Form CG 22 80: Limited Exclusion – Contractors – Professional Liability
1. What the form is
The CG 22 80, titled "Limited Exclusion – Contractors – Professional Liability," is an endorsement to a Commercial General Liability (CGL) policy. Its primary purpose is to exclude coverage for 'bodily injury', 'property damage', or 'personal and advertising injury' that arises from the rendering of, or failure to render, professional services by the insured. Specifically, this applies when the insured is providing engineering, architectural, or surveying services in their capacity as such. However, a crucial aspect of this endorsement is that the exclusion does not apply to the insured's operations in connection with construction work that they perform or that is performed on their behalf. This form is designed to clarify the scope of CGL coverage for contractors who may have some professional liability exposure related to their construction projects, distinguishing it from broader professional liability exclusions.
2. Classes of business it applies to
This endorsement is specifically tailored for contractors, particularly those involved in:
- Design-Build Projects: Contractors who not only construct a project but also provide or are responsible for the design aspects (engineering, architectural, or surveying services) for that same project. For example, a construction company that designs and builds a commercial warehouse would be a candidate for this endorsement. The CG 22 80 aims to ensure that their CGL policy still responds to bodily injury or property damage arising from the construction activities, even if there's an element of design service involved in that project.
- Contractors Hiring Design Professionals: If a contractor hires or subcontracts with architects, engineers, or surveyors in connection with the contractor's own construction work, this endorsement helps define the CGL coverage boundaries. For instance, a general contractor overseeing a a new office building might subcontract the structural engineering design. The CG 22 80 clarifies that the CGL policy's exclusion for professional services doesn't negate coverage for the contractor's overall construction operations on that project.
- Construction Management: Contractors providing construction management services where they might be involved in aspects like supervision, scheduling, and cost estimating, which can carry a professional standard of care.
It's important to note that this endorsement is not intended for firms whose primary business is providing professional engineering, architectural, or surveying services to others, independent of their own construction work. For those firms, a broader professional liability exclusion (like CG 22 43) and a separate Professional Liability (Errors & Omissions) policy would be more appropriate.
3. Special considerations
- Distinction from other professional exclusions: The CG 22 80 is less restrictive than an absolute professional liability exclusion (like CG 22 43) or even the CG 22 79 ("Exclusion - Contractors - Professional Liability"). The key difference lies in the exception for professional services performed in connection with the insured's own construction work. If the contractor provides design services for a project they are not building, the exclusion on the CG 22 80 would likely apply.
- Coverage for Bodily Injury and Property Damage Only: It's crucial to remember that this endorsement modifies a CGL policy, which primarily covers bodily injury and property damage. It does not typically provide coverage for purely economic losses (e.g., costs to re-design a flawed plan if no BI or PD occurs), which are the domain of a separate Professional Liability (E&O) policy.
- Interaction with Professional Liability (E&O) Policies: The CG 22 80 helps to create a clearer boundary between what the CGL might cover and what should be covered under a contractor's Professional Liability policy. For design-build contractors, this endorsement can help ensure there isn't an unintended gap where the CGL excludes something that the E&O policy also doesn't pick up (or vice-versa, though most E&O policies exclude BI/PD).
- "Means and Methods" vs. Professional Design: While the CG 22 80 allows coverage for BI/PD arising from construction work that includes a design component by the insured, it's important to distinguish this from the contractor's general "means and methods" of construction. The CG 22 79 endorsement more directly addresses the non-exclusion of "means and methods." However, the CG 22 80 specifically carves back coverage for design services when tied to the insured's construction project.
Real-world example: A design-build contractor designs and constructs a pedestrian bridge. A flaw in the engineering design (performed by the contractor's in-house engineer) leads to a partial collapse during construction, injuring a worker. The CG 22 80, by not excluding professional services connected to the insured's own construction work, would likely allow the CGL to respond to the worker's bodily injury claim, subject to other policy terms and conditions. If the contractor had only provided the design and another firm did the construction, the exclusion in CG 22 80 might apply to a claim against the designing contractor.
4. Key information for agents and underwriters
- Risk Assessment: Underwriters need to carefully assess the contractor's design exposure. Does the contractor have in-house design professionals? Do they regularly engage in design-build projects? What is the scale and complexity of these design-build projects? The answers will influence the decision to use CG 22 80 versus a broader exclusion or requiring a separate E&O policy.
- Pricing: The use of CG 22 80 acknowledges a degree of professional exposure being retained within the CGL for BI/PD outcomes. This might be a rating consideration compared to a policy with an absolute professional exclusion. However, the premium impact will depend on the insurer's specific rating methodology and the nature of the contractor's operations.
- Coverage Gaps: Agents should counsel contractor clients, especially those in design-build, about the limitations of the CGL even with CG 22 80. Specifically, the lack of coverage for economic damages arising from design errors necessitates a separate Contractor's Professional Liability (E&O) policy. The CG 22 80 does not eliminate the need for E&O coverage for professional mistakes that don't result in BI or PD covered by the CGL.
- Underwriting Guidelines: Insurers will have guidelines on when to use CG 22 80. It's generally preferred over CG 22 43 for contractors who perform construction and have incidental design exposures related to that construction. For contractors whose primary service is design, CG 22 43 and a robust E&O policy remain the standard.
- Clarity is Key: This endorsement aims to provide greater clarity than relying on an unendorsed CGL or a more sweeping exclusion for contractors with some design functions. It helps avoid situations where a broad professional exclusion (like CG 22 43) might be misapplied to a contractor's construction-related activities that have an ancillary design component.
Real-world example for agents/underwriters: An underwriter is reviewing an application for a mid-sized general contractor that occasionally takes on design-build projects for small commercial buildings. The contractor has a good loss history. The underwriter might opt to include the CG 22 80 on the CGL policy to provide coverage for BI/PD arising from their construction work, even if it involves their own design services for that specific project. However, the agent should strongly recommend that the contractor also purchase a separate Contractor's Professional Liability policy to cover potential economic losses from design errors and other professional liability exposures not covered by the CGL.