1. Forms
2. CG
3. CG-25-45

CG 25 45 - Designated Location(s) Aggregate Limit

1. What the Form Is

The CG 25 45, titled "Designated Location(s) Aggregate Limit," is an endorsement to the standard Commercial General Liability (CGL) policy. Its primary purpose is to modify how the General Aggregate Limit applies. Instead of one General Aggregate Limit covering all the insured's locations and operations, this endorsement allows the General Aggregate Limit to apply separately to each specific location designated in the endorsement's schedule. This means that a claim or series of claims arising from one scheduled location will only erode the aggregate limit applicable to that particular location, leaving the aggregate limits for other scheduled locations and, typically, the overall policy aggregate for non-designated operations, intact. Essentially, it provides a dedicated General Aggregate Limit for each listed premises.

2. Classes of Business It Applies To

This endorsement is particularly beneficial for businesses that operate out of multiple, distinct physical locations, where the operations and potential liabilities at each location are largely independent. Examples include:

• Retail Chains: A company with multiple storefronts (e.g., clothing boutiques, electronics stores, supermarkets). A significant slip-and-fall incident at one store would not deplete the aggregate coverage available for incidents at other stores.
• Restaurant Franchises: An owner of several franchised restaurant locations. Each restaurant would have its own aggregate limit.
• Property Management Companies: Firms managing multiple distinct apartment buildings, office complexes, or shopping centers. This ensures that a large liability claim at one managed property doesn't affect the coverage for others.
• Manufacturing Companies: Businesses with several production plants or warehouses. A fire or other major incident at one plant would not exhaust the aggregate limits for the other facilities.
• Service Businesses with Multiple Branches: Examples include banks, dry cleaners, or auto repair shops with various physical locations.
• Real Estate Investment Trusts (REITs): Entities owning diverse portfolios of properties.

The key factor is the desire to segregate the aggregate liability exposure on a per-location basis, preventing a catastrophic event at one site from jeopardizing the coverage for all other operations.

3. Special Considerations

• Accurate Scheduling: It is crucial that all locations intended to have a separate aggregate limit are accurately and completely listed in the Schedule of the endorsement. Any location not listed will typically fall under the policy's main General Aggregate Limit (if one still applies to "all other" operations) or share it with other unscheduled locations.
• Definition of "Location": The policy or endorsement will define "location". Often, this refers to premises involving the same or connecting lots, or premises whose connection is interrupted only by a street, roadway, waterway, or railroad right-of-way. This definition is important when determining if separate buildings or areas constitute distinct locations for the purpose of the endorsement.
• Products-Completed Operations Hazard: Typically, the CG 25 45 endorsement applies only to the General Aggregate Limit and not to the Products-Completed Operations Aggregate Limit. The Products-Completed Operations Aggregate usually remains a single limit applicable to all products and completed work, regardless of location, unless specifically modified by a different endorsement (e.g., CG 25 46 Designated Location(s) Products-Completed Operations Aggregate Limit).
• "Other Operations" Aggregate: It's important to clarify how the General Aggregate Limit stated in the Declarations applies to operations or exposures not attributable to any specifically scheduled location. Payments for claims at scheduled locations reduce that location's specific aggregate but do not reduce the General Aggregate Limit shown in the Declarations for other operations, nor do they reduce any other designated location's aggregate limit.
• Contractual Requirements: Sometimes, contracts (e.g., leases, client agreements) may require an insured to maintain separate aggregate limits per location. This endorsement can help fulfill such requirements.

4. Key Information for Agents and Underwriters

• Pricing/Premium: Applying the General Aggregate Limit on a per-location basis effectively increases the insurer's potential total payout under the policy. Therefore, this endorsement usually comes with an additional premium. The cost will vary based on the number of locations, the type of operations at each, and their individual risk profiles.
• Risk Assessment: Underwriters must evaluate the exposure at each designated location individually. While the endorsement mitigates the risk of a single large loss exhausting all coverage, high-hazard locations will still require careful underwriting and pricing for their specific aggregate. The overall PML (Probable Maximum Loss) for the insurer increases with each location added.
• Coverage Gaps: Agents should diligently work with insureds to ensure all desired locations are scheduled. Overlooking a location can lead to it being covered under the main policy aggregate, potentially sharing that limit with other unscheduled exposures or having its claims erode the limit available for truly "other" operations.
• Underwriting Guidelines:
  • Insurers may have specific criteria for when this endorsement is offered or required, such as for businesses with a certain number of locations or specific risk characteristics.
  • The underwriter needs to understand the nature and separability of operations at each location. If locations are highly interdependent or exposures are not easily attributable to a single site, the value of this endorsement might be questioned or the underwriting more complex.
  • The remaining General Aggregate Limit (for operations not tied to a designated location) must still be adequate for any other exposures the insured may have.
• Limit Adequacy: While this endorsement provides separate aggregate limits, the adequacy of the per-occurrence limit and the amount of the aggregate limit itself for each location remain critical considerations.
• Clarity in Claims: In the event of a claim, it must be clearly attributable to a specific designated location for that location's aggregate limit to apply. Ambiguity could lead to disputes over which aggregate limit is affected.