1. Forms
2. CG
3. CG-25-03

Form CG 25 03: Designated Construction Project(s) General Aggregate Limit

1. What the form is

The CG 25 03, titled "Designated Construction Project(s) General Aggregate Limit," is an endorsement to a Commercial General Liability (CGL) policy. Its primary purpose is to apply a separate general aggregate limit to each specific construction project listed in the endorsement's schedule. This prevents claims arising from one designated project from eroding the general aggregate limit that applies to the insured's other ongoing operations or other listed projects. Essentially, each designated project gets its own dedicated aggregate limit, equal to the main policy's general aggregate limit. It's important to note that this endorsement typically applies to ongoing operations at the construction site and does not usually affect the products-completed operations aggregate limit.

2. Classes of business it applies to

This endorsement is specifically designed for businesses involved in construction projects, particularly those managing multiple projects concurrently. Examples include:

• General Contractors: A general contractor overseeing several construction sites (e.g., a new office building, a residential complex, and a bridge repair) would use this form to ensure a large loss at one site doesn't jeopardize coverage for the others or their main operations.
• Subcontractors: Specialized subcontractors (e.g., electrical, plumbing, HVAC) working on multiple large projects can also benefit by isolating the aggregate limit for each of their involvements.
• Real Estate Developers: Developers managing multiple construction projects simultaneously can use this endorsement to protect the financial viability of each individual project's liability coverage.

This form is often used when a project owner or a contract requires the contractor to maintain a specific amount of insurance dedicated to that particular project.

3. Special considerations

• Contractual Requirements: This endorsement is frequently used to satisfy contractual obligations where the project owner (e.g., a municipality or large corporation) mandates a dedicated aggregate limit for their specific project. This ensures that the full policy limit is available for their project, regardless of claims on the contractor's other jobs.
• Ongoing Operations Focus: The CG 25 03 typically applies to the "ongoing operations" at the designated construction project. Claims arising after the project is completed would generally fall under the products-completed operations aggregate limit, which is usually separate and not affected by this endorsement. If separate aggregate limits are needed for completed operations on a per-project basis, a different endorsement (like CG 25 45) would be required.
• Scheduling Projects: Each construction project to which a separate aggregate limit will apply must be specifically listed (designated) in the schedule of the endorsement or in the policy declarations. Some insurers might offer a "blanket" approach, stating it applies to "all construction projects undertaken by the named insured," but the standard form requires specific designation.
• No Impact on Other Limits: The endorsement clarifies that payments made under a designated project's aggregate limit reduce that specific project's aggregate. Such payments do not reduce the main policy's general aggregate limit (as it applies to non-designated operations or other projects) or any other designated project's aggregate limit. Other policy limits, such as the Each Occurrence limit, Fire Damage limit, and Medical Expense limit, continue to apply as stated in the declarations.

4. Key information for agents and underwriters

• Risk Assessment: Underwriters need to assess the risk profile of each designated project. Factors like the project's size, scope, duration, location, and the nature of the work being performed will influence the decision to offer this endorsement and the overall policy pricing.
• Pricing: Applying separate aggregate limits per project can increase the insurer's overall exposure, as the total potential payout across all projects could exceed what it would be with a single shared aggregate. This increased exposure may be reflected in the premium.
• Coverage Gaps: Agents should ensure that clients understand this endorsement applies to ongoing operations. If per-project aggregate protection is also needed for completed operations, the appropriate separate endorsement must be added. Failure to do so could create a significant coverage gap.
• Clarity in Designation: It is crucial for agents and insureds to clearly and accurately identify and schedule each designated construction project. Ambiguity could lead to disputes at the time of a claim.
• Interaction with Certificates of Insurance: When a CG 25 03 is in place, the "per project" aggregate box on a certificate of insurance can be checked, indicating that the general aggregate limit applies separately to the specified project.
• Alternative to Doubling Aggregate: In some contractual situations, if a per-project aggregate is required, the alternative might be to double the general aggregate limit of the policy. The CG 25 03 provides a more tailored solution.