1. Forms
2. CG
3. CG-34-04

What the form is

The CG 34 04 is an endorsement that modifies a Liquor Liability Coverage Part. Its primary purpose is to extend coverage to a person or organization acting as a sponsor for an event or function hosted or participated in by the named insured. By adding the sponsor as an additional insured, the endorsement provides them with liability protection under the named insured's liquor liability policy for covered incidents. This protection is specifically for the sponsor's potential vicarious liability that arises from the named insured's activities related to the selling, serving, or furnishing of alcoholic beverages at the event detailed in the endorsement's schedule.

Classes of business it applies to

This endorsement is relevant for any business or organization that is engaged in the manufacturing, distributing, selling, serving, or furnishing of alcoholic beverages and involves sponsors in their events or functions. It is particularly useful when a contractual agreement requires the named insured to provide liquor liability coverage to a sponsor.

Real-world examples:

• A microbrewery (the named insured) is organizing a summer beer festival and a local business sponsors the event. The sponsoring business may contractually require the microbrewery to include them as an additional insured on their liquor liability policy for the duration of the festival. The CG 34 04 endorsement would be used to fulfill this requirement, offering the sponsor coverage if they are named in a lawsuit due to an incident stemming from the brewery's alcohol service at the festival.
• A non-profit organization hosts a fundraising gala where alcohol is served by a contracted bartending service (the named insured). A corporate sponsor of the gala could be added as an additional insured to the bartending service's liquor liability policy using this endorsement to protect the sponsor from liability arising from the bartending service's operations at the event.

Special considerations

• Scheduled Event Specificity: Coverage for the additional insured (sponsor) is strictly limited to their liability as a sponsor of the specific event or function that is explicitly listed in the endorsement's schedule.
• Scope of Coverage: The endorsement covers the additional insured for "injury" (as defined in the policy) resulting from the selling, serving, or furnishing of alcoholic beverages by any insured at the scheduled event.
• Legal Limitations: Any coverage provided by this endorsement is subject to the extent permitted by law.
• Contractual Obligations: If the additional insured status is mandated by a contract, the coverage provided to the sponsor will not be any broader than what the contract stipulates. Furthermore, the maximum amount payable to the additional insured will be the lesser of the limits required by the contract or the applicable limits of insurance stated in the policy.
• Endorsement Schedule: It is crucial that the endorsement schedule accurately and completely lists the full legal name(s) of the sponsor(s) and provides a clear description of the event or function.

Key information for agents and underwriters

• Risk Assessment: Underwriters must thoroughly assess the risk associated with the scheduled event. Factors to consider include the type of event, expected number of attendees, the named insured's history and experience with alcohol service, the specific role and involvement of the sponsor, and the alcohol control measures that will be implemented.
• Contractual Review: Agents should meticulously review any contracts or agreements between the named insured and the sponsor. This review is essential to ensure that the CG 34 04 endorsement, along with the policy limits, satisfies all contractual requirements for additional insured status.
• Clarifying Coverage for all Parties: It is important for agents to clearly communicate the scope of coverage to both the named insured and the additional insured sponsor. The sponsor should understand that the endorsement primarily covers their vicarious liability stemming from the named insured's alcohol-related activities. The phrase "arising out of" generally provides a broader grant of coverage than more restrictive wording like "caused in whole or in part by," which is often found in other additional insured endorsements.
• Pricing Considerations: The premium for this endorsement may be adjusted based on the underwriter's assessment of the increased risk exposure due to the specific event and the sponsor's inclusion.
• Coordination with Other Endorsements: Agents and underwriters should determine if other endorsements are necessary or appropriate. For instance, the CG 20 01 (Primary and Noncontributory – Other Insurance Condition) endorsement has been updated to be applicable to liquor liability and can be used in conjunction with the CG 34 04 to address how coverage responds when other insurance policies are in place for the additional insured.
• Appropriate Form Usage: The CG 34 04 is one of four specialized additional insured endorsements designed for liquor liability. Each addresses a distinct relationship (e.g., CG 34 01 for Owners, Managers, or Lessors of Premises; CG 34 02 for Grantors of Franchise; CG 34 03 for State or Governmental Agencies). It's critical to select the correct endorsement that accurately reflects the relationship between the named insured and the party requiring additional insured status.