1. Forms
2. CG
3. CG-21-65

What the Form Is

The CG 21 65, titled "Total Pollution Exclusion With A Building Heating, Cooling And Dehumidifying Equipment Exception And A Hostile Fire Exception," is an endorsement to the standard Commercial General Liability (CGL) coverage part. Its primary function is to replace the CGL's existing pollution exclusion (typically Exclusion f. under Coverage A) with a more stringent and encompassing "total" pollution exclusion. However, unlike an absolute total pollution exclusion (such as the CG 21 49), the CG 21 65 'gives back' limited coverage through specific exceptions. These exceptions typically apply to bodily injury (and in some cases property damage) that occurs under narrowly defined circumstances: (1) bodily injury sustained within a building caused by smoke, fumes, vapor, or soot produced by or originating from equipment used to heat, cool, or dehumidify the building, or equipment used to heat water for personal use by the building's occupants or their guests; and (2) bodily injury or property damage arising out of heat, smoke, or fumes from a 'hostile fire'.

Classes of Business It Applies To

This endorsement can be attached to CGL policies for a wide array of businesses. Insurers may use it when they wish to significantly curtail their exposure to pollution-related claims for a particular insured or class of business. Examples include:

• Contractors (various types, especially those not directly involved in pollution remediation but where incidental pollution exposures exist)
• Manufacturing facilities
• Property owners and managers (commercial, residential)
• Retail and service industries

The exceptions for HVAC malfunctions and hostile fires make it a slightly less severe option than a complete total pollution exclusion, which might be relevant for businesses where these are the more plausible pollution-related risks rather than industrial-scale polluting activities.

Special Considerations

It is crucial to understand that the CG 21 65 is an exclusionary endorsement, meaning its primary purpose is to remove coverage. While the exceptions provide some relief, the overall scope of pollution coverage is significantly narrower than what might be available under an unendorsed CGL policy or one with more lenient pollution endorsements.

• Preference Hierarchy: Insureds and their agents should generally try to avoid this endorsement if possible. If an insurer insists on a total pollution exclusion, the CG 21 65 is often considered preferable to the CG 21 49 (Total Pollution Exclusion Endorsement) because of its exceptions. It may also be preferable to the CG 21 55 (Total Pollution Exclusion with a Hostile Fire Exception) as the CG 21 65 includes an additional exception for building heating, cooling, and dehumidifying equipment.
• Bodily Injury Focus for Equipment Exception: The exception for building heating, cooling, and dehumidifying equipment is often limited to "bodily injury" and typically specifies that the injury must be sustained within a building. Property damage from such sources may still be excluded.
• Hostile Fire Definition: The term "hostile fire" is generally defined in insurance policies (often as a fire that becomes uncontrollable or breaks out from where it was intended to be). Coverage under this exception depends on the fire meeting this definition.
• Products/Completed Operations: This endorsement typically applies to the products-completed operations hazard as well, meaning pollution claims arising from the insured's completed work or products would also be subject to this broad exclusion and its limited exceptions.

Key Information for Agents and Underwriters

• Agents: Must clearly communicate the restrictive nature of this endorsement to their clients. It's essential to explain what is excluded and the limited circumstances under which the exceptions apply. Documenting this discussion is advisable. Agents should advocate for the broadest coverage available or, if this endorsement is unavoidable, ensure the client understands the remaining exposures.
• Underwriters: Utilize this endorsement to manage and limit pollution exposure for risks they deem to have a higher-than-average, or simply undesirable, pollution potential that is not otherwise specifically addressed by a more tailored pollution coverage form or exclusion. Risk assessment should consider the specific operations of the insured and whether the limited exceptions in CG 21 65 adequately address the most likely incidental pollution exposures the underwriter is willing to retain.
• Coverage Gaps: This endorsement creates significant coverage gaps for most pollution-related incidents. Businesses with more than incidental pollution exposures should explore dedicated pollution liability policies.
• Pricing: While this endorsement significantly restricts coverage, it's not always clear if a specific premium credit is applied compared to the standard CGL pollution exclusion. Some sources indicate that for total pollution exclusions like CG 21 49, CG 21 55, and CG 21 65, rating may be referred to the company.