Additional Insured - Club Members (CG 20 02)
The Additional Insured - Club Members endorsement (CG 20 02) is a standard Insurance Services Office (ISO) form used with the Commercial General Liability (CGL) Coverage Part, typically the CG 00 01 (Occurrence Form). Its primary purpose is to amend Section II - Who Is An Insured of the CGL policy to include members of the named insured club as additional insureds. However, this coverage extension is specific: it applies only to the members' liability arising directly from the club's activities or activities they perform on the club's behalf. It does not cover members for their personal activities unrelated to the club.
Classes of Business It Applies To
This endorsement is specifically designed for clubs and unincorporated associations where members might be exposed to liability due to their involvement in the organization's operations. Examples of organizations where this form would be applicable include:
- Social Clubs: Such as fraternities, sororities, alumni associations, and private hobby clubs (e.g., book clubs, gardening clubs) where members participate in club-sponsored events or activities.
- Civic Organizations: Groups like Rotary Clubs, Lions Clubs, or community service organizations where members are actively involved in projects or fundraising on behalf of the organization.
- Recreational Clubs: Including sports leagues (amateur), booster clubs, and other similar groups where members' actions during club events could lead to liability claims.
- Unincorporated Associations: Various informal groups that operate like clubs but may not have a formal legal structure.
For instance, if a member of a university alumni club is organizing a fundraising event and a guest is injured due to the member's alleged negligence in setting up the venue, this endorsement would provide coverage to that member for liability arising from their activities on behalf of the club. Similarly, if a member of a local gardening club, while participating in a club-organized community beautification project, accidentally causes property damage, this endorsement would extend coverage to that member.
Special Considerations
There are important limitations and considerations when using the CG 20 02 endorsement:
- Scope of Coverage: The coverage for members is strictly limited to their liability for the club's activities or activities they perform on the club's behalf. It does not provide general liability coverage for the members' personal actions outside of their club duties. For example, if a club member gets into a personal dispute at a club meeting that leads to an injury, this endorsement might not apply if the dispute is deemed unrelated to club activities.
- No Coverage for Club's Own Negligence: This endorsement protects the members from liability they incur due to club activities, not the club itself from its own direct negligence. The club is the Named Insured and is covered under the main CGL policy.
- Potential for Gaps: While this endorsement provides important protection, it's crucial to ensure it aligns with the club's overall risk management strategy. Depending on the nature of the club and its activities, other endorsements or policies (e.g., Directors and Officers Liability) might also be necessary.
- Exclusions in Some Versions: Some non-ISO versions or older editions of similar endorsements might contain specific exclusions. For example, an older proprietary form (LS-23 Ed. 9/02) for "Additional Insured (Club Members)" includes exclusions for activities where an admission fee is charged to the public, the use of certain premises owned or rented by the club (except for meeting purposes), or the use of premises for purposes other than member and guest meetings. It is important to review the specific wording of the endorsement being used.
Key Information for Agents and Underwriters
Agents and underwriters should consider the following when dealing with the CG 20 02:
- Risk Assessment: The nature of the club's activities is paramount. Clubs with higher-risk activities (e.g., those involving physical exertion, serving alcohol, or large public events) will present a greater exposure. Underwriters need to thoroughly understand the types of events and activities the club undertakes and the level of member involvement.
- Pricing: The premium for this endorsement is typically minimal or included in the base CGL premium for many club risks, as it's often seen as an essential part of the coverage for such organizations. However, for clubs with significant or hazardous member-led activities, an additional charge might be warranted.
- Underwriting Guidelines: Underwriters should assess the club's bylaws, membership agreements, and risk management practices. Are there clear guidelines for members when acting on behalf of the club? Does the club have safety protocols for its events?
- Relationship to CG 00 01: The CG 20 02 modifies the "Who Is An Insured" section of the base CGL form (CG 00 01 or equivalent). It's crucial to understand that the terms, conditions, and exclusions of the underlying CGL policy will still apply to the coverage provided to the additional insured members, unless specifically modified by this endorsement.
- Clarity of "On Behalf Of": The phrase "activities they perform on your behalf" can sometimes be ambiguous. It's generally understood to mean activities that are authorized, directed, or are a core part of the club's functions. Clear communication with the insured about what constitutes an "on behalf of" activity can prevent misunderstandings at the time of a claim.
For example, if a booster club member is injured while setting up for a school sporting event, this endorsement could provide that member with liability coverage if they are sued by a third party. However, if that same member is involved in an altercation with another parent that is purely personal, the endorsement likely wouldn't apply. Underwriters should probe the types of activities members will engage in – are they primarily administrative, or do they involve physical tasks, supervision of others, or handling of money? The answers will inform the overall risk profile.