1. Forms
2. CG
3. CG-25-02

Form CG 25 02: Amendment Of Limits Of Insurance (Designated Project Or Premises)

1. What the form is

The CG 25 02, "Amendment Of Limits Of Insurance (Designated Project Or Premises)," is an endorsement to a Commercial General Liability (CGL) policy. Its primary purpose is to modify the standard policy limits for a specific, named project or premises. This allows an insured to have different liability limits for a particular venture or location that may have unique risk characteristics or contractual requirements, separate from their overall business operations. The endorsement replaces the limits shown in the Declarations with the limits specified in the endorsement's schedule for the designated project or premises.

2. Classes of business it applies to

This endorsement is particularly relevant for businesses that engage in operations at multiple locations or undertake distinct projects that carry varying levels of risk or require specific insurance limits due to contractual obligations. Examples include:

• Construction Contractors: A contractor might have a standard CGL policy covering their typical residential work but may undertake a large commercial project (e.g., building a shopping mall or a bridge) that necessitates higher liability limits due to the scale, complexity, or contractual demands from the project owner. The CG 25 02 can be used to apply increased limits specifically to that commercial project.
• Real Estate Owners/Developers: A property management company might own various properties. One of these, perhaps a high-rise building in a densely populated urban area or a property with unique hazards, might require higher limits than their other holdings like suburban office parks.
• Manufacturers with Multiple Facilities: A manufacturer might have a standard limit for its primary production plant but could have a smaller, specialized research and development facility or a distribution center with different risk exposures that warrant tailored limits.
• Retail Chains: A company with numerous retail outlets might need specific, potentially higher, limits for a flagship store in a major metropolitan area or a location with significantly higher foot traffic and sales volume compared to its smaller, local branches.
• Event Organizers: While not a permanent premises, an event organizer might need to designate a specific event venue for a large-scale concert or festival with significantly increased liability limits for the duration of that event due to the heightened risk of public liability.

3. Special considerations

• Specificity is Key: The designated project or premises must be clearly and accurately described in the endorsement schedule. Ambiguity can lead to coverage disputes.
• Contractual Requirements: This form is often used to satisfy specific insurance limit requirements imposed by contracts with project owners, landlords, or other third parties. It's crucial that the limits amended by the CG 25 02 meet or exceed these contractual obligations.
• No Impact on General Aggregate for Other Operations: The amended limits for the designated project/premises apply only to that specific exposure. Claims arising from the designated project/premises will erode the specific limits stated in the CG 25 02 and the overall policy's general aggregate limit, unless other endorsements like CG 25 03 (Designated Construction Project(s) General Aggregate Limit) or CG 25 04 (Designated Location(s) General Aggregate Limit) are also in place to apply the general aggregate on a per-project or per-location basis.
• Mid-Term Changes: This endorsement can be used to change limits after policy inception.
• Underlying Policy Terms: The CG 25 02 only amends the limits of insurance. All other terms, conditions, exclusions, and definitions of the underlying CGL policy remain in effect for the designated project or premises unless specifically modified by this or another endorsement.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters must carefully assess the specific risks associated with the designated project or premises. This includes evaluating the nature of operations, location-specific hazards (e.g., high crime area, flood zone), construction type (if applicable), public exposure, and any unique contractual liabilities assumed by the insured for that project/premises.
• Pricing: The premium for the CGL policy will be adjusted to reflect the amended limits for the designated project or premises. This typically involves an additional premium if the limits are increased. The rating will consider the specific exposure of the designated site or project.
• Coverage Gaps: Agents should ensure that by specifying limits for a particular project or premises, they are not inadvertently creating coverage gaps for other operations or exposures that might still fall under the general policy terms but perhaps were intended to have higher limits. It's crucial to understand how the amended limits interact with the policy's overall aggregate limits.
• Interaction with Other Endorsements: Consider how the CG 25 02 interacts with other endorsements on the policy. For example, if a "Limitation of Coverage to Designated Premises, Project or Operations" (e.g., CG 21 44) endorsement is also attached, coverage is restricted only to what is scheduled. If endorsements like CG 25 03 or CG 25 04 are used to apply the General Aggregate Limit on a per-project or per-location basis, this needs to be coordinated with the specific limits set by the CG 25 02.
• Documentation: Thorough documentation of the reasons for the amended limits and the specific details of the designated project or premises is vital for both the agent and underwriter to avoid errors and omissions claims and to ensure clarity in the event of a claim.
• Clarity in Scheduling: Ensure the "Schedule" section of the endorsement is completed accurately and clearly identifies the designated project(s) or premises and the applicable limits for Each Occurrence, General Aggregate (if it's intended to be specific to that project/premises, though this is more directly addressed by CG 25 03/04), Products-Completed Operations Aggregate, Personal & Advertising Injury, Damage to Premises Rented to You, and Medical Expense limits.