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3. CU-25-02

What the Form Is

The CU 25 02, titled Designated Location(s) Products-Completed Operations Aggregate Limit, is an endorsement to the Commercial Umbrella Liability Coverage Form. Its primary purpose is to establish a separate Products-Completed Operations Aggregate Limit that applies specifically and individually to each location listed in the endorsement's schedule. This means that if a claim arising from products-completed operations occurs at one of the designated locations, it will only impact the specific aggregate limit allocated to that particular location. It helps preserve the aggregate limits for other listed locations and the main policy aggregate from being eroded by a loss at a single site.

Classes of Business It Applies To

This endorsement is particularly beneficial for businesses that have multiple distinct physical locations and face products-completed operations exposures at these sites. Examples include:

• Contractors with numerous completed job sites where liability for finished work might arise.
• Manufacturing companies operating several production facilities or distribution centers.
• Retail chains with multiple store outlets.
• Real estate companies managing a portfolio of different properties.
• Any business where it's desirable to segregate products-completed operations aggregate limits on a per-location basis to prevent a single large claim at one location from exhausting coverage for all operations.

Special Considerations

• Coverage Broadening: This endorsement generally broadens coverage by providing dedicated aggregate limits for products-completed operations per designated location, which can be very valuable for insureds with dispersed operations.
• Accurate Scheduling: It is crucial that all locations intended to have this separate aggregate limit are accurately and completely described in the endorsement's schedule. Any ambiguity could lead to disputes at the time of a claim.
• Interaction with Excess Policies: When this endorsement is used on an underlying umbrella policy, it's vital to ensure that any overlying excess liability policies also recognize and follow this per-location aggregate structure. Some excess policies may have their own terms that could default to a single aggregate limit if not specifically endorsed to match the underlying per-location aggregate provided by the CU 25 02.
• Underlying Coverage: While this endorsement applies to the umbrella policy, the structure of the underlying Commercial General Liability (CGL) policy's aggregates (e.g., whether it also has per location or per project aggregates for products-completed operations via endorsements like CG 25 04 for general aggregate or specific PCOH endorsements) should be considered for a consistent liability program structure.
• The aggregate limit established by this endorsement for designated locations applies to "ultimate net loss" under Coverage A of the umbrella policy for the products-completed operations hazard at the scheduled locations. This limit is distinct from the policy's general aggregate limit.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters must carefully evaluate the specific products-completed operations exposures at each location to be scheduled on the endorsement. This includes understanding the nature of the work performed or products sold/handled at each site.
• Pricing: The provision of separate, dedicated aggregate limits per location represents an increased potential payout for the insurer and should be priced accordingly. The premium may reflect the number of locations and the specific exposures at each.
• Coverage Gaps: Agents should identify if clients with multiple locations have a significant products-completed operations exposure that could be better managed with per-location aggregates. Failure to use this endorsement (or a similar mechanism) could leave an insured vulnerable to having their total products-completed operations coverage exhausted by a single large claim at one location.
• Clarity in Communication: Agents need to clearly explain to insureds how this endorsement works, its benefits in protecting their aggregate limits across different locations, and the importance of correctly listing all relevant locations.
• Coordination of Coverage: For layered insurance programs (primary, umbrella, excess), both agents and underwriters need to ensure consistency in how aggregate limits (especially per-location or per-project aggregates) are handled throughout the tower. Using endorsements like CU 25 02 on the umbrella and ensuring follow-form coverage on excess layers is critical.