1. Forms
2. CG
3. CG-34-03

What the Form Is

The CG 34 03 endorsement is designed to extend liquor liability coverage to a state, government agency, or political subdivision when that entity has issued a permit or authorization to the named insured for activities involving alcoholic beverages. It amends the 'Who Is An Insured' section of the liquor liability coverage form to include the specified governmental entity as an additional insured, but only with respect to liability arising out of the liquor-related activities for which the permit or authorization was granted.

Classes of Business It Applies To

This endorsement is relevant for any business or organization that sells, serves, or furnishes alcoholic beverages and is required to obtain a permit or authorization from a governmental entity to do so, particularly when operating on premises owned or controlled by that governmental body. Real-world examples include:

• A vendor selling alcoholic beverages at a state-owned fairground.
• A concessionaire serving alcohol at a municipally-owned stadium or event center.
• A business operating a bar or restaurant in a government-owned building where the liquor license or permit is issued by that government entity.

Special Considerations

There are several important points to consider when using this endorsement:

• Specificity Required: The governmental entity gaining additional insured status must be specifically named (scheduled) in the endorsement.
• Scope of Coverage: Coverage for the additional insured (the governmental entity) is limited to liability specifically arising from the named insured's selling, serving, or furnishing of alcoholic beverages under the issued permit or authorization. It does not provide broader coverage for all of the governmental entity's operations or liabilities.
• Legal Limitations: The coverage provided to the additional insured only applies to the extent permitted by law.
• Contractual Requirements: If the endorsement is required by a contract, the coverage and limits provided to the additional insured may be further restricted to be no broader than what the contract mandates.
• Intended Use: This endorsement is not meant to provide additional insured status for services the named insured might provide for the benefit of the governmental entity that fall outside the scope of the liquor permit or authorization.

Key Information for Agents and Underwriters

Agents and underwriters should be aware of the following:

• Context of Issuance: This is one of several additional insured endorsements for liquor liability introduced by ISO, often in response to requests for coverage extensions in specific scenarios like operations on government property.
• Risk Assessment: Underwriters should carefully review the nature of the permit or authorization, the specific activities of the named insured, and the relationship between the insured and the governmental entity to assess the potential exposure.
• Proper Scheduling: It is crucial to ensure the correct governmental entity is accurately and completely scheduled on the endorsement.
• Potential for Increased Exposure: Adding a governmental entity as an additional insured can potentially increase the insurer's exposure, and this should be factored into underwriting and pricing considerations.
• Interaction with Other Endorsements: The CG 20 01 Primary and Noncontributory – Other Insurance Condition endorsement can be, and often is, used in conjunction with the CG 34 03 to address how coverage responds when other insurance may also apply to the additional insured.