CGL Endorsements to Avoid

Found an excellent article in one of my insurance journals on endorsements any contractor should avoid. I'll post all three over the next few days.
----------------- article by Chris Boggs at http://www.mynewmarkets.com/article_view.php?id=102583
Contractual Liability Limitation
Insureds regularly enter into contractual relationships to accomplish specific business purposes. However, the unendorsed commercial general liability policy specifically excludes liability assumed by contract ("2. Exclusions: b. Contractual Liability"); but the policy gives back coverage through exceptions to the exclusion.
Only one of the two exceptions to the contractual liability exclusion spells out the parameters by which contractually accepted liability is covered in the CGL. Exception "(2)" states that protection is provided when:
The liability is assumed by an "insured contract;"
The bodily injury or property damage occurs AFTER the execution of the contract;
Defense and other fees are assumed in the contract (indemnify and hold harmless wording required); and
A suit alleges injury or damage covered by the policy.(See "Contractual Risk Transfer Coverage Extended from the Unendorsed CGL" for greater detail.)
The key to the breadth of the exception is the definition of "insured contract." Attachment of the Contractual Liability Limitation (CG 21 39) exclusion alters the definition of "insured contract" by removing the "all other business-related contracts" provision provided by definition "f."
CG 21 39 should be avoided if at all possible. All protection normally available for and extended to many contractually-created indemnitees is deleted by attachment of this exclusion. The list of contracts under which the insured can accept contractually-transferred liability is limited to a short schedule which includes: lease agreements; sidetrack agreements; easement or license agreements; obligations to indemnify a municipality; and an elevator maintenance agreement. NO OTHER CONTRACTS are covered as "insured contracts" when the Contractual Liability Limitation (CG 21 39) is attached.
Altering the definition of "insured contract" by attachment of the CG 21 39 requires the insured to make adjustments to the policy anytime it enters into a contract or agreement not contemplated in the remaining short list of acceptable contracts - provided the insured is aware of the need. The exclusion may lead to the requirement to attach additional insured endorsements, even though not requested, to meet specific contractual provisions and avoid a breach of contract or worse, an uncovered claim.
One reason among several an underwriter may choose to use this drastic exclusion is the breadth of coverage extended to the indemnitee under the contractual liability exception. The sole negligence of the indemnitee (transferor) can be picked up under the unaltered wording ("Contractual Risk Transfer Coverage Extended from the Unendorsed CGL"), making the coverage granted by the unendorsed policy broader than coverage granted by most additional insured endorsements.
Agents can recommend an alternative endorsement to the underwriter wanting to avoid the unknown breadth of protection being accepted in business contracts (normally covered under "f."). The Amendment of Insured Contract (CG 24 26) endorsement redefines the meaning of "insured contract" to match the coverage granted by most additional insured endorsements. The CG 24 26 adds "…provided the 'bodily injury' or 'property damage' is caused, in whole or in part, by you or by those acting on your behalf" to the all other business contract wording provided in "f."; thus requiring the insured be at least partially responsible for causing the injury or damage before coverage extends to the contractual indemnitee.
Avoid the Contractual Liability Limitation (CG 21 39) when possible. Its presence as part of the policy requires other endorsements (additional insured in particular) be attached to meet contractual guidelines. If the underwriter wants some control, offer the Amendment of Insured Contract (CG 24 26) as an alternative.