A

Endorsement CG 24 07 redefines the products-completed operations hazard to include products consumed on the premises where they are sold. The endorsement does not define or even use the term “substantial.” In any case, if the insured is debating whether to use CG 24 07, the insured should not be thinking in a quantitative manner — that is, in a way that measures the need for the endorsement based on how much food or drink is consumed on premises. The key point is whether the exposure to loss is substantial. The insured should decide if it has an exposure to loss to such a degree that the possibility of a loss is not acceptable, monetarily or ethically.

The exposure you describe, a school, should have the endorsement because the students consume the insured's products on the insured's premises, and the potential for a huge loss is obvious. There is no iron-clad rule for an insured to follow in deciding whether to use CG 24 07, but a common sense risk management approach to coverage, an approach that recognizes the risks and loss probabilities unique to the insured, is required.

It should be noted that the CGL form, even without CG 24 07, will give the insured coverage for a bodily injury claim based on the claimant's eating the insured's food on the premises. However, the definition of products-completed operations hazard on the CGL form makes the claim subject to and applied to the insured's general aggregate limit. But if CG 24 07 is attached to the CGL form, changing the definition of products-completed operations hazard, a claim arising out of consuming food or beverages on the insured's premises would be subject to the products-completed operations aggregate limit. Such an approach keeps the general aggregate and the products-completed operations limits separate and enhances the coverage that an insured has and needs.