1. Forms
2. CG
3. CG-21-55

What the form is

The CG 21 55, titled "Total Pollution Exclusion With A Hostile Fire Exception," is an endorsement to the standard Commercial General Liability (CGL) policy. Its primary function is to significantly broaden the policy's pollution exclusion, aiming to eliminate coverage for most claims involving bodily injury or property damage caused by pollutants. However, the endorsement carves out a specific exception: it restores coverage if the bodily injury or property damage arises from heat, smoke, or fumes emanating from a "hostile fire." A hostile fire is generally understood to be a fire that becomes uncontrollable or escapes from its intended confines. This exclusion applies to the products and completed operations hazard as well.

Classes of business it applies to

This endorsement is not specific to any single industry but can be applied to a wide array of commercial enterprises where insurers wish to stringently limit their pollution liability. It signifies a cautious underwriting approach to pollution exposures. While any business could theoretically have this endorsement attached, it might be more frequently encountered in sectors perceived to have a higher potential for pollution incidents, yet where the insurer is willing to concede coverage for the specific circumstance of a hostile fire. Examples could include:

• Manufacturing operations
• Contractors (various types)
• Real estate owners and managers
• Retail establishments
• Hospitality businesses (e.g., hotels)

Insurers may use this endorsement to reduce coverage for businesses like retailers, hoteliers, churches, and contractors, who might otherwise have found some pollution coverage through exceptions in the unendorsed CGL policy.

Special considerations

The CG 21 55 is often viewed as a restrictive endorsement because it substantially curtails pollution coverage that might otherwise be available. Key considerations include:

• Significant Reduction in Coverage: It replaces the standard CGL pollution exclusion with a much broader one, effectively making it a "total" exclusion subject only to the hostile fire exception.
• Limited Hostile Fire Exception: While an exception, the hostile fire giveback is narrow. Coverage for pollution not directly and solely caused by a hostile fire is excluded. The endorsement also clarifies that the hostile fire exception does not extend to damages at facilities that treat, store, or dispose of hazardous waste.
• Products and Completed Operations: The total pollution exclusion under this endorsement extends to liability arising from an insured's products or completed work, unless the pollution damage is the result of a hostile fire.
• Negotiation: Insureds and their agents should be aware of the significant coverage reduction. If an insurer insists on a total pollution exclusion, it may be possible to negotiate for a slightly less restrictive endorsement, such as the CG 21 65 (Total Pollution Exclusion with a Building Heating, Cooling and Dehumidifying Equipment Exception and a Hostile Fire Exception), if the CG 21 55 is proposed.
• State-Specific Rules: Availability and applicability can vary by state. For instance, it has been noted as not approved for general use in Texas but potentially usable for "large risks."

Key information for agents and underwriters

For agents, it is crucial to explain the restrictive nature of this endorsement to clients. Ensure they understand that most pollution incidents will not be covered, and the hostile fire exception is specific and limited. Highlight potential coverage gaps, especially for businesses with any pollution exposure beyond what a hostile fire might cause.

For underwriters, the CG 21 55 is a tool to achieve a near-total exclusion of pollution risks, mitigating the insurer's exposure significantly. When considering its use:

• Risk Assessment: The decision to use this endorsement reflects a conservative stance on pollution. The underwriter must be comfortable that the premium and the limited hostile fire exception adequately address the residual risk.
• Clarity of "Hostile Fire": Ensure a clear understanding of what constitutes a "hostile fire" as defined in the policy or by case law, as this is the primary trigger for the exception.
• Alternative Endorsements: This endorsement is one of several total pollution exclusions. CG 21 49 is an absolute total pollution exclusion with no exceptions, while CG 21 65 offers the hostile fire exception plus an exception for bodily injury from issues with building heating, cooling, or dehumidifying equipment. The choice among them depends on the specific risk and underwriting appetite.
• Pricing: While the endorsement primarily serves to limit coverage scope, any pricing considerations should reflect the significant reduction in coverage provided to the insured.