1. Forms
2. CG
3. CG-21-31

What the Form Is

The CG 21 31, titled "Limited Exclusion – Designated Operations Covered by a Consolidated (Wrap-Up) Insurance Program," is an endorsement to a Commercial General Liability (CGL) insurance policy. Its primary purpose is to exclude coverage for bodily injury or property damage arising out of the named insured's ongoing operations and products-completed operations hazard for work performed at a specific project site that is covered by a consolidated insurance program (CIP), commonly known as a "wrap-up." A key feature of this endorsement is its "limited" nature: the exclusion does not apply if the wrap-up insurance program has been cancelled, non-renewed, or is otherwise no longer in effect for reasons other than the exhaustion of its policy limits. This provides a contingent coverage back to the contractor's policy if the wrap-up fails under such circumstances.

Classes of Business It Applies To

This endorsement is specifically designed for contractors (both general contractors and subcontractors) who are participating in large construction projects managed under a wrap-up insurance program. These programs, such as Owner Controlled Insurance Programs (OCIPs) or Contractor Controlled Insurance Programs (CCIPs), provide centralized insurance coverage (typically CGL and Workers' Compensation) for all or most parties working on a specific project.

Real-world example: A plumbing subcontractor is hired to work on a new high-rise building development. The project owner has implemented an OCIP that provides CGL coverage for all enrolled contractors. The plumbing subcontractor's own CGL insurer would attach the CG 21 31 endorsement to their policy, scheduling the high-rise project. This prevents duplication of coverage and ensures the subcontractor isn't paying premium on their own policy for risks already covered by the OCIP for that specific project.

Special Considerations

• Distinction from CG 21 54: The CG 21 31 is often preferred by contractors over the CG 21 54 (Exclusion – Designated Operations Covered by a Consolidated (Wrap-Up) Insurance Program). The CG 21 54 is a more absolute exclusion and typically does not provide coverage back to the contractor's policy if the wrap-up coverage ceases for any reason, including cancellation (unless its wording has been updated in very recent editions). The CG 21 31 offers a crucial layer of protection if the wrap-up is terminated prematurely for reasons other than limit exhaustion.
• Scheduling: It is critical that the endorsement schedule accurately and specifically describes the designated operation(s) and location(s) to which the exclusion applies.
• Notice Requirement: If the wrap-up program is cancelled or non-renewed, the insured contractor may need to promptly notify their CGL insurer to ensure that their policy can respond.
• Enrollment: The 12 19 edition of this endorsement clarifies that the exclusion applies only if the Named Insured is enrolled in the wrap-up program.

Real-world example: If a wrap-up program covering a bridge construction project is suddenly cancelled because the insurer providing the wrap-up becomes insolvent, a contractor with the CG 21 31 endorsement on their CGL policy could potentially have their own policy respond to subsequent claims arising from their work on that bridge project. A contractor with the more absolute CG 21 54 might find themselves without coverage from their own policy in such a scenario.

Key Information for Agents and Underwriters

• Pricing/Premium Impact: When the CG 21 31 is attached, the exposure base (e.g., payroll, receipts, or other applicable measure) related to the designated wrap-up project should be excluded from the calculation of the premium for the contractor's CGL policy. This avoids charging the insured for coverage that is being provided by the wrap-up.
• Risk Assessment: Underwriters should confirm the existence and enrollment of the insured in a legitimate wrap-up program. While the CG 21 31 provides a fallback, the financial stability and terms of the wrap-up are still relevant. The use of CG 21 31 is generally less risky for the insured contractor compared to CG 21 54.
• Potential Coverage Gaps: Despite the contingent coverage, agents should discuss potential gaps with clients. For instance, the wrap-up's completed operations coverage might have a shorter duration than the applicable statute of repose, or warranty work required after the wrap-up's term might not be covered. In such cases, the contractor's own policy might need to be structured to provide difference-in-conditions (DIC) or excess coverage over the wrap-up.
• Underwriting Guidelines: Ensure the project description in the schedule is precise. Verify the contractor's enrollment in the wrap-up. It's beneficial to understand the basic terms of the wrap-up, particularly its duration, cancellation provisions, and the scope of its completed operations coverage. The 12/19 edition's clarification regarding enrollment is a key point for application of the exclusion.