It is standard practice in the construction industry to accept a certificate of insurance, made out by the broker, as evidence that all insurance requirements have been met. The Texas Supreme Court has recently confirmed that this practice is a recipe for disaster. If coverage under another party's insurance policy is important to you, including such things as additional insured status, don't rely on a mere certificate of insurance. Obtain a copy of the policy and all endorsements -- and read them.

In Via Net v. TIG Insurance Co., 211 S.W.3d 310, 314 (Tex. Dec. 22, 2006), the Texas Supreme Court concluded it is not reasonable for a party to believe it is an additional insured under another party’s commercial general liability policy based only on a certificate of insurance provided by the other party’s insurance broker. After noting that certificates of insurance generally do nothing more than acknowledge the existence of a policy and its general terms, and do not specify “the numerous limitations and exclusions that often encumber such policies,” the court stated that “those who take such certificates at face value do so at their own risk.”

If you have questions about the insurance documents provided by your contractors and suppliers, please feel free to have Gardere’s construction and insurance lawyers assist you in assessing your status.