11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- CGL Coverage A has roughly 15 exclusions; the tested point is usually the built-in exception (reasonable-force, insured-contract, hostile-fire, subcontractor).
- The contractual liability exclusion preserves coverage for the six 'insured contracts' and for the insured's own tort liability.
- Damage to your product/your work are business-risk exclusions; the your-work exclusion has a subcontractor exception that protects general contractors.
- The pollution exclusion is broad but keeps coverage for BI/PD from heat, smoke, or fumes from a hostile fire.
- Endorsements such as CG 20 10/20 37 (additional insured), CG 24 04 (waiver of subrogation), and CG 25 03 (per-project aggregate) tailor the CGL to contract requirements.
Why the CGL Excludes So Much
The CGL grants broad coverage and then narrows it with exclusions that (1) bar uninsurable conduct, (2) prevent duplicate coverage belonging on another policy, and (3) limit moral hazard. Coverage A contains roughly 15 exclusions, lettered a-q on CG 00 01. The exam concentrates on a handful of them and their built-in exceptions - because the exception is usually the tested point.
| Exclusion | Routes the risk to / bars |
|---|---|
| Expected or intended injury | Bars deliberate harm (uninsurable) |
| Contractual liability | Liability assumed by contract |
| Liquor liability | Liquor Liability policy |
| Workers comp / employer's liability | WC and Employers Liability / EPLI |
| Pollution | Environmental/Pollution Liability |
| Aircraft, auto, watercraft | Aviation / Business Auto / Watercraft |
| Damage to your product / your work | Insured's own goods and workmanship |
The Exclusions With Critical Exceptions
Expected or Intended Injury
BI or PD the insured expected or intended is excluded - except BI from the use of reasonable force to protect persons or property.
Trap: the act may be intentional while the injury is not. Swinging a hammer is intentional; accidentally hitting a bystander is not an intended injury, so coverage can still apply.
Contractual Liability - the Insured-Contract Exception
Liability the insured assumes under a contract is excluded, except (1) liability the insured would have had anyway in tort, and (2) liability assumed in an "insured contract."
| The six insured contracts | |
|---|---|
| Lease of premises | Sidetrack (railroad) agreement |
| Easement or license agreement | Obligation to indemnify a municipality |
| Elevator maintenance agreement | Tort liability assumed in a business contract |
Pollution - the Hostile-Fire Exception
The pollution exclusion is very broad, but BI/PD caused by heat, smoke, or fumes from a hostile fire (a fire that breaks out from where it was intended to be) remains covered.
Business-Risk Exclusions: Your Product and Your Work
The CGL is third-party coverage and will not pay to repair the insured's own goods or workmanship - those are business risks, not insurable liability.
- Damage to Your Product (k): PD to the insured's own product is excluded. A faulty widget that fails is not covered; injury the widget causes to a third party is.
- Damage to Your Work (l): PD to the insured's completed work arising out of that work is excluded - except if the damaged work was performed on the insured's behalf by a subcontractor. This subcontractor exception is a frequent exam item: a general contractor's CGL can respond when faulty sub work damages the project.
- Care, Custody, or Control (j): excludes PD to property the insured owns, rents, occupies, or has in its care, custody, or control - use an Inland Marine or Bailee policy instead.
| Scenario | Covered by CGL? |
|---|---|
| Insured's defective product injures a customer | Yes (third-party BI) |
| Insured's defective product damages itself | No (your-product exclusion) |
| Subcontractor's faulty work damages the GC's project | Yes (subcontractor exception) |
| Customer's car damaged while in insured garage's care | No (CCC - needs garagekeepers) |
Endorsements That Modify the CGL
Exclusions and gaps are addressed with endorsements. Know these by form number where shown.
- Additional Insured - CG 20 10 / CG 20 37: adds a party (landlord, owner) as an insured. CG 20 10 covers ongoing operations; CG 20 37 covers completed operations. Often required by lease or construction contract.
- Primary and Noncontributory - CG 20 01: makes the named insured's policy pay first and forgo contribution from the additional insured's own coverage.
- Waiver of Transfer of Rights of Recovery (Waiver of Subrogation) - CG 24 04: the insurer gives up subrogation against a named party.
- Liquor Liability: restores coverage excluded for businesses in the alcohol trade.
- Designated Locations / Per-Project General Aggregate - CG 25 03 / CG 25 04: provides a separate aggregate for each project or location, so one bad project does not exhaust the limits protecting the others.
Exam trap: a standard CGL has one General Aggregate shared by all locations. A contractor running ten simultaneous jobs needs CG 25 03 so a single catastrophic project cannot wipe out the aggregate for the rest.
The "Business Risk" Exclusions
Several CGL exclusions exist because they are business risks the contractor should control, not fortuitous insurable losses. The "Your Work," "Your Product," and "Impaired Property" exclusions remove the cost to repair or replace the insured's own defective work or product — the CGL covers resulting damage to other property or persons, not the insured's faulty workmanship itself. The Damage to Property exclusion bars coverage for property in the insured's care, custody, or control.
Key Endorsements: Additional Insured and Primary/Noncontributory
Recurring endorsements: an Additional Insured endorsement (e.g., CG 20 10 for ongoing operations, CG 20 37 for completed operations) extends the named insured's coverage to a project owner or general contractor — heavily required in construction contracts. Primary and Noncontributory language makes the named insured's policy pay first without seeking contribution from the additional insured's own coverage. Also know the pollution exclusion (broad, with limited buy-backs) and the liquor liability exclusion (for those in the business of serving alcohol, requiring separate liquor liability coverage).
A general contractor's completed building suffers water damage because a plumbing subcontractor installed defective pipe. Under the standard CGL 'damage to your work' exclusion, how does coverage respond?
A contractor running several large projects at once wants to ensure that a catastrophic loss on one job site cannot exhaust the General Aggregate that protects all the other jobs. Which endorsement accomplishes this?