1. Forms
2. CG
3. CG-27-05

What the Form Is

The CG 27 05 is an endorsement used with the Products/Completed Operations Liability Coverage Form (CG 00 38) when written on a claims-made basis. Its primary function is to exclude coverage for "bodily injury" or "property damage" that arises from specific accidents, products, work, or locations that are explicitly described in the Schedule of the endorsement. This allows an insurer to offer products/completed operations coverage to an insured while specifically removing coverage for certain exposures that the insurer deems too risky or uninsurable under the standard policy terms.

Classes of Business It Applies To

This endorsement is typically used for businesses with identifiable high-risk aspects within their products or completed operations exposures. Examples include:

• Manufacturers: A company that previously manufactured a product with known defects or a high claims frequency might have claims related to that specific product excluded. For instance, if a toy manufacturer had a recall on a specific toy due to a choking hazard, future claims arising from that particular toy model could be excluded using this endorsement.
• Contractors: A contractor who performed work on a specific project that subsequently developed problems (e.g., a building with known structural issues due to their past work) might have claims related to that specific project excluded.
• Businesses with Divested Operations: A company that sold off a particular division or product line but retains some legacy liability might use this endorsement to exclude future claims arising from those divested operations.
• Specific Locations: If a business operates out of multiple locations, but one particular site has unique, uninsurable hazards related to products or completed work originating there, that location could be scheduled for exclusion.

Special Considerations

• Claims-Made Basis: It is crucial to remember this endorsement is designed for use with claims-made products/completed operations liability policies. The policy's extended reporting period provisions will interact with this exclusion.
• Clarity in Description: The description of the excluded accident, product, work, or location in the endorsement's Schedule must be precise and unambiguous to avoid disputes over the scope of the exclusion.
• Effect on Coverage: The endorsement eliminates coverage for the specified exposures. The insured will be responsible for any claims arising from these excluded matters and may need to explore other risk transfer or risk management options if available.
• State Applicability: While generally a multistate ISO form, its use and exact wording can be subject to state-specific regulations and approval. An older source from 2008 indicated that the CG 27 05 was not applicable in Alaska at that time. Current applicability should always be verified.
• Interaction with Extended Reporting Periods (ERPs): Exclusions listed on this endorsement will generally also apply to any Supplemental Extended Reporting Period. Related endorsements like CG 27 03 (Amendment Of Section V - Extended Reporting Periods For Specific Accidents, Products, Work Or Location Endorsement) or CG 27 11 (Supplemental Extended Reporting Period Endorsement For Specific Accidents, Products, Work Or Locations) might be used in conjunction.

Key Information for Agents and Underwriters

• Underwriting Tool: The CG 27 05 provides underwriters with a tool to manage specific, identified risks without having to decline products/completed operations coverage entirely. It allows for tailored coverage when certain exposures are unacceptable.
• Risk Assessment: A thorough risk assessment is necessary to identify the precise accidents, products, work, or locations that warrant exclusion. This often involves a detailed review of the insured's operations, claims history, and specific projects or product lines.
• Premium Considerations: While excluding exposures might seem like it should reduce the premium, the overall premium will still be based on the remaining covered exposures and the insured's overall risk profile. The impact of the exclusion on pricing is determined by the insurer.
• Agent's Duty: Agents must clearly communicate the scope and impact of this exclusion to the insured. The insured needs to fully understand that no coverage is afforded for the items scheduled on the CG 27 05 and should be advised to consider how to manage those uninsured risks.
• Documentation: Both agents and underwriters should maintain clear documentation regarding the reasons for the exclusion and the insured's acknowledgment of it. This is vital for preventing misunderstandings and potential errors and omissions claims.