CG DS 05–PRODUCTS/COMPLETED OPERATIONS LIABILITY DECLARATIONS

(July 2024)

INTRODUCTION

The Insurance Services Office (ISO) provides a sample declarations form which individual insurance companies modify when developing their unique declarations. The declarations must have descriptive language that clearly identifies the covered entity(ies) and the insurance carrier providing the coverage. The declarations must also provide needed information that is referred to within the coverage form. In addition, rate, exposure and premium information is usually provided along with audit status.

GENERAL INFORMATION

This section of the sample declarations form includes the following information:

Policy number
Insurance company name and mailing address
Producer name and mailing address
Named insured and mailing address

Note: The first named insured is treated differently than any other insured named. It is responsible for making premium payments as well as receiving return premiums. It is also the only insured that receives notices of cancellation and other correspondence.

Policy period expressed as month, day and year commencing at 12:01 A.M. at the named insured's mailing address

AGREEMENT

In this section, the insurance company agrees to insure the named insured with the protection provided in the applicable coverage form. That obligation is subject to all that form’s terms and conditions, and in return for the payment of the premium by the named insured.

LIMITS OF INSURANCE

The limits of insurance represent the entire amounts available, regardless of the number of insureds, claims made, suits brought or persons or organizations making claims or bringing suits. Section III–Limits of Insurance in the Products/Completed Operations Liability Coverage Forms explains their applicability This section of the sample declarations includes the following information:

Each Occurrence Limit

Example: Marzipan, Inc. makes confectionary delights. A customer complains to Marzipan that she suffered food poisoning. The company determined that one batch of cookies was contaminated and distributed to 500 customers. All injuries from that cookie batch are considered a single occurrence. The insurance company responds to losses until the policy’s each occurrence limit is exhausted.

Aggregate Limit

Example: Marzipan, Inc. paid a total of $400,000 for the cookie incident. Later that year, a second occurrence resulted in it paying an additional $500,000. Because Marzipan's aggregate limit is $1,000,000, only $100,000 remains to pay any additional losses that occur during the remainder of the policy year.

RETROACTIVE DATE

This provision applies only to CG 00 38–Products Completed/Operations Liability Coverage Form–Claims-Made Basis. Insurance does not apply to any bodily injury or property damage loss that occurs before the retroactive date shown in the space provided. If no retroactive date applies, the word "none" must be entered in the space.

Example: Slide and Swim manufactures toys used with swimming pools. It purchases claims-made products/completed operations coverage because no insurance company is willing to insure the exposure on an occurrence basis. The policy period is 1/1/24 to 1/1/25 but Slide and Swim requests a 1/1/17 retroactive date because that is the date its operations began. The insurance company is willing to provide a 1/1/22 retroactive date and then only if the current carrier provides a letter listing all existing reports of injury since 1/1/22.

DESCRIPTION OF BUSINESS

The form of business must be identified as part of determining exactly who the named insured is. Section II–Who Is an Insured defined insureds based on their form of business. The forms of business are:

Individual
Partnership
Joint Venture
Trust
Limited Liability Company
Organization other than the above, including a corporation

Note: If more than one named insured is involved, more than one form of business may apply.

Example: The named insureds are Bailey Manufacturing, Inc., B&B Partnership and Bailey Family Trust. A checkmark should be entered in the boxes for Partnership, Trust, and Organization other than the above.

CLASSIFICATION AND PREMIUM

This section provides the actual rating for the coverages provided. This is particularly important on policies subject to audit. The named insured must understand the premium base(s) used for rating and the rates used to calculate the premium(s) to prepare for audit. If the premium base changes, the premium also changes. A separate schedule may be used because the space available is limited. The information included in this section is:

Classification description(s)
Classification description(s) corresponding code number(s)
Premium base(s)
Rate(s)
Advance premium(s)
State or other tax, if any apply
Total premium subject to audit, if audit applies
The premium is payable at inception, or at each anniversary if the policy period is more than one year and the premium is paid in annual installments
Audit period, if applicable can be annual, semi-annual, quarterly or monthly

ENDORSEMENTS

Any endorsements included at the time the policy is issued are listed in this section. Subsequent endorsements issued after policy issuance obviously cannot be listed in this section but are included by inference.

STATEMENT

The ISO Advisory Declarations includes a statement in this section that provides that the declarations, along with the common policy conditions, coverage forms and any endorsements, completes the numbered policy referred to above.