A Certificate of Insurance Is Not Coverage
A certificate of insurance is a summary of your policy, not the policy. Texas Insurance Code chapter 1811 says a certificate "is not a policy of insurance and does not amend, extend, or alter the coverage afforded by the referenced insurance policy." The same chapter limits what a landlord, a general contractor, a buyer, or anyone else can require a certificate to say. It applies to certificates of insurance issued on operations or a risk located in Texas, wherever the parties are.
Sources: Tex. Ins. Code ch. 1811 · Tex. Ins. Code § 1811.152 · Tex. Ins. Code § 1811.002
If you've got a contract with insurance requirements in it, send me that section. The rest of this page is what I read it against.
A Certificate Can't Point to Your Lease
A Texas certificate can't refer to an insurance requirement in your lease, your subcontract, or any other contract. Under § 1811.154, a certificate "may not contain a reference to a legal or insurance requirement contained in a contract other than the underlying contract of insurance, including a contract for construction or services." A lease clause requiring the certificate to state that your coverage complies with Section 12 of the lease asks for exactly that reference. So does a subcontract that wants "meets all requirements of the subcontract" typed into the description box.
Writing it in anyway doesn't help either side: a certificate that is executed, issued, or required in violation of the chapter "is void and has no effect" under § 1811.156. What a landlord or contractor can get instead is the coverage itself, added to your policy by endorsement.
Sources: Tex. Ins. Code § 1811.154 · Tex. Ins. Code § 1811.156
A Certificate Gives the Holder No Rights
Being named on a certificate gives the holder nothing that the policy and its endorsements don't already give. An insurer or agent may not issue a certificate that "alters, amends, or extends the coverage or terms and conditions provided by the insurance policy," and a certificate "may not convey a contractual right to a certificate holder," under § 1811.051. Under § 1811.153, it can't confer "new or additional rights beyond what the referenced policy or any executed endorsement of insurance provides."
What a certificate does do: one on an approved form, properly executed and issued, "constitutes a confirmation that the referenced insurance policy has been issued or that coverage has been bound," even when it says "for information purposes only," under § 1811.151.
Sources: Tex. Ins. Code § 1811.051 · Tex. Ins. Code § 1811.153 · Tex. Ins. Code § 1811.151
Additional Insured Status Comes From an Endorsement
Anyone who wants to be covered under your policy needs an endorsement on the policy, not a line in the certificate's description box. Section § 1811.153 names the only two places a certificate holder's rights can come from: "the referenced policy or any executed endorsement." Typing "additional insured" or "waiver of subrogation" onto a certificate creates neither, because a certificate can't alter the policy's terms and conditions under § 1811.051 and § 1811.152.
Three ISO endorsements, by number and title:
| Form | Title |
|---|---|
| CG 20 10 | Additional Insured – Owners, Lessees Or Contractors – Scheduled Person Or Organization |
| CG 20 11 | Additional Insured – Managers Or Lessors Of Premises |
| CG 24 04 | Waiver Of Transfer Of Rights Of Recovery Against Others To Us |
If the contract names a form number, that's the endorsement to put on the policy.
Sources: Tex. Ins. Code § 1811.153 · Tex. Ins. Code § 1811.051 · Tex. Ins. Code § 1811.152
Cancellation Notice Comes From the Policy or a Law
A certificate holder has a legal right to notice of cancellation, nonrenewal, or a material change only if two things are true under § 1811.155(a): the holder is "named within the policy or an endorsement to the policy," and "the policy or endorsement or a law, including a rule, of this state requires notice to be provided." A certificate "may not alter the terms and conditions of the notice required by a policy of insurance or the law of this state." A contract demanding that the certificate itself promise notice is asking the certificate to do what only the policy, an endorsement, or a law can.
Sources: Tex. Ins. Code § 1811.155
The Certificate Form Has to Be TDI-Approved, Whoever Asks for It
A certificate of insurance on a Texas risk has to be on a form filed with and approved by the Texas Department of Insurance, and the rule binds the person who demands the certificate as well as the agent who issues it. The rule is § 1811.052(b): "A person may not execute, issue, or require the issuance of a certificate of insurance for risks located in this state, unless the certificate of insurance form has been filed with and approved by the department." A standard form from ACORD, AAIS, or ISO "is deemed approved on the date the form is filed with the department" under § 1811.103. A landlord's or contractor's own certificate form can be required only if it has been filed with and approved by TDI.
Asking for a letter instead doesn't get around it. Under § 1811.055, no one may require an agent or insurer, in addition to or in lieu of a certificate, to issue "any other document or correspondence, instrument, or record, including an electronic record, that is inconsistent with this chapter."
