Helping Your Clients Add Coverage Back for Bodily Injury and Property Damage

Melanie Phillipp

Vice President, Broker

May 7, 2021
Commercial General Liability Endorsements CG2165 & CG2155

Most commercial general liability (CGL) policies exclude coverage for total pollution by way of endorsement CG2149. In fact, according to the International Risk Management Institute, this exclusion eliminates virtually all coverage for pollution incidents — including those retained in the standard commercial general liability policy form CG0001 — despite its “absolute” pollution exclusion.

As a result, your property owner, tenant, and contractor clients could unknowingly be putting their businesses at substantial risk in the event of a loss. One way to add coverage back to mitigate losses is with two critical endorsements — CG2165 and CG2155.

Adding Valuable Bodily Injury and Property Coverage Back
Unlike typical coverage for pollution, policy endorsements CG2165 and CG2155 are specific in that they add back coverage for covered third-party bodily injury and property damage claims for losses arising from a hostile fire at the insured premises and certain off-premises work by contractors. This includes injury or damage caused by heat, smoke or fumes from a hostile fire, with certain exceptions as noted in the forms. Here are two examples:

  • The owner of a warehouse experienced a fire in which smoke billowed from the insured’s building into the carpet store located next door. The smoke caused over $35,000 in property damage to the carpet store’s contents/stock. Fortunately, the fire occurred after business hours, so there were no injuries. However, the carpet store’s third-party insurance carrier indemnified their policyholder and subrogated against the owner of the warehouse for the recovery of all damages incurred.
  • An insured’s building caught on fire during business hours and black smoke entered the neighboring building’s ventilation system. The black smoke not only caused damage to the building, but also caused occupants to suffer significant smoke inhalation injuries. As a result, lawsuits for bodily injury and property damage were filed against the insured.

It’s notable that, where applicable, CG2165 would also provide coverage in the event that HVAC equipment causes bodily injury to the occupants of an owner-occupied building.

These examples illustrate that in the event of a loss, either the third-party claimant’s insurance carrier will indemnify its policyholder and subrogate against your insured, or the third-party claimant will make a claim against your policy for damages or injuries caused by the insured’s hostile fire. As you see, in the absence of CG2165 or CG2155 on the insured’s policy, coverage would not respond to these types of claims — or even provide a defense — depending on the policy’s coverage exclusions’ “no duty to defend” language.

Of course, you need to keep in mind that a policyholder could be held legally liable for injuries or damage — even if the third-party claimant’s insurance carrier indemnified them. In some cases, insurance carriers can subrogate against your insured even if their policy excludes coverage, which in a large claim situation is plausible. By adding endorsements CG2165 and CG2155, policyholders are afforded broader protection at little or no cost and can avoid errors and omissions claims.

CG2165 and CG2155 Specifics
Most of today’s business owner’s policies (BOPs) automatically include CG2165. However, when it comes to the excess and surplus (E&S) lines market, you’ll find that carriers will automatically attach the CG2149 exclusion endorsement. If you have clients who are moving a policy from a standard admitted market to an E&S lines carrier, it’s critical to request the removal of CG2149 and to replace it with endorsements CG2165 or CG2155 to ensure clients have coverage.

For excess liability policies, it’s important to review all coverage forms in depth, as some will exclude total pollution — not by way of a specific endorsement, but by burying the exclusion within the coverage form. As a result, you’ll want to make sure that excess liability policies follow the wording found in the underlying commercial general liability policy with respect to pollution, or ask whether the carrier has attached their own hostile fire exception endorsement.

Take Note!

  • The CG2165 and CG2155 endorsements apply to the commercial general liability coverage part of the contract — on either a monoline or package policy — and are subject to the commercial general liability policy’s limits and deductibles.
  • Typically, there is no additional cost to the insured to add the endorsements.
  • The CG2165 and CG2155 endorsements are NOT pollution liability coverage forms, as they narrowly apply to hostile fire. Coverage for true pollution risk exposures would need to be secured separately under a pollution liability policy.

Unfortunately, highly nuanced endorsements like CG2165 and CG2155 are often overlooked. By addressing these critical coverages, you can provide clients and their insureds with the protection they need. To learn more about these endorsements, please contact Melanie Phillipp, Vice President, Broker. Email or call 818-378-4883.

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