Per project aggregate endorsement

A per-project aggregate endorsement modifies a commercial general liability (CGL) policy, applying a separate aggregate limit to each construction job, rather than spreading one shared aggregate across all of a contractor's jobs for a policy period (typically one year).

This coverage protects your small business against expensive lawsuits and claims over:

• Third-party bodily injuries, including medical expenses, if a customer slips and falls at a jobsite
• Third-party property damage, like flooding a client's kitchen during renovations
• Damage to premises rented to you, such as a fire at a rented jobsite trailer
• Personal and advertising injuries, including defamation and copyright infringement

You may need separate insurance limits for a single project to prevent claims on other jobs from draining your coverage for the rest of your CGL policy period. A per-project aggregate limit helps you:

• Avoid cross-project depletion: If a catastrophic claim or several lawsuits arise on one job, the payouts won't deplete the coverage limits for your other jobs.
• Meet contractual requirements: General contractors, project owners, and big-budget clients often contractually require this endorsement to protect their projects.
• Cover high-risk projects: Between injuries, property damage, and product defects, construction projects come with many high risks. It's important to have equal coverage on each job site to cover these liabilities.
• Protect profit margins: Without this endorsement, a major claim could drain your general aggregate limit, forcing you to pay for damages and legal costs out of your own pocket.

Yes, CG 25 03 is the specific insurance form that puts a per-project aggregate endorsement into effect. To break this down a bit:

• Per-project aggregate endorsement is the general term for this type of coverage.
• CG 25 03, officially titled Designated Construction Project(s) General Aggregate Limit, is the standard Insurance Services Office (ISO) form that insurers attach to a policy to create this coverage.

A similar endorsement form, CG 25 04 (Designated Locations General Aggregate Limit), can be used to modify general liability coverage as well. This per-location aggregate endorsement ensures that your policy's aggregate limit is applied separately to each specific property you rent or own, making it useful for retail stores and other businesses with multiple locations.

A per-project aggregate endorsement affects how the aggregate limit is applied, not the size of any individual coverage limit. A standard business policy's general aggregate limit is one pot of money shared by all claims for the policy period. You can find this limit stated in your policy's declarations page.

Here's how each limit works when the endorsement is added:

• Per-occurrence limit: The maximum amount most insurance policies pay for claims from a single incident. The per-project endorsement doesn't change that amount.
• General aggregate limit: If the policy has a $2 million aggregate limit, the per-project endorsement gives each designated project its own $2 million limit.

Let’s say a construction company has a $2 million general aggregate limit and is running three projects, all listed on a CG 25 03 per-project aggregate endorsement.

• Project A: Scaffolding collapses and injures a pedestrian, resulting in a $1.5 million settlement.
• Project B: During demolition, debris damages a client’s parked car and adjacent landscaping, leading to a $400,000 settlement.
• Project C: An electrician’s faulty wiring causes a fire that damages a portion of the building under construction, resulting in a $1 million payout.

Since the policyholder’s per-project aggregate endorsement provides $2 million for each project, all of these claims would be covered.

Keep in mind, the per-occurrence limit would still apply. If any of those claims were to exceed that limit, the construction company would need to pay the remainder out of its own pocket or would need additional coverage from an excess insurance policy or an umbrella liability policy.

A per-project aggregate endorsement is a crucial part of risk management for businesses managing simultaneous projects, and is often required in the construction and real estate industries. Here are some situations where it’s essential:

• General contractors overseeing multiple jobsites need to avoid letting an accident at one site deplete the funds needed to protect other projects.
• Subcontractors, including painters, plumbers, carpenters, and other specialists working on several jobs per year, need to protect active limits across each job.
• Installation contractors installing equipment, solar panels, or HVAC systems across multiple sites need to ensure one project’s mishap doesn’t reduce the coverage needed for the rest.
• Architects and engineers use a per-project endorsement for jobsite visits or on-site services across multiple projects. If they need coverage for design and consulting errors, however, they will need professional liability insurance, also called errors and omissions (E&O) insurance.

There’s no legal requirement to carry a per-project aggregate endorsement. However, many contractors and businesses need to carry one to meet contractual terms set by clients, general contractors, lenders, or bonding companies.

Even without a contractual obligation, you should consider adding one if you have:

• Multiple projects running simultaneously. The more active jobsites, the more exposure a single claim has to drain coverage needed elsewhere.
• A larger business with more liability exposure. Bigger operations generally face more claims, increasing the risk of a shared aggregate running out.
• Large-scale projects, budgets, and timelines. Higher-value, longer-running jobs mean more time and more at stake if the aggregate is drained mid-project.