1. Forms
2. CG
3. CG-20-12

Additional Insured - State Or Governmental Agency Or Subdivision Or Political Subdivision - Permits Or Authorizations (CG 20 12)

1. What the form is:

The CG 20 12 endorsement is a standard Insurance Services Office (ISO) form used in Commercial General Liability (CGL) policies. Its primary purpose is to extend liability coverage to a state or governmental agency, or a political subdivision thereof, when that entity has issued a permit or authorization to the named insured for specific operations. Essentially, if the named insured's operations under that permit lead to a covered claim for which the governmental entity is also held liable, this endorsement allows the entity to be considered an "additional insured" under the named insured's CGL policy. It's important to note that this endorsement typically applies to liability arising out of the named insured's ongoing operations for which the permit was issued. Coverage is afforded to the additional insured only to the extent permitted by law.

2. Classes of business it applies to:

This endorsement is relevant for a wide range of businesses that are required to obtain permits or authorizations from state or local governmental entities to conduct their operations or specific activities. Examples include:

• Construction Contractors: Requiring permits for building, street work, or other construction activities. For instance, a contractor needing a permit to temporarily close a city street for a project.
• Special Event Organizers: Needing permits for festivals, parades, fairs, or other public gatherings held on public property. For example, an organization hosting a street fair that requires a city permit.
• Businesses with Sidewalk Cafes or Street Vending Operations: Requiring permits to operate on public sidewalks or streets.
• Utility Companies: Requiring permits for work on public rights-of-way.
• Any business conducting temporary operations on public land: For example, a film production company needing a permit to shoot scenes in a state park.

3. Special considerations:

• Permit or Authorization Specific: Coverage for the governmental entity is tied directly to the operations for which the specific permit or authorization listed in the schedule (or on the Declarations page) was granted.
• Not for Work Done FOR the Government Entity: This endorsement is generally not appropriate when the named insured is performing work directly FOR the governmental agency (e.g., a contractor hired by the city to build a municipal building). In such cases, other endorsements like CG 20 10 (for ongoing operations) or CG 20 37 (for completed operations) would typically be more suitable.
• Ongoing Operations vs. Completed Operations: The standard CG 20 12 typically provides coverage for ongoing operations. It explicitly excludes coverage for "bodily injury" or "property damage" included within the "products-completed operations hazard". If coverage for completed operations is required for the governmental entity, a separate endorsement (like CG 20 37) would be necessary.
• Definition of "Authorization": The term "authorization" is not specifically defined in the form, which can sometimes lead to ambiguity. Some entities may prefer this endorsement only when a formal document titled "permit" is issued. For other situations, an endorsement like CG 20 26 (Additional Insured – Designated Person Or Organization) might be considered.
• "To the Extent Permitted by Law": The coverage afforded to the additional insured only applies to the extent permitted by law. This acknowledges that some state laws may restrict or limit the extent to which a governmental entity can be indemnified.
• Limits of Insurance: If coverage is required by a contract or agreement, the amount paid on behalf of the additional insured will be the lesser of the amount required by the contract or the policy's applicable limits. The endorsement does not increase the policy's overall limits. Recent ISO revisions removed references to limits shown on the Declarations, instead referring to "applicable limits of insurance," acknowledging that other endorsements might alter available limits.
• Primary and Non-Contributory: Often, the governmental entity will require that the additional insured coverage be primary and non-contributory, meaning the named insured's policy will pay first before any insurance the governmental entity might have. This is typically achieved through a separate endorsement like CG 20 01.

4. Key information for agents and underwriters:

• Risk Assessment: Underwriters should carefully review the nature of the operations for which the permit is issued. High-risk activities may warrant additional scrutiny or premium. The specific location and scope of the permitted operations are key.
• Pricing: While some insurers may include this endorsement for a nominal fee or no additional charge for low-to-moderate risk operations, others may charge an additional premium based on the increased exposure.
• Coverage Gaps: Agents should ensure clients understand the limitations, particularly the exclusion of completed operations and the fact that it doesn't apply to work done *for* the government entity. If broader coverage is needed (e.g., completed operations, or if the governmental entity is hiring the insured), alternative or additional endorsements must be considered.
• Contractual Requirements: Agents must review the insurance requirements in the permit or associated contract to ensure the CG 20 12, along with any other required endorsements (like primary & non-contributory or waiver of subrogation), satisfies those obligations. Some governmental entities have very specific requirements for acceptable endorsement forms.
• Scheduling: The governmental agency or political subdivision must be clearly identified in the Schedule of the endorsement or in the Declarations. Vague descriptions can lead to coverage disputes.
• Alternative Forms: Be aware of when CG 20 12 is appropriate versus other additional insured endorsements like CG 20 10, CG 20 37, or CG 20 26. For instance, if the government entity is a lessor of premises to the insured, CG 20 11 (Additional Insured – Managers or Lessors of Premises) might be considered, though CG 20 12 or CG 20 26 may still be preferred by the government if it's a permit situation rather than a true lease.
• Edition Dates: ISO forms are periodically updated. It's crucial to use the correct edition date of the form as specified by the governmental entity or as appropriate for the coverage intended, as language can change between editions. For example, the 12/19 editions of several AI endorsements, including CG 20 12, modified language regarding limits of insurance.