11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- The CGL excludes expected or intended injury, contractual liability beyond an insured contract, liquor liability for those in the business, and workers compensation or employers liability obligations.
- Pollution, aircraft, auto, and watercraft liability are excluded so those exposures are placed on specialty or commercial auto policies.
- Damage to the insured's own product, work, or property in its care is excluded because the CGL covers liability to others, not business risk.
- The Personal and Advertising Injury offenses include false arrest, malicious prosecution, libel, slander, wrongful eviction, and copyright infringement in advertising.
- Endorsements like Additional Insured (CG 20 series), Primary and Noncontributory, and Waiver of Subrogation are routinely added to satisfy contract requirements.
Major Coverage A Exclusions
The Coverage A (Bodily Injury and Property Damage) insuring agreement is broad, so a long list of exclusions narrows it. The most tested exclusions push particular exposures onto other policies or bar uninsurable business risk.
| Exclusion | Why it exists / where it belongs |
|---|---|
| Expected or Intended Injury | The CGL covers accidents, not deliberate harm (self-defense excepted) |
| Contractual Liability | Liability assumed in a contract, unless it is an insured contract |
| Liquor Liability | Applies only to those in the business of selling/serving alcohol |
| Workers Compensation / Employers Liability | Belongs on the WC policy, not the CGL |
| Pollution | Needs a specialty environmental policy |
| Aircraft, Auto, Watercraft | Belongs on aviation, commercial auto, or marine policies |
Business-Risk (Own-Property) Exclusions
Because the CGL insures liability to others, it excludes damage to the insured's own product, work, or property. These business-risk exclusions are a recurring exam theme.
- Damage to Your Product: the insured's own product that fails is not covered; that is a quality-control loss.
- Damage to Your Work: faulty workmanship to the insured's completed work (subject to a subcontractor exception).
- Damage to Property: property the insured owns, rents, occupies, or has in its care, custody, or control.
- Recall of Products (Sistership): the cost to recall or withdraw a defective product is excluded.
Exam trap: if a defective product injures a third party or damages other property, that liability is covered; only damage to the product itself is excluded.
Coverage B - Personal and Advertising Injury Offenses
Coverage B responds to specific named offenses rather than accidents. Memorize the list, because questions often ask whether a given act qualifies.
| Offense | Example |
|---|---|
| False arrest, detention, imprisonment | Wrongly detaining a suspected shoplifter |
| Malicious prosecution | Filing baseless criminal charges |
| Wrongful eviction or entry | Improperly locking out a tenant |
| Libel, slander, defamation | Publishing a false statement that harms reputation |
| Violation of privacy | Disclosing private facts |
| Use of another's advertising idea | Copying a competitor's ad concept |
| Copyright, trade dress, slogan infringement in advertising | Reusing a protected slogan in an ad |
Note that patent and trademark infringement are generally not covered offenses, and breach of contract is excluded.
Insured Contract and the Liquor Exception
The contractual-liability exclusion has a key carve-back for an insured contract, which includes leases of premises, easements, contracts required by ordinance, and the part of any contract where the insured assumes another party's tort liability. Liability assumed under an insured contract is brought back into coverage.
The liquor liability exclusion applies only if the insured is in the business of manufacturing, selling, serving, or furnishing alcohol. A company holiday party where alcohol is served gratuitously does not trigger the exclusion, so host liquor liability remains covered - a frequently tested distinction.
Common Endorsements
Endorsements tailor the CGL to satisfy contracts with landlords, general contractors, and clients.
| Endorsement | Effect |
|---|---|
| Additional Insured (CG 20 series) | Extends coverage to a third party (e.g., CG 20 10 for owners/managers, CG 20 37 for completed operations) |
| Primary and Noncontributory | The insured's policy pays first and will not seek contribution from the additional insured's own coverage |
| Waiver of Transfer of Rights (CG 24 04) | Waives the insurer's subrogation rights against a named party |
| Per Project / Per Location Aggregate | Provides separate aggregates per project or site |
Worked example: A subcontractor's $1,000,000 CGL names the general contractor as additional insured with a primary-and-noncontributory endorsement. When a worksite injury suit names both, the sub's policy responds first up to $1,000,000 before the general contractor's own CGL is touched - exactly what the contract required.
A manufacturer's defective heater catches fire, destroying both the heater itself and the customer's adjacent furniture. Under a standard CGL, which loss is covered?
A general contractor requires its subcontractor's CGL to respond before the contractor's own coverage. Which endorsement accomplishes this?
The Subcontractor Exception to Your Work
The Damage to Your Work exclusion bars coverage for the insured's own faulty workmanship, but it contains an important carve-back: the exclusion does not apply if the damaged work or the work that caused the damage was performed by a subcontractor. This subcontractor exception is why general contractors can obtain completed-operations coverage for damage caused by the subs they hire.
Worked example: A general contractor's completed building suffers $200,000 of water damage because a plumbing subcontractor installed a fitting incorrectly. Because a subcontractor performed the faulty work, the Your Work exclusion is set aside, and the general contractor's CGL can respond to the resulting property damage. Had the general contractor's own crew done the work, the exclusion would bar the claim.
Severability and the Separation of Insureds
The CGL applies separately to each insured under the Separation of Insureds condition, except with respect to the limits of insurance. This means one insured's conduct that triggers an exclusion does not automatically void coverage for an innocent insured.
Worked example: Employee A intentionally strikes a customer, an act barred by the Expected or Intended Injury exclusion as to A. The employer, however, did not intend the harm, so the employer may still be covered for vicarious-liability allegations because the policy is read as if each insured had separate coverage. The exam frequently uses this fact pattern to test whether candidates understand that exclusions are applied insured-by-insured, not policy-wide.
Additional Insured Forms and Edition Dates
Additional insured status is granted through specific CG 20 series forms, and the edition date matters because newer editions limit coverage to the extent required by a written contract and exclude the additional insured's sole negligence.
| Form | Who it adds |
|---|---|
| CG 20 10 | Owners, lessees, or contractors - ongoing operations |
| CG 20 37 | Owners, lessees, or contractors - completed operations |
| CG 20 11 | Managers or lessors of premises |
| CG 20 26 | Designated person or organization (broad) |
Exam trap: an additional insured added only by CG 20 10 has coverage for ongoing operations but not completed operations unless CG 20 37 is also attached. Many contracts therefore require both forms so the additional insured is protected after the project is finished.