1. Forms
2. CG
3. CG-25-04

Form CG 25 04: Aggregate Limits Of Insurance Per Project

1. What the form is

The CG 25 04, titled "Aggregate Limits Of Insurance Per Project," is an endorsement to the Commercial General Liability (CGL) policy. Its primary purpose is to modify how the policy's aggregate limits apply. Instead of a single general aggregate limit applying to all of the insured's work during the policy period, this endorsement allows for the aggregate limits to apply separately to each specific project designated in the endorsement's schedule. This is a significant modification because it means that a large claim on one project will not deplete the coverage available for other, unrelated projects undertaken by the insured. Payments made for damages or medical expenses under Coverage A (Bodily Injury and Property Damage Liability) or Coverage C (Medical Payments) that can be attributed to a specific designated project will reduce the aggregate limit for that project only. These payments will not reduce the main General Aggregate Limit shown in the Declarations, nor will they impact the aggregate limits for any other designated projects. However, the standard per-occurrence limits, Damage To Premises Rented To You limit, and Medical Expense limit still apply and are subject to the per-project aggregate. It's important to note that this endorsement typically applies to ongoing operations and does not affect the Products-Completed Operations Aggregate Limit.

2. Classes of business it applies to

This endorsement is most commonly and crucially used for businesses involved in multiple construction projects simultaneously. Real-world examples include:

• General Contractors: A general contractor overseeing several construction sites (e.g., a new office building, a residential development, and a bridge repair) would benefit greatly. A significant claim on the office building project would not exhaust the liability coverage needed for the residential development or the bridge repair.
• Subcontractors: Specialized subcontractors, such as electricians, plumbers, or HVAC installers, who work on numerous projects for different general contractors or owners, also find this endorsement vital. If an electrical subcontractor's work leads to a fire on one project, having a per-project aggregate ensures that their coverage remains intact for other concurrent jobs.
• Artisan Contractors: Smaller contracting businesses that undertake multiple distinct jobs can also utilize this endorsement to protect their aggregate limits on a project-by-project basis.
• Any business with distinct, separable projects: While heavily favored in construction, any business that can clearly define and separate its operations into distinct "projects" where separate aggregate limits would be beneficial could theoretically use this endorsement, subject to underwriter approval. This could include event management companies organizing multiple large, distinct events, or engineering firms working on several independent infrastructure projects.

Often, the requirement for a per-project aggregate limit is mandated by contract, where the project owner or general contractor requires the insured (e.g., a subcontractor) to maintain a specific amount of insurance dedicated solely to their project.

3. Special considerations

• Clear Project Designation: Each project to which the separate aggregate limit applies must be clearly described and listed in the schedule of the endorsement. Ambiguity in project descriptions can lead to coverage disputes. Some insurers may allow for a "blanket" description, such as "all construction projects undertaken by the named insured," but this needs to be carefully negotiated and clearly worded.
• Ongoing Operations vs. Completed Operations: The CG 25 04 typically applies to the General Aggregate Limit for ongoing operations. It does not automatically apply a separate aggregate to the Products-Completed Operations Hazard. If per-project aggregate limits are also desired for completed operations, a different endorsement (like the CG 25 03 for designated construction projects, or a specific completed operations aggregate endorsement) would be needed.
• Contractual Requirements: This endorsement is frequently used to satisfy contractual obligations imposed by project owners or general contractors who want to ensure that the full policy limit is available for their specific project, regardless of claims on the contractor's other jobs. It's crucial to review contract insurance requirements carefully to determine if this endorsement is necessary.
• "Project" Definition: The term "project" itself is not always explicitly defined in the policy or endorsement, which could lead to interpretation issues. It's important for the insured and insurer to have a mutual understanding of what constitutes a distinct project for the purpose of this endorsement.
• Interaction with Umbrella/Excess Liability: If an umbrella or excess liability policy is in place, it's important to ensure that it will follow form with the CGL policy's per-project aggregate provisions. Specific endorsements for the umbrella/excess policy (like CU 25 01 or CU 25 02, which adapt CGL endorsements CG 25 03 and CG 25 04 respectively) may be needed to achieve this.
• Renewal Considerations: When renewing a policy that previously included this endorsement, it's vital to ensure the schedule of projects is current and accurate. Coverage is restricted to the projects listed.

4. Key information for agents and underwriters

• Pricing: The pricing for this endorsement is often subject to underwriter discretion ("refer to company") and can vary. Insurers may charge an additional premium for providing per-project aggregate limits, as it potentially increases their overall exposure. The cost may be passed on to the entity requiring the endorsement if the contractor must obtain it to secure the contract.
• Risk Assessment: Underwriters will assess the nature, number, and value of the projects listed. Higher-risk projects or a large number of concurrent projects might lead to higher premiums or stricter underwriting criteria. The clarity of project separation is also a key underwriting concern.
• Coverage Gaps: Agents should ensure clients understand that this endorsement typically only addresses the General Aggregate Limit for ongoing operations. If per-project coverage is needed for Products-Completed Operations, this must be addressed separately. Also, ensure that if the insured is working on projects not listed in the schedule, those projects will fall under the policy's main General Aggregate Limit, which could be eroded by claims from designated projects if not structured carefully (though the standard CG 25 04 language aims to prevent designated project claims from eroding the main policy aggregate for non-designated work).
• Underwriting Guidelines: Insurers will have specific guidelines on when they will offer this endorsement. They may require detailed information about each project, including its scope, duration, and contractual requirements. Some insurers may be more willing to offer a "blanket" per-project aggregate than others.
• Alternative Endorsements: Be aware of similar endorsements. For instance, the CG 25 03 (Designated Construction Project(s) General Aggregate Limit) is very similar in function. The CG 25 04 is sometimes referred to as applying the general aggregate separately to each *premises owned by or rented to* the insured, distinguishing it slightly from a "per project" basis which might include job sites not owned or rented by the insured. However, usage and interpretation can vary, and many contractual requirements simply refer to "per project/location" aggregates. It's critical to use the correct endorsement based on the specific needs and contractual obligations of the insured.
• Certificate of Insurance (COI) Accuracy: When issuing COIs, it's crucial that the "per project" or "per location" aggregate box is checked accurately based on the attachment of the CG 25 04 (or CG 25 03) endorsement. The COI must reflect the actual coverage provided by the policy.