Answering a certified question from the Ninth Circuit, the Washington Supreme Court responded that an insurer's agent who makes a representation in a certificate of insurance binds the insurer. T-Mobile USA Inc. v. Selective Ins. Co. of Am., 2019 Wash. LEXIS 659 (Wash. Sup. Ct. Oct. 10, 2019).
Two T-Mobile companies were involved in the case: T-Mobile USA and To-Mobile Northeast. T-Mobile NE wanted to construct a cell phone tower on a rooftop in New York City. A contract between T-Mobile NE and the contractor required the contractor to obtain a CGL policy, to annually provide T-Mobile NE with certificates of insurance showing the policy's coverage, and to name T-Mobile NE as an additional insured under the policy. T-Mobile USA was not a party to the contract, but was aware of it and approved the contract as to form.
Selective issued the policy to the contractor. The policy provided that a third party would automatically become an additional insured if the contractor and the third party entered into their own contract and that contract required the contractor to add the third party to its policy as an additional insured. Over seven years, Selective's agent issued a series of certificates of insurance, including one that named T-Mobile USA, Inc., "its Subsidiaries and Affiliates" as additional insureds with respect to certain areas of coverage. Selective never objected to the agent's issuance of the certificates.
The certificate also included pre-printed industry-standard disclaimers. It stated in bold capital letters that the certificate "is issued as a matter of information only and confers no rights upon the certificate holder," " does not affirmatively or negatively amend, extend or alter the coverage afforded by the policy," and "does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder."
Eventually, the owner of the rooftop on which the cell tower was constructed sued the contractor and T-Mobile USA, not T-Mobile NE. Selective accepted the contractor's tender, ,but rejected T-Mobile USA's tender. The building owner later amended its complaint, naming T-Mobile NE as as defendant and dropping T-Mobile USA. T-Mobile USA sued Selective for expenses incurred in defending itself in the underlying litigation.
T-Mobile USA, which is headquartered in the State of Washington, sued Selective there. The court granted summary judgment to Selective and dismissed all of T-Mobile USA's claims.
T-Mobile USA appealed. The Ninth Circuit certified a question to the Washington Supreme Court, asking whether an insurer was bound by representations made by its authorized agent in a certificate of insurance with respect to a party's status as an addition insured, even though the certificate disclaimed its authority and ability to expand coverage.
The Washington Supreme Court determined that Selective was bound by the representations its agent made in the certificate of insurance. The Ninth Circuit had previously ruled that Selective's agent acted with apparent authority. This ruling conclusively resolved the issue. T-Mobile USA's objectively reasonable belief that the agent had authority to issue the certificate made its reliance on the certificate reasonable. The pre-printed disclaimers were ineffective because they were general boilerplate, whereas the additional insured statement was specifically written into the certificate.
Therefore, the certified question was answered as follows: an insurance company's agent who makes an authoritative representation binds the insurance company, even when that specific representation is transmitted via a certificate of insurance and accompanied by general disclaimers.
