Avoid the hazards of certificates of liability insurance: Current legal requirements by state

Certificates of liability insurance were first created by ACORD in 1976, known as ACORD 25. However, the providing of evidence of financial responsibility for liability exposures dates to the late 19th century and early 20th century. The problem with COIs is that they are not issued as proof of insurance, and one must understand the nuance between evidence and proof of insurance. This nuance has caused years of litigation and forced some states to regulate COIs heavily.

Understanding the nuance between these two words has been further complicated by requests for additional insured coverage, primary noncontributory language and subrogation waivers. In this article, we will explain—in general terms—the nuance and how the states in PIA Northeast’s footprint have come to regulate COIs.

It is clear from the inception of the COI that it was never intended to be absolute proof of insurance for the certificate holder to which it was issued, but rather the COI is issued only as evidence of insurance at the time that it is issued—with the understanding that it is subject to the terms, conditions and endorsements of the policy to which it refers. In fact, along those lines the current disclaimer on the ACORD 25 COI states, in part:

This Certificate Is Issued As A Matter Of Information Only And Confers No Rights Upon The Certificate Holder. This Certificate Does Not Affirmatively Or Negatively Amend, Extend Or Alter The Coverage Afforded By The Policies Below.

For years, those who have utilized COIs have been using and abusing them to create coverage where no coverage exists. To that end, many states have taken it in their own hands to regulate the use of COIs. Specifically, in this article we will focus on what New York, New Hampshire, Connecticut, New Jersey and Vermont have done to regulate COIs.

New York law

In 2014, New York enacted Article 5 of New York Insurance Laws entitled Certificates of Insurance. Article 5 under Section 501(a): states “‘certificate of insurance’ means any document or instrument, or addendum thereto no matter how titled or described, prepared or issued by an insurer or insurance producer as evidence of property/casualty insurance coverage.” New York Insurance Law Section 502 goes on to prohibit:

Any person or governmental entity from willfully requiring an entity or person from issuing a COI that is not in “a form promulgated by the insurer issuing the policy referenced in the certificate of insurance;” or “a COI issued by industry standard-setting organization and approved by the Superintendent of the Department of Financial Services or any other form approved for use by the Superintendent.” NY Insurance Law Section 502(a).[1]

The law makes it illegal for any entity or person to require the “inclusion of terms, conditions or language of any kind, including warranties or guarantees,” in the COI that the insurance policy referenced in the COI does not include.[2] Finally, the law states: “A certificate of insurance shall further not confer to any person any rights beyond those expressly provided by the policy of insurance referenced therein.”[3]

The takeaway from these provisions is that New York state will no longer allow any COI that has not been approved by the DFS, nor will it allow a COI to amend any term, condition or endorsement of an insurance policy reference in the COI. Moreover, the state has made it a crime if any person violates Section 502 of the New York Insurance Law, punishable by a $1,000 fine for the first violation, and a $2,000 fine for each violation thereafter.[4]

New Hampshire law

While New Hampshire has codified its requirements relative to issuing a COI, it does not have a specific penalty if one violated these requirements. In 2011, New Hampshire enacted Section 412:6-b titled: Certificate of Insurance. New Hampshire prohibits any person from issuing a COI that:

• does not comply with the subparagraphs of NH Rev Stat Section 412:6-b.II.(b);
• is misleading, deceptive, or encourages misrepresentation; and
• violates any law.[5]

New Hampshire requires all COIs contain the following disclaimer language:

This certificate of insurance is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend, or alter the coverage, terms, exclusions, and conditions afforded by the policy or policies referenced herein.[6]

It also further prohibits the following:

• any person from demanding or requiring an insurer, producer or policyholder to issue a COI that contains false or misleading information about the policy it references;
• any person from issuing a COI that contains misleading information;
• any person from issuing a COI that purports to amend, alter or extend coverage provided by the policy it references with the exception that the COI can reference an umbrella/excess limit lower than set forth in the reference policy to meet the particular requirements of an agreement or contract to which it is being issued for;[7]
• the reference to any contract other than a contract of insurance unless such reference is in relation to coverage or other requirements of the insurance contract; and
• the designation of the certificate holder’s right to notice of cancellation unless the certificate holder is an additional insured and the insurance contract or an endorsement requires such notice to be provided.

New Hampshire—unlike the other states we are examining—allows an insurance producer to charge a reasonable fee for providing COIs if the fee accurately reflects the effort and cost to the insurance producer in issuing such COIs.[8]

The New Hampshire Insurance Department insurance commissioner may impose fines upon a person between $500 to $10,000 for each violation and $1,000 to $25,000 for each willful violation.[9] In addition, the insurance commissioner may suspend, revoke or refuse to issue or renew a license for an insurance producer if the insurance producer is found to have violated any of these laws.[10]

Connecticut law

Connecticut began to address how COIs should be handled in Bulletin S-14 issued on Nov. 9, 2010, titled: Use of Certificate of Insurance. However, in 2024, Connecticut enacted Connecticut General Statute Section 38a-322a titled: Certificate of insurance. Prohibitions. Investigation. This section of the law basically codified the Bulletin S-14 and prohibits any person from:

• preparing, delivering or issuing a COI that is misleading about the coverages referenced therein;
• representing that the COI confers new or additional rights to any person beyond what is referenced in the COI; and
• attempting to amend, alter or extend coverage in the insurance policy referenced in the COI.[11]

Moreover, a COI may not warrant that the referenced policy complies with the insurance or indemnifications of a contract.[12] Finally, no person may request or require a person to perform any act that violates this section.[13] This is all backed up with the granting to the insurance commissioner the right to conduct an investigation of any person it believes violated any of the provisions of this section of law.[14]

CGS Section 38a-322a also is backed up by Connecticut Unfair Insurance Practices Act of Conn. Gen. Stat. Sections 38a-815 and 38a-816(l )(a), “which provides that it is an unfair insurance practice to make, issue or circulate a statement that ‘[m]isrepresents the benefits, advantages, conditions or terms of any insurance policy … .’”[15] Any violation of this provision leads to an insurance producer being fined—“license revocation, suspension or orders of restitution” also are possible punishments.[16]

Connecticut has put teeth behind its enforcement of misuse of COIs by insurance producers under the enactment of CGS Section 38a-322a. And, in Bulletin S-14, it urges insurers to review the oversight procedures of their insurance producers who are issuing COIs.

