1. Forms
2. CG
3. CG-24-07

Form CG 24 07: Products/Completed Operations Hazard Redefined

1. What the Form Is

The CG 24 07, titled "Products/Completed Operations Hazard Redefined," is an endorsement to the standard Commercial General Liability (CGL) policy, such as the CG 00 01. Its primary function is to modify the definition of the "products-completed operations hazard" (PCOH). Specifically, this endorsement alters the standard CGL definition which typically requires that bodily injury or property damage arising from "your products" must occur away from the premises owned or rented by the insured to be considered part of the PCOH. The CG 24 07 removes this "away from premises" requirement for products consumed on the insured's premises once the product has been relinquished to the customer. This means that incidents arising from products consumed on-site, after the insured has given up possession, will fall under the PCOH and its specific aggregate limit, rather than the general aggregate limit.

2. Classes of Business It Applies To

This endorsement is particularly relevant for businesses where there's an exposure to liability from products consumed on their premises. The most common examples include:

• Restaurants, cafes, and bars: Where food and beverages are sold and consumed by patrons on-site. For instance, if a customer gets food poisoning from a meal eaten at the restaurant, this endorsement would ensure the claim is handled under the products-completed operations hazard.
• Schools, hospitals, or company cafeterias: Entities that prepare and serve food for consumption on their premises by students, patients, or employees. A widespread illness caused by contaminated food served in a school cafeteria would be a scenario where this endorsement is pertinent.
• Food vendors at events or stadiums: Businesses selling food items that are typically consumed immediately in the vicinity of the point of sale.
• Any business where the insured relinquishes a product to a customer on their premises, and that product could cause bodily injury or property damage after relinquishment but still on the premises.

The decision to use this form often hinges not just on the type of business, but on the significance of the on-premises products exposure.

3. Special Considerations

• Impact on Aggregate Limits: By redefining the hazard, claims that might otherwise fall under the General Aggregate limit (and its per occurrence limit) will now apply to the Products-Completed Operations Aggregate limit. This can be advantageous if the PCOH aggregate is specifically needed or is higher, but it also means the PCOH aggregate can be eroded by on-premises product claims.
• Mandatory for Certain Classifications: For some business classes, such as restaurants, the Insurance Services Office (ISO) classification guidelines may actually require the attachment of the CG 24 07.
• Medical Payments Coverage: The application of this endorsement can also influence how medical payments coverage responds to incidents involving on-premises product consumption.
• Risk Management Decision: For businesses not mandated to use it, the decision should be based on a careful risk assessment. If the potential for significant loss from on-premises product consumption is high (e.g., a large restaurant or a school cafeteria), this endorsement helps ensure coverage is appropriately categorized.
• Clarity of Coverage: The endorsement provides clarity by explicitly including on-premises consumption (after relinquishment) within the PCOH, avoiding potential disputes about which coverage or limit applies.

4. Key Information for Agents and Underwriters

• Risk Assessment Focus: Underwriters should carefully evaluate the on-premises products exposure. For restaurants, this includes food handling practices, volume of patrons, and types of food served. For other risks like schools, the number of people served and food safety protocols are key.
• Pricing Implications: Modifying the definition to include on-premises consumption under the PCOH could impact the premium, reflecting the specific exposure being underwritten under that hazard.
• Coverage Gap Prevention: This endorsement helps to address a potential gray area in the standard CGL. Without it, on-premises product incidents (after relinquishment) might be argued as either a premises/operations exposure or a products exposure, potentially leading to confusion over which aggregate limit applies. CG 24 07 clarifies this.
• Underwriting Guidelines: Insurers often have specific underwriting guidelines detailing when CG 24 07 should be used or is mandatory, especially for food-related businesses. Agents should be aware of these carrier-specific rules.
• Comparison with Standard CGL (CG 00 01): The standard CG 00 01 defines PCOH to include BI or PD occurring away from the insured's premises. CG 24 07 explicitly changes paragraph 'a.' of this definition for scheduled premises/operations, to include BI or PD from "your products" if it occurs after the insured has relinquished possession, regardless of whether it's on or off-premises for those specific products.
• Effect on General Aggregate: By shifting these specific on-premises product claims to the PCOH aggregate, the General Aggregate limit is preserved for other types of premises and operational liabilities.