11.3 Key CGL Exclusions and Endorsements

Why the CGL Excludes So Much

The CGL grants broad coverage and then narrows it with exclusions that (1) bar uninsurable/intentional risk, (2) prevent duplicate coverage belonging on another policy, and (3) reduce moral hazard. Coverage A (CG 00 01) carries roughly 15 exclusions, lettered a through q in the form. Coverage B has its own set. Examiners love to test which policy should respond instead.

Coverage A Exclusions to Master

• a. Expected or Intended Injury - BI/PD the insured expected or intended (self-defense to protect persons/property is preserved).
• b. Contractual Liability - liability assumed in a contract, UNLESS it is an "insured contract" or liability the insured would have anyway by law.
• c. Liquor Liability - applies only to insureds in the business of selling/serving alcohol; covered by separate liquor liability. Host-liquor (the casual party host) IS covered.
• d. Workers Compensation / e. Employers Liability - employee injuries belong on the WC and EL policies, not the CGL.
• g. Auto/Aircraft/Watercraft - operation of these belongs on auto/aviation/marine forms.
• j. Damage to Property - the "care, custody or control" group; damage to property the insured owns, rents, or works on.
• k. Damage to Your Product and l. Damage to Your Work - the business-risk exclusions: the policy is not a warranty on the quality of the insured's own product/work.
• m. Damage to Impaired Property - loss of use of property not physically injured, arising from the insured's defective work or product.

The Pollution Exclusion and Its Exceptions

Exclusion f. Pollution is one of the most litigated provisions. It broadly bars BI/PD from the discharge, dispersal, seepage, migration, release or escape of pollutants. But the form preserves several important carve-backs:

• Hostile-fire exception: BI/PD arising from heat, smoke, or fumes of a hostile fire remains covered (a fire that becomes uncontrollable or escapes its intended place).
• Building-heating exception: fumes from equipment used to heat a building the insured occupies.
• Products in normal use (e.g., a customer using the insured's product as intended).

The Your-Work / Subcontractor Carve-Back

Exclusion l. Damage to Your Work bars claims for damage to the insured's own completed work - but it contains a critical exception: it does not apply if the damaged work, or the work out of which the damage arises, was performed by a subcontractor. This is why general contractors require subcontractors to carry their own CGL and name the GC as additional insured: the carve-back preserves the GC's coverage for a sub's faulty work.

Key CGL Endorsements

Because the base form has gaps, the exam expects familiarity with the most common endorsements that add insureds or modify coverage:

• Additional Insured - Owners, Lessees or Contractors (CG 20 10 / CG 20 37): the workhorse of construction contracts. CG 20 10 covers ongoing operations; CG 20 37 covers completed operations. Both are usually needed to fully protect an upstream party.
• Additional Insured - Managers or Lessors of Premises (CG 20 11): for landlords on a tenant's CGL.
• Primary and Noncontributory (CG 20 01): makes the named insured's coverage primary and bars contribution from the additional insured's own policy - commonly demanded in contracts.
• Waiver of Transfer of Rights of Recovery / Waiver of Subrogation (CG 24 04): waives the insurer's subrogation right against a designated party.
• Amendment of Limits / Designated Locations General Aggregate (CG 25 04): gives each location its own General Aggregate, so one location's losses do not exhaust limits for the others.
• Stop Gap / Employers Liability endorsements in monopolistic WC states.

Trap: An additional insured endorsement does NOT raise limits - the AI shares the named insured's existing limits. To guarantee separate limits per project, use a per-project or per-location aggregate endorsement (CG 25 03 / CG 25 04).

Coverage B Exclusions and Other Restrictions

Coverage B (Personal & Advertising Injury) carries its own exclusions the exam tests separately from Coverage A. It bars injury caused by the insured knowing it was false (the knowing-falsity exclusion), injury arising from a breach of contract, injury from the failure of goods to conform to advertised quality, and the wrong description of the price of goods. It also excludes media and internet businesses and infringement of patent or trade secret (though copyright, trade dress, and slogan infringement in advertising are covered).

Common Coverage-Narrowing Endorsements

Beyond the additive endorsements above, insureds frequently see restrictive endorsements that the exam expects producers to flag for clients:

• Total Pollution Exclusion (CG 21 49): removes even the hostile-fire carve-back, eliminating nearly all pollution coverage.
• Designated Work / Classification Exclusion: carves out a specific operation or class of work.
• Exclusion - Exterior Insulation and Finish Systems (EIFS): common in construction CGLs after widespread EIFS claims.
• Communicable Disease and Abuse/Molestation exclusions: increasingly attached to habitational and care-facility risks.

Putting It Together

When analyzing a CGL claim on the exam, work the issue in order: (1) Is there an occurrence causing BI/PD (Cov A) or a listed offense (Cov B)? (2) Does an exclusion apply? (3) Is there a carve-back (insured contract, hostile fire, subcontractor) that restores coverage? (4) Which limit and aggregate caps the payout? Mastering that sequence answers the large majority of CGL exam questions.