Certificates of Insurance - Why We Can't Guarantee Notice of Cancellation
Why is your agency declining to issue a certificate of insurance that provides for notice of cancellation to the certificate holder? In September 2009, ACORD revised the ACORD 25 Certificate of Insurance form. One of the major changes was the removal of the cancellation notice provision. We are unable to issue an older edition of this form, modify the current form, or complete a proprietary form you provide.
Notice of cancellation is a policy right, not an unregulated service. No insurer shown on this certificate is able to provide the cancellation notice you desire by endorsement. For example, the insured can cancel immediately, so it would be impossible for the insurer to give you the notice you request. State law also grants the insurer the right to cancel for reasons such as nonpayment with less notice than you require.
For the reason just cited, if our agency was to issue a certificate that provides the cancellation notice you request, we would do so with the full knowledge that it would be impossible to actually give that amount of notice under certain circumstances. As such, the certificate could be alleged to constitute a misrepresentation or fraud which could subject our agency and staff to serious civil and criminal penalties.
If a certificate purports to provide a policy right different from that provided by the policy itself, then the certificate effectively purports to be a policy form. Policy forms must be filed and approved by our state department of insurance. Use of nonfiled policy forms is illegal and could result in legal sanctions distinct from the assertion that the certificate is fraudulent.
We cannot use an older edition of the ACORD 25. Under the ACORD Corporation’s licensing agreement, the prior editions of superseded forms can be used for one year from the time the new forms are introduced. Using a prior edition would violate ACORD's licensing agreement and, as a copyrighted document, federal copyright law.
Likewise, we are unable to modify the new certificate to add a notice of cancellation. ACORD forms are designed to be completed, not altered. Our insurance company contracts only allow us to issue unaltered ACORD forms.
We are often asked to issue proprietary certificates provided by the certificate holder. Again, our insurance company contracts only allow us to issue unaltered ACORD forms. Many proprietary certificates include broad, vague or ambiguous language that may or may not be incompliance with state laws, regulations, and insurance department directives.
You may be interested in how the City of Atlanta, Georgia is now reportedly dealing with this issue based on a very detailed study they conducted in 2008.
We appreciate your understanding of the legal restrictions on our ability to fully comply with your request.