11.3 Key CGL Exclusions and Endorsements

Reading Coverage A exclusions

Section I, Coverage A of the CGL (CG 00 01) lists exclusions (a) through (q). The exam rarely asks you to recite letters; instead it gives a fact pattern and asks whether coverage applies and which endorsement could restore it. The unifying theme: the CGL covers fortuitous third-party bodily injury and property damage, not the insured's own business risks, expected acts, or specialized exposures that belong on other forms.

The most-tested standard exclusions

Business-risk vs. liability

A core exam idea is that the CGL will not pay to fix the insured's own faulty work or product - that is a business risk the contractor controls, not an insurable liability. If a roofer's defective shingles leak, the CGL excludes the cost to redo the shingles (Damage to Your Work) but DOES cover resulting damage to the homeowner's furniture and ceiling (third-party property damage). Distinguishing the cost-to-repair-your-work from consequential third-party damage is a frequent trap.

The insured-contract exception

The Contractual Liability exclusion removes liability the insured assumes in a contract - but it carves back 'insured contracts.' These include leases of premises, easement agreements, obligations to indemnify a municipality, and, most importantly, the part of any contract where the insured assumes another party's tort liability (typical hold-harmless/indemnification clauses). Tort liability the insured would have had anyway is never affected by the exclusion. This is why standard construction hold-harmless agreements remain insured under the CGL.

Key additional-insured and coverage endorsements

• CG 20 10 / CG 20 37 - Additional Insured: Owners, Lessees or Contractors. The 20 10 covers ongoing operations; the 20 37 covers completed operations. Contractors often need both to satisfy a contract.
• CG 25 04 / 25 05 - per-project / per-location aggregate (covered in 11.1).
• CG 24 04 - Waiver of Transfer of Rights of Recovery (waiver of subrogation) against an additional insured.
• CG 21 47 - Employment-Related Practices Exclusion, often added to confirm EPLI belongs on its own policy.
• CG 21 96 / 21 06 - silica and similar dust/health-hazard exclusions used for high-exposure trades.

Primary and noncontributory wording

Upstream parties (owners, general contractors) frequently demand that the downstream insured's CGL respond primary and noncontributory to the additional insured's own coverage. ISO addresses this with CG 20 01 (Primary and Noncontributory - Other Insurance Condition). Without it, the 'Other Insurance' condition in Section IV could make both policies share the loss pro rata, which breaches the contract requirement. Watch for fact patterns where a subcontractor's certificate promises primary/noncontributory but the policy lacks CG 20 01.

Coverage B and Coverage C exclusions

The exam also tests Coverage B (Personal & Advertising Injury) and Coverage C (Medical Payments). Coverage B excludes knowing-false statements, prior publication, criminal acts, breach of contract, and infringement of patents (though copyright/trade-dress/slogan infringement in the insured's advertisement is covered). Coverage C Medical Payments is excluded for injury to the insured, employees, tenants, and athletic-activity participants. A frequent trap: trademark or patent infringement is excluded under Coverage B, but copyright infringement within an ad is covered.

Mapping a loss to the right policy

When a fact pattern triggers a CGL exclusion, the exam wants you to name the policy that would respond. Pollution releases go to a Pollution Legal Liability or Contractors Pollution Liability form; auto losses to Commercial Auto (CA 00 01); employee injuries to Workers' Compensation and Employers Liability; professional errors to a Professional Liability/E&O form; and damage to property in the insured's care to an installation floater or bailee form. Treat the CGL exclusions as a routing table that directs each specialized exposure to its proper line of business.

Endorsement strategy summary

In practice the producer assembles the CGL plus a stack of endorsements to meet contract requirements: additional-insured status for ongoing and completed operations (CG 20 10 + CG 20 37), primary and noncontributory wording (CG 20 01), a waiver of subrogation (CG 24 04), and per-project or per-location aggregates (CG 25 04 / CG 25 05). Reading a certificate of insurance against the actual endorsement schedule is a core producer skill - a certificate alone confers no rights, so the underlying endorsements must truly be attached.

The Major Coverage A Exclusions

The CGL's exclusions are heavily tested because they define the form's true scope. Key Coverage A exclusions include: expected or intended injury; contractual liability (except for an "insured contract"); liquor liability (for those in the business of serving alcohol); workers' compensation and employer's liability; pollution; auto/aircraft/watercraft (those go on other policies); mobile equipment used in racing; damage to the insured's own product or work (the business-risk exclusions); damage to property in the insured's care, custody, or control; and recall of products (the "sistership" exclusion).

Business-Risk Exclusions and Endorsements

The business-risk (damage-to-your-product/your-work) exclusions are the most misunderstood. The CGL is liability insurance, not a performance warranty: it will pay when the insured's faulty product injures someone or damages other property, but it will not pay to replace the insured's own defective product or to redo its own faulty workmanship. A contractor whose bad wiring burns down a client's house has covered property damage; the cost to rip out and replace the bad wiring itself is excluded.

Common endorsements modify this scope: Additional Insured forms, Primary and Noncontributory wording, Waiver of Subrogation, Liquor Liability buy-backs, Pollution buy-backs, and Amendment of Limits. Match the contract requirement to the endorsement that satisfies it.