11.3 Key CGL Exclusions and Endorsements

Why the CGL Excludes So Much

The CGL is a broad coverage grant deliberately 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 through q in the form); Coverage B has its own set. The exam tests application of exceptions far more than memorization of names. For each major exclusion, train yourself to ask: Is there an exception, and does it apply to these facts?

The single biggest trap is a fact pattern that looks excluded but contains an exception that restores coverage.

Coverage A Exclusions You Must Master

• a. Expected or Intended Injury - excludes BI/PD the insured expected or intended. Exception: reasonable force to protect persons or property. Note the act can be intentional while the injury is not.
• b. Contractual Liability - excludes liability assumed under contract, except the insured's own tort liability and liability assumed in an insured contract (six named contracts).
• c. Liquor Liability - excludes businesses in the alcohol trade; social hosts are NOT excluded. Solution: separate Liquor Liability policy.
• d-e. Workers Comp / Employer's Liability - employee injuries go to WC and Employers Liability; employment practices go to EPLI.
• f. Pollution - very broad, but the hostile-fire exception preserves BI/PD from heat, smoke, or fumes of a hostile fire.
• g. Aircraft/Auto/Watercraft - excluded (use Aviation, Business Auto, Watercraft), but mobile equipment is covered.
• j. Care, Custody, or Control - excludes PD to property in the insured's care, except the Damage to Premises Rented to You grant (fire, ~$100,000).
• k-n. Your Product / Your Work / Impaired Property / Recall - business-risk exclusions; the subcontractor exception to the your-work exclusion is heavily tested.

The Six Insured Contracts (Exception to the Contractual Exclusion)

The contractual-liability exclusion (b) does NOT apply to liability assumed in an insured contract. Memorize all six - the exam likes to slip a non-listed agreement into the answer choices:

Liability the insured would have had even without the contract (its own tort liability) is also preserved. The exclusion only bites when the insured adds liability by contract that is not on this list.

Exception-Restores-Coverage Cheat Sheet

This is the highest-yield exclusions table on the exam. Each major exclusion pairs with an exception that can put coverage back.

Mobile equipment vs. auto - the classic crossover. A self-propelled crane working inside a fenced job site is mobile equipment (covered by the CGL). The same crane causing damage while driven on a public highway under its own power is treated as an auto and is excluded - the contractor needs Business Auto for that exposure. Always check where and how the machine was used.

The Most-Tested CGL Exclusions

The CGL withdraws coverage through a long exclusion list; the exam focuses on these:

The Business-Risk Exclusions

The "your product," "your work," and "impaired property" exclusions embody the principle that a CGL covers third-party damage caused by the insured's faulty work, not the cost to repair the insured's own defective product or work — that is a business risk the insured controls. A subcontractor exception narrows the "your work" exclusion so a general contractor retains coverage for damage caused by a subcontractor's faulty work.

Frequently Added Endorsements

Common CGL endorsements add coverage the base form excludes or restrict it: Additional Insured forms (landlords, vendors, owners by contract), Liquor Liability, Employee Benefits Liability, Limitation of Coverage to Designated Premises, and Amendment of Aggregate (per-project or per-location aggregates). Recognizing that business-risk losses are excluded, but third-party damage from faulty work is covered, resolves the majority of CGL exclusion questions.

Coverage B Exclusions and the Exclusion-to-Solution Map

Coverage B (Personal & Advertising Injury) has its own exclusions: knowing violation of another's rights, material published with knowledge of falsity, material first published before the policy began, criminal acts, claims about quality/performance/price of goods, patent/trademark/trade-secret infringement (copyright, trade dress, and slogans in an ad are still covered), and insureds in the media business.

When an exposure is excluded, the candidate should know which policy picks it up:

Endorsements That Modify the CGL

The exam expects familiarity with the common ISO endorsements that broaden, restrict, or restructure the base form:

• CG 20 10 - Additional Insured (Owners, Lessees, or Contractors): adds a party (often a project owner) as an insured for the insured's ongoing operations. Independent contractors, subcontractors, and additional insureds are NOT automatic insureds - each needs an endorsement.
• CG 25 03 / CG 25 04 - Per Project / Per Location Aggregate: split the General Aggregate as covered in 11.1.
• CG 00 02: switches the form from occurrence to claims-made.

Trap. Candidates assume a subcontractor is automatically insured under the GC's CGL. It is not - additional-insured status requires the CG 20 10 (or similar) endorsement and is frequently a contract requirement.