Form CG 01 04 - Texas Changes (Commercial General Liability)
1. What the form is
The CG 01 04 "Texas Changes" endorsement is a mandatory form used in conjunction with the standard Commercial General Liability (CGL) Coverage Form, most commonly the CG 00 01. Its primary purpose is to modify the CGL policy to ensure compliance with specific Texas statutes and regulations. This endorsement amends various provisions within the standard CGL to align with Texas law, which can impact how coverage applies, how claims are handled, and the rights and duties of both the insured and the insurer in Texas. It is not a standalone policy but rather an integral part of any CGL policy issued in Texas.
2. Classes of business it applies to
The CG 01 04 is not specific to particular classes of business or industries. Instead, it applies broadly to any commercial entity purchasing a standard Commercial General Liability policy that is subject to Texas law. Whether the insured is a small retail store, a large manufacturing plant, a contractor, or a professional service provider, if their CGL policy is written under Texas jurisdiction, this endorsement will likely be attached to modify the underlying CG 00 01 or equivalent CGL coverage form. For example:
- A restaurant operating in Dallas.
- A construction company based in Houston working on projects within Texas.
- An oil and gas service company with operations in the Permian Basin.
- A technology startup headquartered in Austin.
Essentially, any business requiring general liability coverage in Texas will have its policy amended by this or a similar state-specific endorsement.
3. Special considerations
Several Texas-specific legal and regulatory nuances necessitate the CG 01 04. These can include, but are not limited to:
- Notice of Claim or Suit: Texas law may have specific requirements regarding how and when an insured must notify the insurer of a claim or suit, and this endorsement may modify the standard CGL policy conditions accordingly.
- Cancellation and Nonrenewal: Texas has specific statutes governing the insurer's rights and obligations concerning policy cancellation and nonrenewal, including required notice periods and permissible reasons. The CG 01 04 will reflect these state-mandated rules. For instance, an insurer cannot cancel or nonrenew a policy based solely on the policyholder being an elected official.
- Legal Action Against Us: Provisions detailing how and when an insured or a third party can bring direct legal action against the insurer are often modified to comply with Texas law.
- Other Insurance: How the CGL policy interacts with other available insurance (e.g., whether it is primary, excess, or pro-rata) can be affected by Texas regulations and addressed in this endorsement.
- Statutory Requirements: The endorsement ensures that policy language does not conflict with any overriding Texas statutes or Department of Insurance (TDI) regulations. For example, policy forms and endorsements may not be unjust, unfair, inequitable, misleading, or deceptive, and must be filed with and approved by the TDI commissioner.
- "Known" Injury or Damage: If the CGL form limits coverage for continuous or repeated trigger losses, Texas may require that such restrictions are limited to injury or damage "KNOWN" to the insured.
It's crucial to understand that this form makes Texas law paramount in interpreting certain policy provisions, overriding any conflicting language in the standard CGL form.
4. Key information for agents and underwriters
For agents and underwriters, the CG 01 04 is a standard attachment for Texas CGL policies, and its presence is more a matter of compliance than a point of significant underwriting discretion or pricing variation on its own. However, understanding its implications is vital:
- Risk Assessment: While the form itself doesn't typically alter the fundamental risk profile of an insured, the underlying Texas laws it reflects can influence the claims environment. For example, Texas "prompt payment of claims" laws can impact how quickly an insurer must act.
- Coverage Interpretation: Agents must be aware that the CGL policy will be interpreted in light of these Texas-specific modifications. This is particularly important when explaining coverage to clients or comparing policies.
- Compliance: Failure to include this endorsement (or an equivalent approved Texas-specific endorsement) on a CGL policy issued in Texas can lead to regulatory issues and potential coverage disputes. The Texas Department of Insurance mandates that forms be filed and approved.
- No Alteration of Coverage Intent (Generally): While the form makes changes, it's generally intended to align the policy with Texas law, not to fundamentally broaden or restrict the core coverages of the CGL (Bodily Injury, Property Damage, Personal and Advertising Injury) beyond what Texas law requires. However, specific provisions within the CG 01 04 can have significant impacts on how those coverages apply in certain claim scenarios.
- Relationship to CG 00 01: The CG 01 04 directly amends the CG 00 01. Underwriters must be thoroughly familiar with the base CG 00 01 to understand the context and impact of the changes introduced by the CG 01 04.
Agents should ensure their clients understand that their CGL policy is subject to Texas law and that this endorsement is part of that compliance. Underwriters should confirm its attachment as a standard procedure for all Texas CGL risks.