11.3 Key CGL Exclusions and Endorsements

Reading Coverage A Exclusions

Coverage A (Bodily Injury & Property Damage) of CG 00 01 lists exclusions a. through q. Because the insuring agreement is broad, the exclusions do most of the work of shaping coverage. The exam concentrates on a handful that pair an exclusion with a severability or a buyback endorsement.

The most-tested Coverage A exclusions are: (a) Expected or Intended Injury; (b) Contractual Liability; (c) Liquor Liability; (d) Workers' Compensation/Employer's Liability; (e) Pollution; (g) Aircraft, Auto or Watercraft; (j) Damage to Property; (k) Damage to Your Product; (l) Damage to Your Work; and (m) Damage to Impaired Property.

The Business-Risk ("Your Work / Your Product") Exclusions

Exclusions j, k, l, and m are collectively the business-risk exclusions. The principle: the CGL covers liability for damage your faulty work causes to other property or persons, but it does not pay to repair or replace your own defective product or work - that is a business cost, not an insurable liability.

• k. Your Product - damage to the product itself is excluded.
• l. Your Work - damage to your completed work arising out of it is excluded; an important exception restores coverage if the damaged work or the cause was performed by a subcontractor on your behalf.
• m. Impaired Property - excludes loss of use of property not physically injured because your product/work is defective.

Trap: a contractor's faulty wiring that burns down the building IS covered (third-party property); rewiring the contractor's own defective panel is NOT.

Other High-Frequency Exclusions and Their Buybacks

The Contractual Liability exclusion has a vital exception: liability assumed under an "insured contract" (leases, easements, sidetrack agreements, elevator maintenance contracts, and the tort liability of another assumed in a contract) IS covered. This is how additional-insured and hold-harmless arrangements work.

Additional Insured Endorsements and Severability

The CG 20 series adds parties as additional insureds - e.g., CG 20 10 (additional insured for ongoing operations) and CG 20 37 (additional insured for completed operations). Contractors typically need both to satisfy a contract that requires coverage during and after the job. The current ISO additional-insured forms limit coverage to the extent required by the written contract and subject to the named insured's limits.

The CGL is written on a severability of interests basis (Conditions): coverage applies separately to each insured, but the limits of insurance are not multiplied - one set of limits applies to all insureds combined. The exam loves to pair severability (separate application of coverage) with the single shared limit (no stacking).

The Business-Risk Exclusions (j, k, l, m)

The CGL's "your work / your product" family of exclusions removes claims for repairing or replacing the insured's own faulty work or product — these are uninsurable business risks, not fortuitous accidents.

Exclusion (k) bars damage to your product; (l) bars damage to your work (with the subcontractor exception for completed operations); (m) bars damage to impaired property that is not physically injured; and (n) is the recall ("sistership") exclusion for withdrawing a product. The covered event is the resulting damage to other property or persons caused by the faulty work, not the cost to fix the work itself.

Additional Insureds and Severability

The separation of insureds (severability) condition applies the policy separately to each insured, so an exclusion triggered by one insured does not automatically bar another's claim — except where an exclusion is written to apply to "any insured." That "any insured" wording is the trap: it reaches all insureds, defeating severability.

Additional insured endorsements (e.g., CG 20 10 for ongoing operations, CG 20 37 for completed operations) extend the named insured's coverage to a landlord, owner, or contractor as required by contract; modern forms limit the additional insured's coverage to liability caused by the named insured and to the lesser of the contractually required limit or the policy limit. Primary and noncontributory wording determines whose coverage pays first.

Pollution, Liquor, and the Buy-Backs

Several high-frequency CGL exclusions have buy-back endorsements the exam expects you to know. The absolute pollution exclusion removes nearly all pollution claims; a limited pollution or hostile-fire exception narrows it.

Liquor liability is excluded for those in the business of selling/serving alcohol (a restaurant needs separate liquor-liability coverage), but a host who only incidentally serves alcohol is not in that business and keeps CGL coverage. Employer's liability/workers' comp is excluded because those belong on the WC policy. Aircraft, auto, and watercraft are excluded because they belong on auto/aviation/marine forms. Each exclusion routes the exposure to its proper policy, which is exactly what the test rewards.