Key CGL Exclusions and Endorsements
Key Takeaways
- Coverage A exclusions move exposures to the right policy (auto, WC, pollution) or exclude uninsurable business risk.
- The business-risk exclusions (k/l/m/n) bar repair/replacement of the insured's own product or faulty work but not resulting damage to other property.
- The subcontractor exception restores 'your work' completed-operations coverage when a sub performed the work.
- The insured-contract exception restores contractual liability for defined agreements such as leases and hold-harmless clauses.
- Per-location (CG 25 04) and per-project (CG 25 03) endorsements multiply the general aggregate so one site's losses do not strip the others.
Reading the Exclusions in Coverage A
Section I - Coverage A (Bodily Injury and Property Damage) of CG 00 01 contains a lettered list of exclusions (a through n). The exam concentrates on a handful that recur in practice. Many of these exclusions exist because the exposure belongs in a different policy (auto, workers' comp, pollution, professional liability) or because it is an uninsurable business risk rather than fortuitous loss.
A useful mental model: the CGL is a third-party liability form covering accidental harm the insured causes to others. Exclusions strip out (1) exposures duplicated by another commercial policy, (2) intentional or expected acts that are not fortuitous, and (3) the insured's own business risk - its product, its work, and the economic consequences of its defects. Knowing which of those three buckets an exclusion serves usually answers the question without memorizing the letter.
The Most-Tested Coverage A Exclusions
| Exclusion (CG 00 01) | What it removes | Why / where covered instead |
|---|---|---|
| a. Expected or Intended Injury | Intentional harm by the insured | Self-inflicted/moral hazard; reasonable-force exception for protection of persons/property |
| b. Contractual Liability | Liability assumed under contract | Exception for 'insured contracts' restores coverage |
| e. Employer's Liability | BI to an employee in the course of employment | Belongs in Workers' Comp / Employers Liability |
| f. Pollution | BI/PD from release of pollutants | Needs a pollution liability policy (CPL) |
| g. Aircraft, Auto or Watercraft | Loss from owned/operated autos, aircraft, large boats | Belongs in commercial auto / aviation / marine |
| j. Damage to Property | Insured's own/cared-for property | Property, not liability, exposure |
| k. Damage to Your Product | The insured's own product | Business risk - covered by warranty, not GL |
| l. Damage to Your Work | The insured's completed work | The 'business risk' exclusions |
| m. Impaired Property | Loss of use of non-defective property | Economic/business-risk loss |
Business-Risk ("Your Product / Your Work") Exclusions
Exclusions k, l, m, and n are the business-risk exclusions. The CGL is not a performance bond or product warranty: it does not pay to repair or replace the insured's own defective product or faulty workmanship. It does pay when that defect causes injury to a person or damage to other property.
Classic trap: a contractor installs a faulty water heater that bursts. Replacing the heater (the insured's product/work) is excluded; the resulting water damage to the homeowner's floors and furniture (other property) is covered. The subcontractor exception within exclusion l restores coverage for completed-operations damage to 'your work' when the damaged work or the work that caused the damage was performed by a subcontractor.
Contractual Liability and "Insured Contracts"
Exclusion b removes liability the insured assumes by contract - but the insured contract exception restores it for six defined contract types, most importantly leases of premises, easement/license agreements, and the part of any contract that assumes another party's tort liability (a hold-harmless/indemnity agreement). This is why a tenant's CGL can respond to a landlord's hold-harmless clause, and why exam questions hinge on whether the agreement fits the 'insured contract' definition.
Common CGL Endorsements
| Endorsement | Form | Effect |
|---|---|---|
| Additional Insured - Owners, Lessees or Contractors | CG 20 10 | Adds the named party as insured for ongoing operations |
| Additional Insured - Completed Operations | CG 20 37 | Extends AI status to completed-operations claims |
| Amendment of Limits / Designated Location Aggregate | CG 25 04 | Provides a per-location general aggregate |
| Designated Construction Project Aggregate | CG 25 03 | Provides a per-project general aggregate |
| Total Pollution Exclusion | CG 21 49 | Broadens the pollution exclusion to near-absolute |
| Liquor Liability Exclusion | CG 21 50 | Removes host/commercial liquor exposure |
The per-location (CG 25 04) and per-project (CG 25 03) aggregate endorsements are heavily tested: they multiply the general aggregate so that exhausting it at one site does not strip coverage at the insured's other sites or projects.
Worked Trap - Per-Location Aggregate
A property manager with a $2,000,000 general aggregate and the CG 25 04 Designated Locations General Aggregate endorsement covering three buildings effectively has a separate $2,000,000 general aggregate at each location - up to $6,000,000 of total general-aggregate capacity across the three. Without the endorsement, a $2,000,000 loss at Building A would exhaust the entire policy aggregate and leave Buildings B and C with no general-aggregate coverage for the rest of the term.
The Three Buckets of CGL Exclusions
Rather than memorize letters a through n, sort each exclusion into one of three buckets: exposures duplicated by another policy (auto, watercraft, aircraft, employer's liability, pollution), non-fortuitous acts (expected or intended injury), and the insured's own business risk (its product, its work, impaired property). This framework answers most exclusion items because the question usually asks why something is excluded or where it is covered instead - and that is exactly what the bucket tells you.
Worked Business-Risk Trap
A contractor installs a defective valve that later bursts. Replacing the valve (the insured's product and work) is excluded as business risk; the resulting water damage to the customer's flooring and inventory (other property) is covered third-party property damage. The subcontractor exception in exclusion l restores completed-operations coverage for damage to the insured's work when a subcontractor performed the work or caused the damage.
Pairing this with the insured-contract exception to the contractual-liability exclusion - which restores coverage for tort liability assumed in leases and hold-harmless agreements - covers the two most common CGL exclusion questions on the exam.
A plumbing contractor installs a defective valve. The valve fails, the contractor must replace the valve, and escaping water damages the customer's hardwood floors. Under the unendorsed CGL Coverage A, which is true?
Which endorsement provides a separate general aggregate limit for each designated construction project, so that losses at one project do not erode the aggregate available at others?