1. Forms
2. CG
3. CG-04-22

Understanding the "Amendment Of Limits Of Insurance" Endorsement (with a note on Form Code CG 04 22)

Important Note on Form Code CG 04 22: The form code CG 04 22 is most commonly associated in the insurance industry with the "Pollution Liability Coverage Extension" endorsement, not an "Amendment Of Limits Of Insurance". For example, some sources list form CG 25 02 as an "Amendment Of Limits Of Insurance Endorsement". However, this description will address the function of an endorsement designed to modify the limits of insurance within a Commercial General Liability (CGL) policy, as per your provided title and summary.

1. What the Form Is

An "Amendment Of Limits Of Insurance" endorsement is a crucial document used to alter the financial caps of coverage provided under a Commercial General Liability (CGL) policy, such as the one provided by form CG 00 01 (Commercial General Liability Coverage Form). Its primary purpose is to formally change one or more of the limits of insurance that are originally stated in the Declarations page of the CGL policy. This modification becomes a legally binding part of the insurance contract once the endorsement is issued and attached to the policy.

This endorsement can be used to:

• Increase limits: This is common when a business grows, takes on larger projects, enters into new contracts with higher insurance requirements, or simply desires greater financial protection.
• Decrease limits: While less common for liability coverages, a business might request lower limits if its operations scale down significantly or if it initially over-insured its exposures.

• General Aggregate Limit
• Products-Completed Operations Aggregate Limit
• Personal and Advertising Injury Limit
• Each Occurrence Limit
• Damage To Premises Rented To You Limit
• Medical Expense Limit

2. Classes of Business It Applies To

This type of endorsement is broadly applicable across nearly all classes of business that carry a CGL policy. The need to adjust insurance limits is not confined to specific industries but rather to changing circumstances and risk exposures of any insured entity.

Real-world examples include:

• A construction contractor that wins a bid for a larger municipal project will likely need to increase its Each Occurrence and General Aggregate limits to meet the contract's insurance requirements.
• A manufacturing company launching a new, widely distributed product may decide to increase its Products-Completed Operations Aggregate Limit to address the potential for an increased number of claims.
• A retail store chain expanding into new, larger leased locations might need to increase its Damage To Premises Rented To You limit to comply with new lease agreements.
• A technology company that has significantly grown its client base and public interface might opt to increase its Personal and Advertising Injury limit.
• Conversely, a business divesting a significant portion of its operations might (though less typically) seek to reduce certain limits if its overall exposure has demonstrably decreased, subject to underwriter approval and potential contractual obligations.

3. Special Considerations

Several important factors come into play when using an endorsement to amend CGL limits:

• Contractual Requirements: The most common driver for increasing limits is to meet the insurance requirements stipulated in contracts with clients, landlords, lenders, or other third parties. Failure to meet these requirements can lead to breach of contract.
• Premium Impact: Amending limits directly affects the policy premium. Increases will result in additional premium, while decreases would typically lead to a return premium (potentially subject to minimum earned premium or short-rate calculations if done mid-term).
• Underwriting Scrutiny: Requests for significant limit increases, especially for businesses in higher-risk classes, will undergo thorough underwriting review. Underwriters will assess the increased exposure, the insured's loss history, risk management practices, and the insurer's capacity to provide the higher limits.
• Mid-Term vs. Renewal Changes: While limits are commonly adjusted at policy renewal, changes can sometimes be made mid-term if necessitated by a significant change in the insured's business or contractual obligations.
• Aggregate Limits: It's crucial to understand how changes to per-occurrence or other specific limits might affect, or be affected by, the policy's aggregate limits. For instance, a substantial increase in the Each Occurrence limit might warrant a corresponding review and potential increase of the General Aggregate limit. Some endorsements, like CG 25 03 (Designated Construction Project(s) General Aggregate Limit) or CG 25 04 (Designated Location(s) General Aggregate Limit), can apply aggregate limits to specific projects or locations, and amending these would also be done via an appropriate endorsement.
• Umbrella/Excess Liability Coordination: The CGL policy provides primary coverage. If the insured has an umbrella or excess liability policy, the underlying CGL limits must meet the attachment point