In responding to a certified question from the Ninth Circuit in T-Mobile USA Inc. v. Selective Insurance Company of America, the Washington Supreme Court has held that an insurer is bound by representations regarding a party’s additional insured status contained in a certificate of insurance issued by the insurer’s authorized agent, even where the certificate contains language disclaiming any effect on coverage. To hold otherwise, the court noted, would render meaningless representations made on the insurer’s behalf and enable the insurer to mislead parties without consequence.
The certified question and ruling stem from T-Mobile USA’s appeal of the district court’s summary judgment ruling in favor of Selective Insurance Company on T-Mobile USA’s breach of contract and declaratory judgment claims. Selective issued the insurance policy at issue to a contractor of T-Mobile Northeast, LLC, a wholly owned subsidiary of T-Mobile USA. Through endorsement, the policy extended “additional insured” status to T-Mobile NE because the contract between T-Mobile NE and the insured required that T-Mobile NE be added as an additional insured. Additional insured status was not, however, extended to T-Mobile USA, as T-Mobile USA had not entered a written contract with the insured.
Despite the fact that T-Mobile USA was not an additional insured under the policy, the Van Dyk Group, Inc. – Selective’s authorized agent, acting with Selective’s apparent authority – issued a certificate of insurance to T-Mobile USA, stating that T-Mobile USA was “included as an additional insured” under the policy. The certificate of insurance also included a disclaimer, stating that the certificate could not extend or alter the coverage afforded by the policy.
Based on Van Dyk’s representations in the certificate of insurance, T-Mobile USA argued that it has additional insured status under the policy, because Selective is bound by Van Dyk’s representations that T-Mobile USA was included as an additional insured. In response to the Ninth Circuit’s certified question, the Washington Supreme Court agreed with T-Mobile USA, holding that, under Washington law, an insurance company is bound by the representation of its agent under such circumstances.
This ruling serves as a reminder of the significance and binding effect of agent representations. The decision is also an important illustration of why it is crucial, when obtaining insurance coverage, to make sure that additional insured coverage is properly structured.