 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
DIFI; certificates of insurance
Purpose
Defines certificate of insurance and establishes regulations for a certificate of insurance. Prohibits a certificate of insurance from misrepresenting an insurance policy and allows the Director of the Department of Financial Institutions (Director) to investigate and act on any violation of the prohibition.
Background
Established in 2020 after consolidating the Department of Insurance and the Department of Financial Institutions, the Department of Insurance and Financial Institutions (DIFI) is responsible for regulating the insurance industry, financial institutions, financial service professionals and business entities. DIFI conducts examinations on licensees and businesses and investigates fraud, deceptive practices, unprofessional conduct, claim delays and unfair claim settlement practices (A.R.S. Title 20).
The insurance industry typically uses certificates of insurance in lieu of providing a full copy of an insurance policy, serving as proof of insurance and summarizing policy forms. Statute prohibits a person from misrepresenting the coverage or terms of an insurance policy. An insurer or insurance producer who issues a certificate of insurance that misrepresents or obscures the terms or conditions of the underlying policy may be subject to administrative action for suspension or revocation of a producer’s license or an insurer’s certificate or authority, civil penalties and, if applicable, restitution (DIFI Regulatory Bulletin 2011-01; A.R.S. § 20-443).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Defines certificate of insurance as any document, form, template, submission, questionnaire or other instrument regardless of title that includes a description, summary, interpretation or evidence of property or casualty insurance coverage and that is prepared or issued by an insurer or an insurance producer, or their representative, and excluding an insurance policy, insurance binder, policy endorsement or automobile insurance identification or information card.
2. Specifies that a certificate of insurance prepared or issued by an insurer or insurance producer, or their representative:
a) is not an insurance policy;
b) does not amend, extend or alter the coverage that is provided by an insurance policy; and
c) does not confer any new or additional rights beyond those expressly stated in the insurance policy.
3. Prohibits a person from preparing, issuing, requesting or requiring a certificate of insurance that:
a) contains false or misleading information about the insurance policy;
b) alters, amends or extends coverage that is provided for in the insurance policy; or
c) claims that the insurance policy complies with the insurance or indemnification requirements of a contract.
4. Entitles a person, other than the policyholder, to a notice of cancellation, nonrenewal or a material change in the terms of an insurance policy only if the policy or an endorsement to the policy affords such notice rights to the person.
5. Allows the Director to investigate any violation of the prescribed certificate of insurance prohibition and to take one or both of the following actions:
a) issue an order that requires the person to cease and desist from the actions that constitute the violation; or
b) assess a civil penalty of up to $1,000 per violation.
6. Specifies that the Director's authority to investigate any violation of the prescribed certificate of insurance prohibition does not limit the authority of the Director to investigate, enforce or issue civil penalties pursuant to any other applicable law.
7. Allows the Director to adopt rules to implement the certificate of insurance regulations.
8. Applies the prescribed certificate of insurance regulations to any certificate of insurance that is issued in connection with property and casualty risks located in Arizona without regard to the location of the policyholder, insurer, insurance producer or any person who requests or requires a certificate of insurance to be issued.
9. Voids a certificate of insurance or any other document or correspondence that is prepared, issued, requested or required in violation of the certificate of insurance prohibition.
10. Applies the certificate of insurance considerations to any contract or addendum that is entered into on or after the general effective date.
11. Becomes effective on the general effective date.
House Action
COM 2/17/26 DPA 10-0-0-1
3rd Read 2/26/26 52-0-8
Prepared by Senate Research
March 12, 2026
MG/SJ/hk