1. Forms
2. CG
3. CG-21-04

Form CG 21 04: Exclusion - Products-Completed Operations Hazard

1. What the form is

The CG 21 04 endorsement is used with the Commercial General Liability (CGL) policy to exclude coverage for "bodily injury" or "property damage" that is included within the "products-completed operations hazard." The "products-completed operations hazard" (PCOH) is a defined term in the CGL policy and generally includes bodily injury and property damage that occurs away from the insured's premises and arises out of "your product" or "your work," after the product is no longer in the insured's physical possession or the work has been completed or abandoned. Essentially, this endorsement removes coverage for liabilities stemming from the insured's products once they are out of their control or from their completed work after they have left the job site.

2. Classes of business it applies to

This endorsement is not limited to specific industries but is often used in situations where:

• The insurer wants to avoid the entire products-completed operations exposure of the insured.
• The products-completed operations exposure is insured under a separate policy, such as a standalone Products/Completed Operations Liability policy. This might occur if the PCOH exposure is considered too risky for the general liability carrier.
• All of the insured's premises and operations classifications already include this exposure, and a separate limit for this coverage is not deemed necessary by the insurer.

Real-world examples could include:

• A manufacturer whose products carry a high risk of causing injury after sale (e.g., certain types of machinery or chemical products) might have this exclusion on their CGL and a separate, specialized policy for products liability.
• A contractor completing a large project might have their completed operations covered under a project-specific policy or a wrap-up insurance program, leading to the attachment of CG 21 04 to their corporate CGL.

3. Special considerations

• Existence of Other Coverage: A primary consideration when encountering this endorsement is whether the excluded products-completed operations hazard is covered elsewhere. If not, a significant coverage gap exists. Agents and insureds should verify that any alternative coverage is equivalent or better.
• Definition of Products-Completed Operations Hazard: It's crucial to understand the CGL policy's definition of "products-completed operations hazard," including its exceptions. For instance, the definition excludes products still in the insured's physical possession or work not yet completed or abandoned.
• Impact on Classifications: If a classification listed in the Declarations or a policy schedule states that products-completed operations are subject to the General Aggregate Limit, then claims that would normally be considered products or completed operations arising from that classification are NOT considered part of the "products-completed operations hazard" by definition. In such cases, the CG 21 04 exclusion would not apply to those specific claims. For example, if a janitorial service's classification (e.g., 96816 Janitorial Services) specifies that PCOH is subject to the General Aggregate Limit, an injury arising from their completed work (like an inadequately cleaned floor causing a slip and fall) might still be covered despite the CG 21 04, because it doesn't fall under the PCOH definition for that classification.
• No Partial Exclusion: The CG 21 04 excludes all liability arising out of the products-completed operations hazard. If an insurer wishes to exclude only specific products or specific completed work, other endorsements like CG 21 33 (Exclusion - Designated Products) or CG 21 34 (Exclusion - Designated Work) would be more appropriate.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters use this endorsement when they deem the products-completed operations exposure of a particular insured to be too high for their standard CGL appetite or when the exposure is better handled by a specialist insurer.
• Pricing: Attaching the CG 21 04 generally results in a premium credit for the CGL policy, as a significant coverage component is being removed. However, the overall insurance cost for the insured may not decrease if they need to purchase separate PCOH coverage.
• Coverage Gaps: Agents must carefully counsel insureds when this endorsement is present. It's vital to ensure that the insured understands the scope of the excluded coverage and to explore options for covering that exposure if necessary and desired. Failure to do so can lead to significant uninsured losses. For example, a contractor who built a deck that collapses years after completion, causing injury, would have no coverage under their CGL if the CG 21 04 was attached and no separate PCOH policy was in place.
• Underwriting Intent: Historically, some insurers might have attached this endorsement when a classification's products/completed operations exposure was already included in the premises/operations charge, believing it meant "no coverage." However, this can be a misinterpretation, especially if the classification notes that PCOH is subject to the General Aggregate Limit.
• Alternative to Excluding Specific Operations: There isn't a direct equivalent endorsement to exclude only specific operations (as opposed to products or completed work) in the same way CG 21 33 or CG 21 34 work. If limitation to specific operations is needed, an underwriter might consider CG 21 44 (Limitation of Coverage to Designated Premises, Project or Operations).