11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- Coverage A exclusions a-q each have carve-backs; learn the exclusion and what coverage is restored.
- The business-risk exclusions (j-l) bar repair of the insured's own product/work but cover resulting third-party damage.
- The 'Your Work' exclusion has a subcontractor exception that restores coverage when a sub did the work.
- Pollution, employer's liability, auto/aircraft, and liquor (business) losses need separate policies or endorsements.
- Match additional-insured endorsements to the exposure: CG 20 10 covers ongoing operations, CG 20 37 covers completed operations.
Reading the Exclusions in Coverage A
The CGL's Coverage A (Bodily Injury and Property Damage) lists exclusions a. through q. Exam writers love them because each has carve-backs (exceptions that restore coverage). The strategy: learn the exclusion, then learn what the policy gives back. Many losses that look excluded are actually covered through an exception, and vice versa.
High-Yield Coverage A Exclusions
| Exclusion | Bars coverage for | Key carve-back / note |
|---|---|---|
| a. Expected or Intended Injury | Harm the insured expected or intended | Exception for reasonable force to protect persons/property |
| b. Contractual Liability | Liability assumed in a contract | Exception for an 'insured contract' and liability the insured would have anyway |
| c. Liquor Liability | Insureds in the business of selling/serving alcohol | Host-liquor (non-business) exposure stays covered |
| e. Employer's Liability | Injury to an employee in the course of employment | Covered by Workers Comp / Employers Liability instead |
| g. Aircraft, Auto, Watercraft | Ownership/use of these | Exceptions for small watercraft, parking, mobile equipment |
| j. Damage to Property | Insured's own/rented/cared-for property | Premises-rented fire carve-back |
| k. Damage to Your Product | The insured's own product | Pushes claim to a product-recall or warranty, not CGL |
| l. Damage to Your Work | The insured's completed work | Exception if work was performed by a subcontractor |
The 'Business Risk' Doctrine (j, k, l, m)
Exclusions j through m embody the rule that the CGL is not a performance bond or warranty. It will not pay to repair or replace the insured's own faulty product or workmanship - those are business risks the contractor controls. It will pay for resulting damage to other property or third-party injury. Example: a plumber's bad solder joint is excluded (your work), but the water damage to the homeowner's flooring is covered.
A general contractor's completed roofing work leaks and must be torn out and redone. The same leak also ruins the building owner's inventory inside. Under an unendorsed CGL, what is covered?
Pollution and Other Absolute Exclusions
The Total Pollution Exclusion (and the standard pollution exclusion f.) removes coverage for the actual, alleged, or threatened discharge of pollutants, plus cleanup costs. Pollution exposure must be bought back through a separate Pollution Liability or CPL/EIL policy. Likewise, war, nuclear, asbestos, lead, and (by endorsement) communicable-disease and silica exposures are commonly excluded - tested as 'this needs a separate policy or endorsement.'
Common CGL Endorsements
- Additional Insured (CG 20 10 ongoing ops / CG 20 37 completed ops): extends coverage to a project owner or upstream party as required by contract.
- Primary and Noncontributory (CG 20 01): makes the insured's policy pay first, ahead of the additional insured's own coverage.
- Waiver of Transfer of Rights / Subrogation (CG 24 04): waives the insurer's recovery rights against a designated party.
- Designated Aggregate (CG 25 03 / CG 25 04): per-project or per-location General Aggregate.
- Amendment of Limits / Reduced Limits: adjusts the schedule on the Declarations.
Worked Trap: Additional Insured Wording
A subcontractor adds the general contractor as an additional insured for ongoing operations only (CG 20 10). A construction-defect claim surfaces two years after the job is complete. Because completed-operations coverage requires the CG 20 37 endorsement (or a combined form), the GC may have no additional-insured protection for the post-completion claim. Always match the endorsement edition and operations type to the contract requirement - a frequent exam and real-world failure point.
An insured is sued for cleanup costs after a fuel spill contaminates neighboring soil. The CGL contains the standard pollution exclusion. What is the most accurate statement?
The Business-Risk Exclusions and the Pollution Bar
Coverage A's exclusions remove business risks the insured controls and harms better insured elsewhere. The "your" exclusions (paragraphs j, k, l, m) are the heart of the business-risk doctrine:
| Exclusion | Removes |
|---|---|
| Damage to your product | The insured's own product that fails |
| Damage to your work | The insured's completed work (subcontractor exception) |
| Damage to property you own/rent/control | Care, custody, or control losses |
| Impaired property / recall (sistership) | Cost to recall or replace a withdrawn product |
Key point: The CGL covers damage the product or work causes to OTHER property and people, not the cost to repair or replace the defective product or work itself — that is a business risk the insured must absorb or insure under warranty/bonds. The completed-operations subcontractor exception restores coverage where the faulty work was done by a subcontractor on the insured's behalf.
The absolute pollution exclusion bars most pollution-related BI/PD, and exclusions for aircraft/auto/watercraft, liquor liability (for those in the business), employers liability/workers comp, war, and expected or intended injury complete the list. Common endorsements add insureds (the CG 20 10 ongoing-operations and CG 20 37 completed-operations additional-insured forms are heavily tested) and amend aggregates per project or per location.
Additional-Insured Wording and the Pollution/Auto Boundaries
Additional-insured endorsements are a steady exam topic because their wording controls the scope of the extended protection. The two most common construction forms are CG 20 10 (covers the additional insured for the named insured's ongoing operations) and CG 20 37 (covers completed operations once the work is done). A landlord added only on CG 20 10 has no coverage for a claim arising after the project is finished — exactly the kind of distinction a question will hinge on.
Worked trap: A general contractor adds a property owner as an additional insured using CG 20 10 only. Two years after the building is complete, a defect in the contractor's ongoing-operations-era work injures a visitor. Because the loss arises from completed operations, the CG 20 10 (ongoing-ops) endorsement does not respond; CG 20 37 would have been needed.
Two coverage boundaries also recur. The absolute pollution exclusion removes most pollution BI/PD, pushing those exposures to a separate pollution-liability policy. The auto, aircraft, and watercraft exclusion keeps the CGL from doubling as auto coverage — bodily injury from the insured's owned auto is the commercial auto policy's job, not the CGL's — though incidental, non-owned watercraft and certain mobile equipment are carved back in. Matching the right endorsement or policy to each exposure is the skill these questions measure.