1. Forms
2. CG
3. CG-21-98

What the Form Is

The CG 21 98, titled "Total Pollution Exclusion Endorsement," is an endorsement used with the Commercial General Liability (CGL) policy and the Products/Completed Operations Liability Coverage Form. Its primary purpose is to replace the existing pollution exclusion in the policy with a much broader and more stringent exclusion. This effectively eliminates coverage for most claims alleging bodily injury or property damage arising from pollution incidents. The intent is to make the pollution exclusion as absolute as possible, subject to very few, specific exceptions.

Classes of Business It Applies To

This endorsement is typically applied to businesses perceived by insurers to have a significant pollution exposure that they are unwilling to cover under a standard CGL policy. Examples include:

• Manufacturing operations, particularly those involving chemicals, paints, or other potentially polluting substances.
• Contractors whose operations might lead to the release of pollutants (e.g., excavation, demolition, or those working with hazardous materials, though other specific endorsements might also apply).
• Businesses involved in the storage, transportation, or disposal of waste materials or chemicals. For example, a fuel oil dealer or a chemical distributor.
• Agricultural operations with large-scale use of pesticides or herbicides.
• Businesses with underground or above-ground storage tanks.

For instance, an insurer might require this endorsement for a petroleum distribution company or a large-scale dry cleaning operation using perchloroethylene before agreeing to write their General Liability coverage.

Special Considerations

• Breadth of Exclusion: The term "Total" signifies the insurer's intent to exclude coverage for almost all pollution events. This includes claims arising from the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of "pollutants." The definition of "pollutants" within the CGL policy is itself very broad.
• Hostile Fire Exception: A key, and often one of the only, remaining coverages for pollution-related losses under this endorsement is for bodily injury or property damage caused by heat, smoke, or fumes from a "hostile fire." A hostile fire is generally defined as one that is uncontrollable or has escaped its intended confines.
• Need for Separate Coverage: Insureds with this endorsement on their CGL policy must understand that they have virtually no coverage for pollution liability under that policy. If they have pollution exposures, they should be strongly advised to procure a separate, specialized Pollution Liability insurance policy.
• Contractual Requirements: Insureds should be aware that this endorsement might put them in breach of contract if their agreements with other parties (e.g., landlords, clients) require broader pollution coverage.

Key Information for Agents and Underwriters

• Agents: It is critical for agents to thoroughly explain the drastic reduction in coverage to the insured when this endorsement is added. This conversation should be documented. Agents should assess the insured's pollution exposures and recommend appropriate standalone pollution coverage if needed. Failure to do so can lead to significant Errors & Omissions (E&O) claims.
• Underwriters: The CG 21 98 is a significant underwriting tool used to limit exposure to pollution losses from higher-risk insureds. Its use indicates that the underwriter has identified a pollution exposure they are not comfortable covering under the standard CGL terms. Underwriters should ensure that the remaining premium still adequately reflects any residual risks and be aware of any state-specific judicial interpretations of total pollution exclusions. They may also use this endorsement in conjunction with offering a separate pollution policy from their company or an affiliated carrier. The presence of this endorsement often means the underwriter views the pollution risk as substantial or difficult to quantify for standard coverage.