1. Forms
2. CG
3. CG-28-07

What the Form Is

The CG 28 07, Principals Protective Liability Coverage endorsement, is designed to modify the standard Insurance Services Office (ISO) CG 00 09 Owners and Contractors Protective Liability Coverage Form (OCP). Its primary function is to convert the OCP, which typically provides liability protection to a project owner or general contractor for operations performed by a designated contractor, into a more general Principal's Protective Liability form. This endorsement specifically addresses the principal's vicarious liability for bodily injury caused by independent contractors working on their behalf or bodily injury sustained by those independent contractors or their employees. It's important to note that this endorsement typically only provides coverage for bodily injury, not property damage. The CG 28 07 replaces the insuring agreement, exclusions, and amends certain conditions and definitions of the CG 00 09 form.

Classes of Business It Applies To

This endorsement is utilized by principals who hire independent contractors and wish to secure separate liability coverage for the exposures arising from the contractors' work. Common users include:

• Property Owners or General Contractors: Who hire various independent contractors for projects and want to protect themselves from liability stemming from the contractors' actions or injuries to the contractors themselves. For example, a real estate developer hiring multiple subcontractors for a new building project might use this coverage.
• Newspaper Publishers: This is a classic example where publishers use this form to cover their liability for bodily injury arising from the activities of independent newspaper carriers or distributors.
• Other Businesses Utilizing Independent Contractors: Any business that regularly engages independent contractors for services where a bodily injury liability exposure exists for the principal.

Special Considerations

• Bodily Injury Only: A key limitation is that the CG 28 07, when modifying the CG 00 09, generally restricts coverage to bodily injury only, excluding property damage.
• Separate Coverage: Principals often opt for this coverage to isolate the risks associated with independent contractors from their primary Commercial General Liability (CGL) policy. This can help protect the principal's CGL loss experience and aggregate limits.
• Vicarious Liability Focus: The coverage is centered on the principal's indirect or vicarious liability for the actions of the independent contractors they hire.
• Replaces CG 00 09 Provisions: Users must understand that this endorsement significantly alters the underlying CG 00 09 by replacing its insuring agreement and exclusions with its own specific set.
• Coverage A and B: The endorsement typically provides two distinct coverages: Coverage A for bodily injury sustained by an independent contractor or their employee while performing operations for the named insured, and Coverage B for bodily injury sustained by any other person arising out of the activities of an independent contractor or their employee performing operations for the named insured.

Key Information for Agents and Underwriters

• Modifies CG 00 09: It is crucial to remember this is not a standalone policy but an endorsement to the CG 00 09. The CG 00 09 Declarations (often CG DS 02) and other standard forms like the Nuclear Energy Liability Exclusion (IL 00 21) would typically be part of the policy.
• Named Insured is the Principal: Unlike a typical OCP where the contractor might procure the policy for the owner, with the CG 28 07, the named insured purchasing the policy is the principal (e.g., property owner, newspaper publisher).
• Rating Basis: Specific rating classifications apply, particularly for newspaper publishers where the basis of premium may be per newscarrrier. For other principals, the total cost of work let or sublet might be a rating basis, similar to the standard OCP.
• Risk Assessment: Underwriters should carefully assess the nature of the operations performed by the independent contractors, the principal's hiring practices (including verification of the contractor's own insurance), and contractual agreements. The imposition of liability on the principal can arise from inherently dangerous work, non-delegable duties, or negligence in hiring.
• Coverage Gaps: Agents should ensure clients understand the limitation to bodily injury and that property damage is generally not covered by this endorsement. The principal's own CGL or other policies would need to address property damage exposures.
• Alternative to CGL: While a principal's CGL might offer some coverage for vicarious liability, the CG 28 07 provides a dedicated limit and can prevent claims from impacting the CGL policy's record and limits.