1. Forms
2. CG
3. CG-27-03

What the form is

The CG 27 03 is an endorsement designed to amend Section V – Extended Reporting Periods of a claims-made Commercial General Liability (CGL) or Products/Completed Operations liability policy. Its primary function is to restrict the scope of the policy’s Basic Extended Reporting Period (tail coverage) and the option to purchase a Supplemental Extended Reporting Period. This restriction means that these ERP provisions will only apply to specific accidents, products, work, or locations that are explicitly listed (scheduled) in the endorsement. This endorsement is typically implemented when an insurer renews a claims-made policy but decides to exclude or limit coverage for certain past exposures moving forward, often through what is known as a "laser endorsement." The CG 27 03 ensures that the tail coverage provided by the expiring policy specifically addresses these newly excluded or restricted exposures, and it grants the insured the option to purchase a Supplemental Extended Reporting Period for these specified items only.

Classes of business it applies to

This endorsement is applicable to any business holding a claims-made CGL or Products/Completed Operations policy where there's a need to provide specific tail coverage for particular past exposures that will be excluded or restricted in the renewing policy. Common scenarios include:

• Discontinued Operations/Products: A business ceases a particular product line or stops operations at a specific location. For instance, if a manufacturer discontinues a product with a history of claims, the insurer might renew the CGL policy but exclude future claims related to that product. The CG 27 03 would then be used to offer tail coverage specifically for claims arising from that product manufactured or sold before the exclusion date.
• High-Risk Past Projects: An insurer identifies a significant risk associated with an insured's past work, such as a completed construction project with known or suspected defects. The insurer may be unwilling to provide ongoing coverage for this specific project in the renewal policy. The CG 27 03 allows the insured to secure tail coverage specifically for that project.
• Significant Change in Risk Profile: If an insured's operations or risk profile changes substantially, an insurer might restrict coverage for certain past activities. This endorsement facilitates providing tail coverage for those specific, now-excluded activities.

Special considerations

• Claims-Made Policies Only: This endorsement is exclusively for use with claims-made policies, not occurrence policies.
• Use with Exclusionary Endorsements: It is frequently used in conjunction with an exclusionary endorsement (often referred to as a "laser endorsement," such as ISO forms CG 27 02 or CG 27 05) that removes coverage for specific accidents, products, work, or locations from the current policy term.
• Limited Basic ERP: The CG 27 03 restricts the Basic Extended Reporting Period (BERP) to only the items scheduled in the endorsement. The duration of this BERP is defined in the policy (e.g., often 60 days for reporting claims arising from occurrences previously reported, and potentially a longer period, such as five years, for other claims related to the specified exposures, though this can vary).
• Supplemental ERP Option: The endorsement provides the insured the option to purchase a Supplemental Extended Reporting Period (SERP) for the scheduled exposures. This is crucial as the BERP might not be sufficient for all potential claims to be reported.
• Potential Coverage Gaps: If other exposures are excluded from the renewal policy and are not scheduled on the CG 27 03, there will be no tail coverage for those exposures under this specific amendment. Insureds must carefully review what is and isn't covered.

Key information for agents and underwriters

• Pricing: The premium for the policy and any associated SERP purchased under this endorsement will be influenced by the underwriter's assessment of the risk associated with the specific exposures being provided tail coverage.
• Risk Assessment: The use of CG 27 03 indicates that specific, potentially higher-risk exposures have been identified. Underwriters must ensure that the schedule of accidents, products, work, or locations is precise and unambiguous to avoid future coverage disputes.
• Coverage Gaps: Agents have a critical role in explaining the limitations of this endorsement to the insured. It must be clear that tail coverage is only provided for the items explicitly scheduled. The duration of the BERP and the availability, cost, and importance of the SERP for these specified items are key discussion points to prevent misunderstandings and potential E&O issues.
• Underwriting Guidelines: This endorsement is typically used when managing higher-risk situations or significant changes in an insured's exposures. Underwriters should thoroughly document the rationale for restricting the ERP and ensure the retroactive date applicable to the scheduled exposures is correctly maintained and understood. The schedule must be meticulously drafted.