11.3 Key CGL Exclusions and Endorsements

Why the CGL Excludes So Much

The CGL is a broad coverage grant narrowed by exclusions that (1) bar uninsurable risk, (2) prevent duplicate coverage belonging on another policy, and (3) reduce moral hazard. Coverage A carries roughly 15 exclusions (lettered a-q on the form); Coverage B has its own set. The exam tests application of exceptions more than memorization of names.

Coverage A Exclusions to Master

• a. Expected or Intended Injury. Excludes BI/PD the insured expected or intended. Exception: injury from reasonable force to protect persons or property. Trap: the act may be intentional while the injury is accidental - swinging a hammer is intentional, but accidentally striking a bystander is not an intended injury.
• c. Liquor Liability. Excluded for businesses in the alcohol trade (manufacture, sale, serving). Social hosts are not excluded. Solution: separate Liquor Liability coverage.
• d-e. Workers Comp / Employer's Liability. Excludes any WC obligation and BI to an employee arising out of employment - those go to WC and Employers Liability.

Contractual Liability and the Six "Insured Contracts"

Exclusion b bars liability the insured assumes under a contract, except: (1) liability the insured would have without the contract (its own tort liability), and (2) liability assumed in an "insured contract."

Pollution - the Hostile-Fire Exception

Exclusion f is very broad (cleanup, discharge, dispersal of pollutants). Key exception: BI/PD caused by heat, smoke, or fumes from a hostile fire (a fire that breaks out from where it was intended to be) is covered. Gradual seepage, groundwater contamination, and government-ordered cleanups require separate Environmental/Pollution Liability.

Aircraft, Auto, Watercraft - and Mobile Equipment

Exclusion g removes BI/PD from owning or operating aircraft, autos, or watercraft (use Aviation, Business Auto, or Watercraft policies). But mobile equipment - forklifts, bulldozers, cranes used at a site - remains covered by the CGL.

Business-Risk Exclusions: Your Product and Your Work

The "business-risk" exclusions reflect a core principle: the CGL covers liability for damage to others, not the cost of redoing the insured's own defective work or replacing its own defective product. Those are business risks controlled through quality and warranty.

• k. Damage to Your Product. PD to the insured's own product is excluded.
• l. Damage to Your Work. PD to the insured's completed work is excluded, except when the damaged work, or the work that caused the damage, was performed by a subcontractor - the heavily tested subcontractor exception.
• m. Impaired Property. Loss of use of property not physically injured, caused by a deficient product or work.
• n. Recall ("sistership"). Costs of withdrawing or recalling products are excluded.

Care, Custody, or Control (Exclusion j)

Excludes PD to property the insured owns, rents, occupies, sells, loans, or has in its care, custody, or control, plus the particular part being worked on. Exception: the Damage to Premises Rented to You grant covers fire (and short-term rental) damage up to a separate limit, typically $100,000.

Spotting the Exception That Restores Coverage

Exclusion questions usually present a fact pattern that looks excluded, then reward the candidate who identifies the exception that restores coverage. For each major exclusion, ask: "Is there an exception, and does it apply here?"

Mobile Equipment vs. Auto - the Classic Crossover

A vehicle is mobile equipment (CGL-covered) if it is land machinery used at a job site and not subject to motor-vehicle registration. The same machine flips to an auto (excluded; needs Business Auto) if it travels public roads under its own power. Worked example: a self-propelled crane inside a fenced job site is mobile equipment under the CGL; the same crane causing damage while driven on a public highway is treated as an auto and is excluded.

Exclusion-to-Solution Cheat Sheet and Key Endorsements

Most CGL exclusions exist because the exposure belongs on a different policy. Know the substitute coverage.

Endorsements That Add Insureds or Modify Aggregates

• CG 20 10 - Additional Insured (Owners, Lessees, Contractors). Independent contractors, subcontractors, and other additional insureds are not automatic - each must be added by endorsement, commonly CG 20 10 for ongoing operations (CG 20 37 for completed operations).
• CG 25 03 / CG 25 04 - Per Project / Per Location Aggregate. Split the shared General Aggregate so one project or site cannot exhaust protection for the rest.

The Separation of Insureds condition means an exclusion triggered by one insured's conduct (e.g., an employee's intentional act) does not automatically void coverage for an innocent insured.