Key CGL Exclusions and Endorsements
Key Takeaways
- Coverage A exclusions (a)-(q) route risks to other policies: WC/EL to workers comp, auto/aircraft/watercraft to specialty forms, pollution to environmental coverage.
- Business-risk exclusions (j, k, l, m) bar repair of the insured's own product/work/impaired property but cover resulting injury and damage to others' property.
- Exclusion (b) excludes assumed liability but carves back 'insured contracts,' including hold-harmless/indemnity agreements - the basis for additional-insured requirements.
- Additional Insured endorsements differ: CG 20 10 = ongoing operations, CG 20 37 = completed operations; CG 20 01 makes coverage primary/noncontributory.
- CG 25 03 (per project) and CG 25 04 (per location) multiply available General Aggregates and cure single-aggregate exhaustion exposure.
Where the CGL Stops Covering
Coverage A's insuring agreement is broad, then Section I exclusions (a) through (q) carve it back. The exam tests the named exclusions and the common endorsements that buy some of them back. Understanding why each exclusion exists - usually because the loss belongs on a different policy or is uninsurable as a moral hazard - is the fastest way to answer trigger-and-exclusion questions.
The Tested Coverage A Exclusions
| Exclusion | What it removes | Where the risk belongs |
|---|---|---|
| (a) Expected or Intended Injury | Deliberate harm (self-defense excepted) | Uninsurable / moral hazard |
| (b) Contractual Liability | Liability assumed by contract (carve-back for 'insured contracts') | Negotiated indemnity |
| (d) Workers Compensation | Obligations under WC/disability laws | Workers comp policy |
| (e) Employer's Liability | Injury to an employee in the course of employment | WC Part Two / EL |
| (f) Pollution | Most pollution release BI/PD | Pollution liability policy |
| (g) Aircraft, Auto, Watercraft | Ownership/use of autos, aircraft, large boats | Commercial/business auto, aviation, marine |
| (j) Damage to Property | Insured's own property, property in care/custody/control | First-party property forms |
| (k) Damage to Your Product | The insured's product itself | Performance/warranty, not liability |
| (l) Damage to Your Work | The insured's completed work itself | Builders risk / warranty |
| (m) Impaired Property | Loss of use of non-defective property | Business risk, not CGL |
The 'Business Risk' Exclusions (j, k, l, m)
The most heavily tested cluster. The CGL is a liability policy, not a performance guarantee. It excludes Damage to Your Product (k) and Damage to Your Work (l) because repairing one's own faulty product or workmanship is a cost of doing business, not a covered liability. However, the policy does cover resulting bodily injury or damage to other property. Trap: a manufacturer's defective brake fails and damages the customer's car - the brake (your product) is excluded, but the damage to the rest of the car is covered.
The Insured Contract Carve-Back
Exclusion (b) removes liability assumed under contract, then gives it back for an 'insured contract' - a defined term including leases of premises, sidetrack agreements, easement/license agreements, obligations under municipal ordinance, elevator maintenance agreements, and the big one: the part of any contract where the insured assumes another's tort liability (a hold-harmless/indemnity agreement). This is why a general contractor can be required to add a project owner as an additional insured and assume defense - the CGL responds because the indemnity is an 'insured contract.'
A flooring contractor installs tile that later cracks due to faulty installation, and the cracking also damages the homeowner's hardwood subfloor installed by a different trade. Under an unendorsed ISO CGL, what is covered?
Common CGL Endorsements
- Additional Insured (CG 20 10 / CG 20 37): extends coverage to another party (e.g., a project owner or landlord). CG 20 10 covers ongoing operations; CG 20 37 covers completed operations. Contractors frequently need both to satisfy a contract.
- Primary and Noncontributory (CG 20 01): makes the named insured's coverage primary and stops it from sharing with the additional insured's own policy.
- Waiver of Transfer of Rights of Recovery (CG 24 04): the insured waives subrogation against a designated party, common in construction contracts.
- Designated Premises/Operations (CG 21 44): limits coverage to scheduled locations or operations.
- Aggregate Limits Per Project/Location (CG 25 03 / CG 25 04): gives each project or location its own General Aggregate.
Per-Project / Per-Location Aggregate - A High-Value Endorsement
Normally one General Aggregate covers all of the insured's projects combined. A busy contractor working ten jobs could exhaust the single aggregate on one bad project, leaving the other nine bare. The Designated Construction Project(s) General Aggregate Limit (CG 25 03) or Designated Location(s) (CG 25 04) endorsement establishes a separate General Aggregate for each scheduled project or location, dramatically increasing total available limits. Exam questions present this as the cure for aggregate-exhaustion exposure.
Worked Example - Per-Project Aggregate Value
A contractor has a $2,000,000 General Aggregate and runs four projects. Without endorsement, all four share the one $2,000,000 cap - a single catastrophic project loss can consume it. With the CG 25 03 Per-Project Aggregate, each of the four projects gets its own $2,000,000 General Aggregate, so the total potential aggregate exposure rises to $8,000,000 ($2M x 4) for the same per-occurrence limit. This is why owners and lenders demand it in construction contracts.
Pollution and the 'Absolute' Exclusion
Exclusion (f) is so broad it is nicknamed the absolute pollution exclusion. It bars bodily injury and property damage from the discharge, dispersal, seepage, migration, release, or escape of pollutants - and even bars cleanup costs demanded by a governmental authority. Narrow exceptions exist (for example, certain hostile-fire situations or specified products), but the practical takeaway for the exam is that pollution exposure must be insured under a separate Pollution Liability policy or a pollution buyback endorsement, not the unendorsed CGL.
Reading an Exclusion Question
When an exam item describes a loss, work the logic in order: (1) Is there an occurrence causing bodily injury or property damage during the policy period? (2) Does an exclusion remove it? (3) Does an exception or endorsement give it back? Most missed questions skip step three - the contractual-liability exclusion's insured-contract carve-back and the resulting-damage exception to the business-risk exclusions are the carve-backs that flip a 'not covered' answer to 'covered.'
A general contractor's certificate of insurance must show that the project owner is protected as an additional insured for both ongoing and completed operations, that the contractor's policy responds first without sharing, and that each construction project has its own General Aggregate. Which combination of endorsements best satisfies this?