1. Forms
2. CG
3. CG-20-34

What the Form Is

The CG 20 34 is an endorsement to the Commercial General Liability (CGL) policy. Its primary function is to automatically provide additional insured status to a person or organization (the lessor) from whom the named insured (the lessee) leases equipment. This automatic status is granted only when there is a written contract or lease agreement between the named insured and the lessor that requires the named insured to add the lessor as an additional insured on their policy. The coverage extended to the lessor is specifically for liability arising out of the named insured's use or maintenance of the leased equipment during the lease period. Importantly, the endorsement stipulates that the coverage provided to the additional insured will not be broader than what is required by the written contract and will only apply to the extent permitted by law.

Classes of Business It Applies To

This endorsement is beneficial for a wide range of businesses that lease equipment and are contractually obligated to provide insurance coverage for the lessor. Real-world examples include:

• Construction Contractors: Businesses leasing heavy machinery such as cranes, excavators, backhoes, or scaffolding. For instance, a general contractor leasing a bulldozer for a project would use this endorsement to cover the leasing company as required by the lease agreement.
• Manufacturing Companies: Firms that lease specialized production equipment, forklifts, or other machinery.
• Event Management and Production Companies: Companies leasing audio-visual equipment, lighting systems, stages, tents, or portable generators for events.
• Retail and Service Businesses: Businesses that might lease office equipment (like copiers), delivery vehicles, or specialized tools necessary for their operations.
• Agricultural Operations: Farms or agricultural businesses leasing tractors, harvesters, or other farming equipment.

Special Considerations

• Written Agreement Prerequisite: The existence of a written contract or lease agreement explicitly requiring the named insured to add the lessor as an additional insured is a fundamental condition for this endorsement to apply. Without such an agreement, additional insured status is not automatically conferred.
• Scope of Coverage Limitations: Coverage for the lessor is generally limited to liability arising from the named insured's ongoing operations involving the leased equipment. It is not intended to cover the lessor's sole negligence or liability stemming from inherent defects in the equipment itself that existed prior to the lease. The phraseology "to the extent permitted by law" and ensuring coverage is "not broader than required by the contract" are critical aspects that can limit the scope of protection.
• Automatic Status Advantage: A key benefit is the automatic extension of coverage, which eliminates the administrative burden of scheduling each lessor individually on the policy every time equipment is leased, provided the contractual requirement is in place. This differs from an endorsement like CG 20 28 (Additional Insured - Lessor of Leased Equipment), which requires the specific lessor to be named.
• Policy Limits: The 2019 and later editions of this form clarify that the insurance provided to the additional insured is subject to the applicable limits of insurance under the policy and the endorsement itself does not increase these limits. The language was changed from "limits of insurance shown in the Declarations" to "available under the applicable limits of insurance."
• Interaction with Other Terms: The determination of whether this coverage is primary and non-contributory for the lessor often depends on the specific wording in the lease agreement and whether other endorsements, such as CG 20 01 (Primary and Noncontributory – Other Insurance Condition), are included in the policy.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters should evaluate the nature and frequency of the insured's equipment leasing activities. The types of equipment leased (e.g., heavy machinery vs. office equipment) and the typical duration of leases can significantly influence the exposure.
• Contractual Review Emphasis: Agents must counsel their clients to meticulously review their lease agreements to fully understand their insurance obligations. Ensuring the CGL policy, with this endorsement, aligns with contractual requirements is vital to prevent potential breaches of contract and coverage disputes.
• Identifying Potential Coverage Gaps: While CG 20 34 offers valuable protection, it's crucial for agents and insureds to recognize its limitations. It may not cover every liability scenario the lessor could face. For instance, claims arising from the lessor's independent negligence or from equipment defects present before the lease might fall outside the scope of this endorsement for the lessor.
• Pricing Considerations: The premium for this endorsement is often determined on a "refer to company" basis, allowing insurers to price the coverage based on their individual assessment of the insured's specific risk profile.
• Alternative Endorsements: In situations where a written contract requiring additional insured status is absent, or if more tailored coverage is necessary for a specific lessor, the CG 20 28 (Additional Insured - Lessor of Leased Equipment) endorsement, which requires scheduling the lessor, may be a more suitable option.
• Edition Date Awareness: Insurance professionals should always note the edition date of the CG 20 34 form being used (e.g., '04 13', '12 19'), as policy language and coverage interpretations can evolve between editions. The '12 19' edition, for example, incorporates updated language regarding the limits of insurance.