In New Jersey

Unlike all the other states we discuss in this article, New Jersey has not enacted any laws or regulations that dictate how COIs are to be handled. However, it has one of the most stringent duties of care for an insurance agent and/or broker. Specifically, “[a]n insurance producer acts in a fiduciary capacity in the conduct of his or her insurance business.”[17]

What does this mean regarding the issuance of a COI in New Jersey? An insurance producer’s fiduciary duty runs to the issuance of a COI, and he or she is expected to exercise good faith and reasonable care in advising an insured on the issuance of its requested COI. In addition, the insurance producer’s duty of care not only falls to the insured, but it also falls to other foreseeable parties—such as the certificate holder.

While New Jersey has not enacted any statute or regulation to address COIs, it has enacted provided tools for the state to stop improper actions with COIs.[18] Specifically, the statute allows the Department of Banking and Insurance commissioner to levy civil penalties, suspension, revocation and refusal to issue or renew licenses when the commissioner finds an insurance producer has:

• intentionally misrepresented the terms of an actual or proposed insurance contract, policy or application for insurance;
• admitted or been found to have committed any insurance unfair trade practice or fraud; and
• used fraudulent, coercive or dishonest practices, or demonstrated incompetence, untrustworthiness or financial irresponsibility in the conduct of insurance business in this state or elsewhere.[19]

Thus, while not having enacted a statute, New Jersey has the necessary tools to stop improper action by an insurance producer in the issuance of an COI.

In Vermont

Like New Jersey, Vermont does not have a statute or regulations that specifically regulate the issuing of COIs. However, like most other states, there are statutes that indirectly control how COIs are issued in Vermont.

For example, the Vermont statutes state: “No person shall engage in any trade practice that is determined under this chapter to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.”[20]

More specifically, Vermont statutes may find that a COI is in violation of its statues if it “misrepresents or fails to adequately disclose the benefits, advantages, conditions, exclusions, limitations, or terms of any insurance policy … .”[21] Any violation of this statute allows the commissioner for the Vermont Department of Financial Regulation to assess penalties—$1,000 for each violation, and up to $10,000 for each violation it finds willful.[22]

Uniquely, while most states hold the COI out for information purposes only, the Vermont Supreme Court has looked to a COI to assist in determining the intent of the insurance carrier stating in relevant part: “[t]he certificate of insurance, like the terms of the insurance policy, demonstrate that the insurance company and the insured contemplated indemnification coverage.”[23] Finally, Vermont does have a statute that requires that all COIs be “filed with the commissioner for approval prior to issuance or use … .”

Even though Vermont does not have a statute that directly dictates the legal requirements in the issuance of COIs in Vermont, it has enough control in its statutes to regulate how COIs are issued, and the state will penalize producers who improperly issue COIs for any other purpose than to be issued for information purposes only.

Conclusion

What is clear is that these states—and the rest of the states across the country—are no longer going to put up with the misuse of COIs, and they are using the heavy hand of the law to stop the abuses.

Insurance agents and brokers also must police themselves, and they must report any misuse of COIs that they see.

While there has been a big push to regulate the issuance of COIs by the states, there has been an increase in misuse of COIs, and insurance agents and brokers need to be vigilant to confirm these misuses are not occurring in their agencies.

Remember, COIs are not proof of insurance, but rather they are evidence that insurance is in place at the time the COI is issued.

This article originally appeared in the December 2025 issue of PIA Magazine.

---

[1] Relative ACORD 25 COI, the superintendent of insurance has only approved two versions of the form, Version (2014/01) and Version (2016/03). Every agent and/or broker issuing a COI in New York state should regularly confirm the approved forms at the DFS’s website.

[2] See, New York Insurance Law Section 502(b)

[3] See, New York Insurance Law Section 502(c)

[4] See, New York Insurance Law Section 503

[5] See, NH Rev Stat Section 412:6-b.II.(a)

[6] See, NH Rev Stat Section 412:6-b.II.(b)(1)

[7] See, NH Rev Stat Section 412:6-b.II.(b)(2)-(7)

[8] See, NH Rev Stat Section 412:6-b.II.(e)

[9] See, NH Rev Stat Section 412:20

[10] See, NH Rev Stat Section 402-J:12.I.(b)

[11] See, CGS Section 38a-322a(b)(1)-(3)

[12] See, CGS Section 38a-322a(c)

[13] See, CGS Section 38a-322a(e)

[14] See, CGS Section 38a-322a(f)

[15] See, CGS Section 38a-816(1)(a)

[16] See, CGS Section 38a-817(e)

[17] See, Weinisch v. Sawyer, 123 N.J. 333, 340, 587 A.2d 615 (1991)

[18] See, New Jersey Revised Statute Section 17:22A-40

[19] See, NJ Rev Stat Section 17:22A-40(5), (7) and (8)

[20] See, 8 V.S.A. Section 4723

[21] See, 8 V.S.A. Section 4723(1)(A)

[22] See, 8 V.S.A. Section 4726

[23] See, Utica Mut. Ins. Co. v. Central Vermont Ry. Inc., 133 Vt. 292, 295 (1975)