The Washington Supreme Court issued its decision in T-Mobile USA INC. v. Selective Insurance Company of America on October 10, 2019. The majority opinion, joined by seven of the nine justices, held that an agent with apparent authority can bind an insurance company through written representations, even if contrary to the policy.
This case reached the Washington Supreme Court through a certification from the Ninth Circuit Court of Appeals. The Ninth Circuit sought an answer as to whether an insurance company is bound by its agent’s written representation on a Certificate of Insurance that a company is an additional insured in a given policy. The Ninth Circuit had already ruled that the agent acted with apparent authority and the Certificates of Insurance included disclaimers stating the Certificates could not “amend, extend, or alter the coverage afforded by” the policy.
This case arose from the construction of a cell phone tower on the roof of a New York Building. T-Mobile Northeast (“T-Mobile NE”) hired a contractor for the project. The contract between them required the contractor to name T-Mobile NE as an additional insured and to provide annual Certificates of Insurance showing coverage. The contractor obtained a policy through Selective Insurance Company of America (“Selective”). T-Mobile NE became an additional insured under the policy based on the contract with the contractor. For the next seven years, Selective’s agent issued a series of Certificates of Insurance naming “T-Mobile USA, its subsidiaries and affiliates” as additional insureds. T-Mobile USA is a parent company for T-Mobile NE, but was not involved in the project or identified in the construction contract. Selective never objected to the agent’s issuance of the Certificates of insurance.
The owner of the rooftop sued the contractor and T-Mobile USA for damage that occurred during the construction. Both T-Mobile USA and the contractor tendered to Selective. However, Selective denied T-Mobile USA’s claim because T-Mobile USA was not an additional insured per the policy and construction contract. T-Mobile USA then sued Selective for coverage and defense. After having its claims dismissed on Summary Judgment, T-Mobile USA appealed. On appeal, the Ninth Circuit certified to the Washington Supreme Court the following question:

“Under Washington law, is an insurer bound by representations made by its authorized agent in a Certificate of insurance with respect to a party’s status as an additional insured under a policy issued by the insurer, when the Certificate includes language disclaiming its authority and ability to expand coverage?”

The Washington Supreme Court held that the Certificates of Insurance naming T-Mobile USA as an additional insured superseded the policy. The Court reasoned that the representations in the Certificates of Insurance were binding because they were made by an agent with apparent authority to bind Selective. The specific naming of T-Mobile USA as an additional insured controlled over general disclaimers. The Court also found Selective’s public policy arguments unpersuasive.
The two dissenting justices did not agree with the Court’s ruling because T-Mobile USA was not an insured under the terms of the Selective policy. They asserted that sophisticated business entities cannot reasonably rely on a Certificate of Insurance with clear disclaiming language.
This is an impactful decision regarding the use of Certificates of Insurance. Insurance companies in Washington must make sure Certificates of Insurance issued by agents accurately represent their insurance policies. Companies cannot rely on the general disclaimer language. The principle that an agent’s representations bind their employer may appear in other contexts too.
If you have any questions regarding the effect of this case or any other issues involving Washington insurance law, please contact our offices.