1. Forms
2. CG
3. CG-27-02

What the form is

The CG 27 02, titled "Exclusion Of Specific Accidents, Products, Work Or Location Endorsement," is an endorsement used with the Commercial General Liability (CGL) claims-made coverage form (such as CG 00 02). Its primary purpose is to exclude coverage for "bodily injury" or "property damage" that arises from specific accidents, products, work, or locations that are clearly identified and described in the schedule of the endorsement. This allows insurers to underwrite a policy while specifically removing coverage for certain known or particularly hazardous exposures that are unacceptable to the insurer under standard terms.

Classes of business it applies to

This endorsement is not limited to specific classes of business but can be applied to any insured holding a claims-made CGL policy where particular exposures need to be excluded. It is often used when an underwriter identifies a unique, high-risk aspect of the insured's operations or history that they are unwilling to cover. Real-world examples include:

• A contractor with a history of claims related to a specific type of past project or a particular job site. The endorsement could exclude work related to that specific project or location.
• A manufacturer that has a known issue with a particular product line. The CG 27 02 could be used to exclude liability arising from that specific product.
• A property owner with a known environmental concern at one of their several locations. This endorsement could exclude incidents arising from that specific contaminated location.
• Businesses with unique or difficult-to-insure operations where only specific aspects are problematic.

Special considerations

There are several important points to consider when using the CG 27 02:

• Claims-Made Policies Only: This endorsement is specifically designed for use with claims-made CGL policies. It is not intended for use with occurrence-based policies.
• "Laser Beam" Endorsement: It is often referred to as a "laser beam endorsement" because of its highly specific nature, targeting and excluding very precise exposures. The language in the schedule must be carefully drafted to accurately describe the excluded accident, product, work, or location to avoid ambiguity.
• Extended Reporting Periods (ERPs): When CG 27 02 is used, it often works in conjunction with endorsement CG 27 03 ("Amendment Of Section V - Extended Reporting Periods For Specific Accidents, Products, Work Or Location Endorsement"). CG 27 03 modifies the standard ERP provisions of the claims-made policy to address how ERPs apply (or don't apply) to the exposures excluded by CG 27 02.
• Impact on Coverage: The insured must fully understand the scope of the exclusion, as it creates a significant gap in coverage for the specified items.

Key information for agents and underwriters

Agents and underwriters should be aware of the following when dealing with the CG 27 02:

• For Agents: It is crucial to clearly and thoroughly explain the implications of this endorsement to the insured. The insured needs to understand precisely what is no longer covered and may need to seek alternative risk management solutions (e.g., specialized insurance, contractual risk transfer, or operational changes) for the excluded exposures.
• For Underwriters: This endorsement is a tool to manage specific, identifiable high-hazard risks that might otherwise make an entire account unacceptable or require a prohibitively high premium. Precision in wording the schedule is paramount to ensure the exclusion operates as intended and to prevent future coverage disputes. Underwriters must document the reasons for the exclusion and ensure it aligns with their company's underwriting guidelines.
• Pricing and Risk Assessment: The use of this endorsement can make a risk acceptable for underwriting and can impact the premium. By excluding a significant known hazard, the overall risk profile of the insured is altered.
• Potential for Coverage Gaps: While it helps in tailoring coverage, it inherently creates a coverage gap for the excluded items. This should be a key point of discussion with the insured.