Sources: Tex. Ins. Code § 1811.052 · Tex. Ins. Code § 1811.103 · Tex. Ins. Code § 1811.055
No One Can Require a False Certificate
No landlord, contractor, or buyer may require a certificate that misstates your policy. Section § 1811.054: "A person may not require the issuance of a certificate of insurance from an insurer, agent, or policyholder that contains any false or misleading information concerning the policy of insurance to which the certificate refers." If your policy doesn't carry the endorsement a contract calls for, the fix is adding the endorsement to the policy, not adding words to the certificate.
Sources: Tex. Ins. Code § 1811.054
What Happens When the Chapter Is Violated
The certificate is void, and a wilful violation carries a civil penalty of up to $1,000 each. A person, "including an insurer or agent," who wilfully violates the chapter "is subject to a civil penalty of not more than $1,000 for each violation" under § 1811.203(a).
Sources: Tex. Ins. Code § 1811.156 · Tex. Ins. Code § 1811.203
What Chapter 1811 Doesn't Cover
Chapter 1811 doesn't cover a lender's evidence of property insurance or standard proof of auto liability insurance. Under § 1811.002(b), it doesn't apply to evidence of property insurance a lender requires on a mortgage, lien, deed of trust, or other security interest securing a loan, or to standard proof of motor vehicle liability insurance under Transportation Code § 601.081.
Sources: Tex. Ins. Code § 1811.002
Wholesale Food: The Maker Indemnifies the Store by Statute
In Texas, a manufacturer must indemnify the seller of its product against a products liability suit. Civil Practice and Remedies Code § 82.002(a): "A manufacturer shall indemnify and hold harmless a seller against loss arising out of a products liability action, except for any loss caused by the seller's negligence, intentional misconduct, or other act or omission, such as negligently modifying or altering the product, for which the seller is independently liable." Loss includes "court costs and other reasonable expenses, reasonable attorney fees, and any reasonable damages," and the duty "is in addition to any duty to indemnify established by law, contract, or otherwise," so an indemnity clause in a store's vendor agreement adds to it.
The chapter's definition of manufacturer includes a "producer, compounder, processor" who places a product in the stream of commerce, and a seller is anyone "engaged in the business of distributing or otherwise placing, for any commercial purpose, in the stream of commerce" a product, under § 82.001. How the statute applies to a particular bakery and store is a question for your lawyer.
Sources: Tex. Civ. Prac. & Rem. Code § 82.002 · Tex. Civ. Prac. & Rem. Code § 82.001
State Food Permits Don't Ask for Liability Insurance
Neither the statute nor the state application for a retail food establishment permit or a food manufacturer license asks for liability insurance. Health & Safety Code chapter 437, which governs food service establishment permits and cottage food, doesn't use the word "insurance," and the DSHS Retail Food Establishment Permit Application asks for none. DSHS issues that permit only where no county or public health district requires one, under § 437.0055(a); elsewhere the local health department issues it. This page checked the DSHS application only; a permit from a local health department may ask for something the state application doesn't.
DSHS lists bakeries among the businesses that need a food manufacturer license. Chapter 431, under which that license is issued, mentions insurance only for charitable medical clinics, and the Food Manufacturer License Application asks for none.
The one state food license that asks for insurance is the mobile food vendor license: for each motorized food vending vehicle, the applicant provides "proof of vehicle insurance" under § 437B.053(a)(6)(B). What a landlord or a buyer asks for comes from the lease or the vendor agreement, not the permit. Serving alcohol is a separate question: see what TABC requires of bars and restaurants.
Sources: Tex. Health & Safety Code ch. 437 · DSHS Form EF23-10597, Retail Food Establishment Permit Application · DSHS, Food Manufacturers General Information · Tex. Health & Safety Code ch. 431 · DSHS Form EF23-10853, Food Manufacturer License Application · Tex. Health & Safety Code § 437B.053
Questions People Ask
Can a certificate of insurance say my coverage meets the lease?
No. Under Texas Insurance Code § 1811.154, a certificate can't refer to an insurance requirement in any contract other than the policy itself. What the landlord can get is the endorsement on your policy.
Does being the certificate holder make someone an additional insured?
No. A certificate gives the holder no rights beyond what the policy or an executed endorsement provides, under § 1811.153. Additional insured status comes from an endorsement on the policy.
Does a certificate holder get notice if my policy is cancelled?
Only if the holder is named in the policy or an endorsement and the policy, the endorsement, or a Texas law or rule requires the notice, under § 1811.155. The certificate can't add it.
Can a landlord or contractor require its own certificate form?
Only if that form has been filed with and approved by the Texas Department of Insurance, under § 1811.052(b). Standard ACORD, AAIS, and ISO forms are deemed approved once filed.
Does a Texas food permit require liability insurance?
The state retail food establishment permit and food manufacturer license don't; neither the statute nor the application asks for it. The mobile food vendor license requires proof of vehicle insurance for each vehicle. A permit issued by a local health department isn't covered by this answer; its application may differ.