11.3 Key CGL Exclusions and Endorsements

Why the CGL Excludes So Much

The CGL grants broad liability coverage, then narrows it with exclusions that (1) bar uninsurable risk, (2) prevent duplicate coverage belonging on another policy, and (3) curb moral hazard. Coverage A of CG 00 01 contains roughly 15 exclusions, lettered a through q in the form; Coverage B carries its own set. The exam tests exclusions less on memorizing names than on applying the exceptions that restore coverage. For every major exclusion, train yourself to ask: "Is there an exception, and does it apply here?"

Coverage A Exclusions to Master

a. Expected or Intended Injury

BI/PD the insured expected or intended is excluded. Exception: injury from reasonable force to protect persons or property. Trap: the act may be intentional while the injury is not - swinging a hammer is intentional, but accidentally striking a bystander is not an intended injury, so coverage may apply.

b. Contractual Liability

Liability assumed under a contract is excluded, except (1) liability the insured would have without the contract (its own tort liability), and (2) liability assumed in an "insured contract."

c. Liquor Liability

Excluded for businesses in the alcohol trade (manufacture, sale, serving). Social hosts are not excluded. Solution: separate Liquor Liability coverage.

d-e. Workers Comp & Employer's Liability

Excludes WC obligations and BI to an employee arising out of employment - those go to WC / Employers Liability, and wrongful-termination/harassment to EPLI.

More Coverage A Exclusions

f. Pollution - the Hostile-Fire Exception

The pollution exclusion is broad (discharge, dispersal, cleanup of pollutants). Key exception: BI/PD from heat, smoke, or fumes of a hostile fire (one that breaks out from where it was intended to be) is covered. Other pollution needs Environmental/Pollution Liability.

g. Aircraft, Auto, Watercraft - and Mobile Equipment

BI/PD from owning or using aircraft, autos, or watercraft is excluded (use Aviation, Business Auto, Watercraft). But mobile equipment stays covered by the CGL.

j. Care, Custody, or Control (CCC)

Excludes PD to property the insured owns, rents, occupies, or has in its care, custody, or control, and to the particular part being worked on. Exception: the Damage to Premises Rented to You grant covers fire and short-term-rental damage up to a separate limit (typically $100,000).

k-n. Your Product / Your Work / Impaired Property / Recall

• Your product / your work - PD to the insured's own product or completed work is excluded as a business risk, except when the damaged work or its cause was performed by a subcontractor (the heavily tested subcontractor exception).
• Impaired property - loss of use of undamaged property caused by a deficient product/work.
• Recall ("sistership") - costs of withdrawing or recalling products are excluded.

Reading Exclusions the Way the Exam Tests Them

A typical question gives a fact pattern that looks excluded, then rewards the candidate who spots the exception that restores coverage.

Mobile equipment crossover. The same self-propelled crane is mobile equipment (CGL covers it) while working inside a fenced job site, but flips to an auto (excluded, needs Business Auto) when driven on a public highway. Always check where and how the machine was used.

Key Endorsements That Modify the CGL

Exclusions are matched to a solution policy, and several endorsements add back or carve out coverage on the CGL itself:

Why the your-work exclusion has a subcontractor exception. A general contractor cannot fully control a sub's workmanship, so damage caused by a sub's faulty work stays covered - while the GC's own defective work is an uninsurable business risk. This pairing is one of the most frequently tested points in the entire exclusions section.