1. Forms
2. CU
3. CU-21-11

What the form is

The CU 21 11, titled "Limitation Of Coverage To Designated Premises, Project Or Operation," is an endorsement to a Commercial Liability Umbrella Coverage Part. Its primary function is to restrict the broad coverage typically provided by an umbrella policy to only those premises, projects, or operations specifically listed in the endorsement's schedule. This means that for coverage to apply under the umbrella policy, the bodily injury, property damage, or personal and advertising injury must arise out of the designated premises, or the specified project or operation. The 04 17 edition of this form was a significant revision, clarifying the extent of coverage for designated premises versus designated projects/operations, partly in response to case law and varying interpretations of previous language regarding "operations necessary or incidental."

Classes of business it applies to

This endorsement can be applied to a wide range of commercial enterprises where an insurer or insured wishes to limit the scope of umbrella liability coverage. It is particularly useful for:

• Businesses with multiple, distinct physical locations where umbrella coverage is only desired or needed for specific sites. For example, a retail chain that wants umbrella coverage only for its new flagship stores but not older, smaller locations.
• Contractors or developers working on specific, defined projects. For instance, a construction company might use this endorsement to limit umbrella coverage to a single large building project.
• Insureds with diverse operations where only certain aspects are intended to be covered by a particular umbrella policy, perhaps because other operations are insured separately or are considered uninsurable by that carrier.
• Real estate holding companies that want to specify which properties are covered under the umbrella.

Special considerations

There are several important points to consider when using the CU 21 11 endorsement:

• Specificity is Key: The schedule within the endorsement must be completed accurately and comprehensively. Any premises, project, or operation not listed will likely not be covered by the umbrella policy for losses originating from them.
• "Operations Necessary or Incidental": The 04 17 version of the form significantly curtails automatic coverage for operations that are merely "necessary or incidental" to a scheduled premises if those operations occur off-premises. Such off-premises operations may need to be explicitly scheduled to ensure coverage.
• Potential for Coverage Gaps: If a business acquires new locations, starts new projects, or expands operations, this endorsement must be reviewed and potentially updated. Failure to do so can result in significant uninsured exposures.
• Interaction with Underlying Policies: This endorsement is often used when a similar limiting endorsement, such as the CG 21 44 (Limitation Of Coverage To Designated Premises Or Project), is attached to the underlying Commercial General Liability (CGL) policy. Consistency between the umbrella and underlying coverage limitations is crucial.
• Hired and Non-Owned Auto: If Hired and Non-Owned Auto liability coverage is part of the underlying CGL and is intended to be covered by the umbrella, care must be taken. If the CU 21 11 only schedules a premises, it could be argued that Hired and Non-Owned Auto coverage is restricted to occurrences on that scheduled premises, potentially rendering the off-premises aspect of H/NO auto coverage illusory under the umbrella.

Key information for agents and underwriters

• Risk Assessment: Underwriters use this endorsement to manage exposure by clearly defining the geographic or operational scope of the umbrella coverage. This is especially important for risks with varying hazard levels across different locations or projects.
• Premium Impact: The premium for the umbrella policy may be adjusted based on the reduced exposure resulting from this limitation. The exposure base related to excluded premises or operations would typically be removed from the rating calculation.
• Client Counseling: Agents must thoroughly explain the restrictive nature of this endorsement to their clients. It's vital the client understands that coverage is confined to what is specifically scheduled and the potential consequences of omitting a location, project, or operation.
• Scheduling Detail: The 04 17 edition emphasizes separate scheduling for "Premises" and "Project Or Operation." Underwriters may require detailed descriptions for each to accurately assess the risk. Agents should gather comprehensive information from the insured to ensure the schedule is precise.
• Review at Renewal and Mid-Term: Both agents and underwriters should make it a practice to review the continued appropriateness and accuracy of the CU 21 11 schedule at renewal, and encourage clients to report any new locations or significant operational changes mid-term.