1. Forms
2. CG
3. CG-21-50

Exclusion - Designated Ongoing Operations (Typically CG 21 53)

1. What the form is

This endorsement modifies a Commercial General Liability (CGL) policy (such as the CG 00 01) to exclude coverage for "bodily injury" or "property damage" that arises out of specific ongoing operations of the named insured. The operations to be excluded are described in the Schedule of the endorsement. It can apply to all ongoing operations of the insured, specific operations at a designated location, or particular types of ongoing operations regardless of location, depending on how the schedule is completed. The core purpose is to remove coverage for exposures that the insurer is unwilling to cover under the standard CGL policy, often due to their high-risk nature or because they are covered under another policy (e.g., a wrap-up program).

2. Classes of business it applies to

This endorsement is versatile and can be applied to a wide range of business classes, particularly those with distinct, high-risk operations that an underwriter may want to specifically exclude. Examples include:

• Construction: A general contractor might have this endorsement to exclude a particularly hazardous subcontracted operation (e.g., demolition, blasting) if the subcontractor is providing primary coverage or if the insurer deems that specific activity too risky for the contractor's main CGL. It can also be used to exclude operations covered by a Consolidated Insurance Program (Wrap-Up). For instance, if a contractor is working on a large project where a wrap-up policy is in place, CG 21 53 (or CG 21 54, which is specifically for wrap-ups) could be used to exclude that specific project's ongoing operations from their corporate CGL.
• Manufacturing: A manufacturer might have a specific high-hazard production line or process that the insurer wishes to exclude due to unique risks, perhaps if that process involves experimental materials or particularly dangerous machinery not typical of the insured's overall operations.
• Service Industries: A business offering a variety of services might have one particularly risky service excluded. For example, a landscaping company that occasionally undertakes large-scale tree removal next to high-value property might have the "large-scale tree removal" operation excluded if the insurer is not comfortable with that specific exposure under the standard terms.
• Businesses with Discontinued or Phased-Out Operations with Residual Ongoing Exposure: While "completed operations" are a separate hazard, if a phased-out operation still has some minor "ongoing" elements (e.g., site monitoring during a wind-down), an insurer might use this to clarify no coverage for those specific remaining activities if they pose an unacceptable risk.

3. Special considerations

• Specificity is Key: The description of the "Designated Ongoing Operation(s)" and any "Specified Location" in the endorsement's Schedule is critical. Ambiguity can lead to coverage disputes. Both the insured and the insurer need a clear understanding of what is being excluded.
• Coverage Gaps: The primary consideration is the potential for a significant coverage gap for the insured. If an operation is excluded, the insured will have no coverage under the CGL for claims arising from that operation. The insured must understand this and potentially seek alternative coverage (e.g., a specialty policy, coverage under another party's policy) or implement stringent risk management for the excluded operation.
• Relation to Completed Operations: This endorsement typically applies to "ongoing operations." It's important to distinguish this from "products-completed operations hazard," which is treated differently in the CGL policy. While this form excludes liability arising from operations *in progress*, liability arising after the work is completed might still be covered unless also excluded by another endorsement (e.g., CG 21 34 Exclusion - Designated Work, which applies to completed operations). However, CG 21 53 can be used to exclude only the ongoing operations on a wrap-up project, thereby preserving completed operations coverage under the CGL for that project if the wrap-up provides limited completed operations coverage.
• Contractual Requirements: If an insured is contractually obligated to provide CGL coverage for all its operations (e.g., in a client contract or lease agreement), the use of this endorsement could put the insured in breach of contract.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters use this endorsement to manage unacceptable risks within an otherwise acceptable account. It allows them to write the broader CGL coverage for the insured's standard operations while carving out specific high-hazard activities. The decision to use it is based on a detailed assessment of the nature of the operations, the insured's experience, loss history, and risk controls associated with the proposed excluded operation.
• Pricing: The use of this exclusion should theoretically result in a premium reduction, as the insurer is shedding risk. The amount of credit will depend on the significance of the excluded operation relative to the insured's overall exposures.
• Underwriting Guidelines: Insurers will have specific guidelines on when this endorsement should be used. It's often a tool for risks that fall outside the carrier's standard appetite but where the overall account is still desirable. For example, an underwriter might agree to cover a general building contractor but insist on excluding any work on occupied healthcare facilities due to the specialized risks involved.
• Clarity in Scheduling: Agents must work closely with insureds and underwriters to ensure the Schedule accurately and unambiguously describes the excluded operations and/or locations. Vague wording like "all hazardous operations" is insufficient and problematic. The description should be precise, for example, "All ongoing operations related to the installation of underground fuel storage tanks at the property located at 123 Main Street, Anytown."
• Alternative to Non-Renewal or Declination: This endorsement can be a way to maintain a relationship with an insured when a specific part of their operations becomes too risky for the insurer, rather than declining to write or renew the entire policy.
• Interaction with Other Forms: It's crucial to understand how this endorsement interacts with other parts of the CGL (like CG 00 01) and other endorsements on the policy. For instance, if this form is used to exclude ongoing operations at a specific project covered by a wrap-up, ensure the wrap-up provides adequate coverage and address any potential gaps, especially for completed operations.