause agencies and agents concern, especially with respect to social media.  As the presenter, Becky McCormack of the Independent Insurance Agents and Brokers of South Carolina, noted, the potential liability exposures with social media are essentially the same as with other communication media, but due to its more casual feel, instantaneous and worldwide distribution, and the permanence of what is posted, those exposures are magnified. That is why it is crucial for agencies to have a policy about the use of social media by their employees in connection with the performance of their duties. The Agents Council for Technology has created a guide to help agencies in creating such a policy. (Click here for a link to it, sample policies, and articles on related topics.)

I was also able to sit in on Tamara Gatson’s presentation on time management.  I have been to such presentations for attorneys and the principles are the same, but she made a basic point that is often overlooked.  In order to take control of your time, you need to track how you are currently spending your time both at work and outside of work and compare it to the way you want to be spending your time.  Once you know these basic facts, you can take control of your life by cutting down on what you don’t want to be doing and doing more of what you want to be doing.  She also made the point that you can’t wait for specific events to occur to be happy.  Like life, happiness is a voyage and should be sought in all the activities of your life.

Perhaps the most entertaining presentation I attended was on a subject that is usually considered somewhat boring and technical.  Its title was “Insurance & BBQ” and addressed issues related to commercial property and general liability insurance policies.  The link between Insurance and barbecue was the use by the presenter, David Thompson of the Florida Association of Insurance Agents, of some of the many barbecue restaurants he has visited to explore those issues.  His critiques of the restaurants were fun and made after he discussed a particular issue related to the restaurant.  He made the obvious point that agents should read the policies they are selling and pointed out some endorsements to watch for and avoid if possible (generally, any endorsement that contained the words “limitation” or “exclusion.”).  He also made the not so obvious point that when responding to a customer’s question about the existence of coverage, an agent should begin his or her answer with the statement “there is no coverage, except” in certain situations, instead of “there is coverage, but limited” to certain situations.  I think most of my readers can guess why the first response is better than the second, especially if they have taken an E&O Loss Control course.

Must an Agency Website Contain a Privacy Statement?

A recent question about the use of privacy statements on websites maintained by insurance agencies prompted me to look again at the basic laws that govern when and how such statements must be given to the customers of insurance agencies.  On  the federal level ,there is the Gramm, Leach, Bliley Act (“GLBA”) passed by Congress in 1999 and in Georgia, there is Section 33-39-1, et seq., of the Insurance Code, which was enacted by the General Assembly in 1982 and became effective on January 1, 1984.  The GLBA permits its requirements to be superseded by state laws that impose greater requirements on the giving and contents of privacy statements.

Unfortunately, for Georgia insurance agents, the Georgia law does impose greater requirements than the GLBA on the giving and contents of privacy statements.  Fortunately, the requirements of both laws only apply to “personal information” (Georgia law) and “nonpublic personal information” (GLBA), which means that privacy notices need not be given to insureds or potential insureds who have or are seeking commercial lines coverages that do not involve the collection of personally identifiable information about individuals.  In all cases where such information will be collected by an agency in connection with the obtaining of an insurance coverage, a privacy notice must be given.

Georgia law specifies different times for when such notices must be given in connection with an initial application for insurance, depending on the sources from which personal information about the applicant will be collected before a policy is issued.  If such information will only be collected from the applicant and public records, a privacy notice need not be given until the policy is delivered to the applicant.  If such information will be collected from any other source, a privacy notice must be given when any personal information is first collected about the applicant.

Thus, if an insurance agency has a website that allows a potential customer to get a quote by providing certain personally identifiable information about themselves and before providing that quote, the agency will get any more personal information about the potential customer from a source other than public records, the website must give the customer the required privacy notice when the customer first enters their personal information.  The privacy notice in this situation required by Georgia law is more extensive than the one required by GLBA.  Among other things, that notice must tell the customer of their right to inspect personal information about themselves in the records of an insurance institution, agent, or insurance support organization, to get other information from those entities, and to request a correction of any such information.

The Georgia law requires a privacy notice to be “in writing”.  However, given the subsequent passage of the Georgia Uniform Electronic Transactions Act and the enactment last year of a revised Section 33-24-14 of the Georgia Insurance Code (click here for blog post), which specifically applied the provisions of that Act to the Insurance Code, if the requirements of the Act are met, the required privacy notice can be given electronically on the agency’s website.  Those requirements have been explained in an article I wrote for the Dec Page magazine.  If an agency would prefer not to put a full blown privacy notice on its website, the Georgia law permits an abbreviated notice to be given that informs the customer that (i) personal information may be collected from persons other than the customer, (ii) such information as well as other personal or privileged information subsequently collected by the agency may in certain circumstances be disclosed to third parties without authorization, (iii) a right of access and correction exists with respect to all personal information collected; and (iv) a complete privacy notice will be furnished to the customer upon request.