Key CGL Exclusions and Endorsements

Why Exclusions Drive CGL Questions

Coverage A's insuring agreement is broad, so the exclusions (labeled a. through q. in Section I) are what actually shape the coverage. The exam expects you to recognize the major exclusions by name and to know which separate policy or endorsement buys the exposure back. Memorize the function of each exclusion, not the letter, because editions renumber them.

The theme: the CGL is a third-party liability policy for sudden, accidental bodily injury and property damage to others. It is not a performance warranty, not a pollution policy, not auto coverage, and not workers compensation.

Major Coverage A Exclusions

The Business-Risk Exclusions (Your Product / Your Work)

The most misunderstood exclusions are the property-damage business-risk group, often called "j," "k," "l," "m," and "n." Their purpose: the CGL pays when the insured's faulty work damages someone else's property, but it does NOT pay to repair or replace the insured's own defective product or workmanship. That cost is a business risk the contractor controls, not a fortuitous insurable event.

Example: A roofer installs a roof that leaks. Replacing the defective roof (the insured's work) is excluded. But if the leak ruins the customer's inventory inside, that consequential damage to other property IS covered. The subcontractor exception to the "your work" exclusion restores coverage when the damaged work or the work causing damage was performed by a subcontractor - a heavily tested point for general contractors.

Common CGL Endorsements

Endorsements modify the standard form. The most tested:

• Additional Insured - Owners, Lessees or Contractors (CG 20 10 / CG 20 37): adds a project owner or GC as an insured for liability arising out of the named insured's ongoing operations (CG 20 10) or completed operations (CG 20 37). Required by most construction contracts.
• Primary and Noncontributory: makes the named insured's policy pay first, ahead of the additional insured's own coverage.
• Waiver of Transfer of Rights of Recovery (CG 24 04): waives the insurer's subrogation rights against a designated person.
• Designated Locations / Per-Project Aggregate (CG 25 03 / CG 25 04): gives each project or location its own General Aggregate so one bad job does not exhaust limits for all jobs.
• Amendment of Liquor Liability / Exclusions: narrow or broaden specific exclusions.

The per-project aggregate (CG 25 04) is a favorite numeric trap - it multiplies available aggregate limits by the number of projects.

Worked Example - Per-Project Aggregate

A contractor carries a $2,000,000 General Aggregate. Without the per-project endorsement, all jobs in the year share that single $2M. A $2M loss on Project A leaves nothing for Projects B, C, and D.

With the CG 25 04 Designated Construction Project(s) General Aggregate Limit, each designated project gets its own separate $2,000,000 General Aggregate. So a $2M loss on Project A exhausts only Project A's aggregate; Projects B, C, and D each retain a full $2,000,000. If the contractor runs four designated projects, the effective annual aggregate capacity becomes up to $8,000,000 - though each project's Each Occurrence limit still caps any single loss at $1,000,000.

This is why owners and lenders demand the per-project endorsement: it prevents one claimant from consuming the limits everyone else relies on.

The Key CGL Exclusions and Business-Risk Logic

Coverage A carries a roster of exclusions built on the principle that the CGL insures liability to others, not the insured's own business risk. The 'business-risk' exclusions bar damage to the insured's own product, the insured's own completed work (the work-itself exclusion, subject to the subcontractor exception), impaired property, and the cost to recall a product (the 'sistership' exclusion). These push faulty-workmanship costs back onto the contractor rather than the liability insurer.

Other exclusions are categorical: expected or intended injury, contractual liability (except an 'insured contract'), liquor liability for those in the business of serving alcohol, workers compensation and employer's liability (covered elsewhere), auto/aircraft/watercraft (the CGL is premises-and-operations, not auto), pollution, and damage to property in the insured's care, custody, or control.

Frequently added endorsements adjust this: Additional Insured endorsements extend coverage to landlords, lessors, or project owners; Primary and Noncontributory wording governs how the CGL responds alongside another policy; and a Waiver of Subrogation prevents the insurer from pursuing a party the insured agreed by contract not to sue. Matching the exclusion to the business-risk rationale is the fastest way to resolve a CGL coverage question.