Designated Premises Endorsement and Necessary and Incidental Operations

The standard commercial general liability (CGL) form usually provides insurance coverage for the on-premises and off-premises operations of the named insured. However, this comprehensive coverage can be limited by endorsements attached to the CGL form. One such endorsement is CG 21 44, Limitation of Coverage to Designated Premises or Project—the designated premises endorsement. This endorsement played a definite role in a recent Massachusetts appeals court ruling. The case is United States Liability Insurance Company v. Harbor Club, Inc., 2010 WL 841287 (Mass.App.Ct.).

The insured, Harbor Club, did business as Trader Ed's, a restaurant in Hyannis . Trader Ed's was sued by Kimberly Mooney, an invitee to an off-premises party (more than 60 miles from the restaurant) hosted by Trader Ed's. She suffered injuries when a gas grill exploded. The insured submitted a claim for defense and indemnification to the insurer, United States Liability Insurance Company. The insurer declined coverage and filed a declaratory judgment action seeking a judgment that the designated premises endorsement attached to the liability policy provided a proper basis for the denial of coverage. The trial court sided with the insurer and this appeal followed.