11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- CGL Coverage A exclusions mostly steer risks to the correct policy (auto, WC, pollution) or bar uninsurable business risks and intentional acts.
- Damage to Your Product (k) and Damage to Your Work (l) are business-risk exclusions; (l) has a key subcontractor exception preserving coverage in construction-defect claims.
- The absolute pollution exclusion is broad; genuine environmental exposure needs a CPL/EIL policy or a specific endorsement.
- Exclusion (b) returns coverage for 'insured contracts,' which back hold-harmless and indemnity agreements in leases and construction contracts.
- Key endorsements: CG 20 10/CG 20 37 (additional insured), CG 25 03/CG 25 04 (per-project/location aggregate), CG 21 47 (employment-related practices exclusion).
Key CGL Exclusions and Endorsements
Coverage A (Bodily Injury and Property Damage) of the CG 00 01 lists roughly a dozen exclusions, lettered (a) through (q). The exam does not require memorizing every letter, but it heavily tests the reasons certain losses are excluded and which endorsement restores or modifies coverage. Most exclusions exist to push a risk onto a more appropriate policy (auto, workers' comp, pollution, professional liability) or to bar uninsurable intentional/business-risk losses.
The Major Coverage A Exclusions
| Exclusion | What it removes | Why / proper market |
|---|---|---|
| Expected or Intended Injury (a) | Deliberate harm by the insured | Insurance covers fortuitous loss only |
| Contractual Liability (b) | Liability assumed in a contract | Returned for 'insured contracts' |
| Workers' Compensation / Employer's Liability (d/e) | Injury to employees | Belongs on WC and Employers Liability |
| Pollution (f) | Bodily injury/property damage from pollutants | Buy CG 00 01 endorsements or a CPL/EIL policy |
| Aircraft, Auto, Watercraft (g) | Liability from owned/operated vehicles | Belongs on commercial auto/aviation/marine |
| Damage to Your Product (k) | The insured's own product | A business risk, not third-party liability |
| Damage to Your Work (l) | The insured's completed work | Business risk; subcontractor exception applies |
| Recall of Products / Sistership (n) | Cost to recall/withdraw products | A standalone product-recall policy |
Business-Risk Exclusions: Your Product and Your Work
Exclusions (k) Damage to Your Product and (l) Damage to Your Work embody the principle that the CGL is third-party liability insurance, not a warranty. If a contractor's faulty work damages only the work itself, that is a business risk borne by the contractor.
The key tested nuance: exclusion (l) does not apply if the damaged work or the work causing damage was performed by a subcontractor. So a general contractor can recover for faulty subcontractor work that damages other completed work - a crucial point for construction-defect claims.
A general contractor's CGL has the standard 'Damage to Your Work' exclusion. A subcontractor's faulty plumbing later damages finished drywall that the general contractor's own crew installed. Why might this loss still be covered?
The Pollution Exclusion and Its Restorers
The absolute pollution exclusion (f) bars BI/PD arising from the discharge, dispersal, or escape of pollutants at or from any premises the insured owns or operates. It is broad on purpose. Coverage can be tailored back with endorsements:
- CG 24 17 / limited pollution endorsements for hostile-fire or specific exceptions.
- A separate Contractors Pollution Liability (CPL) or Environmental Impairment Liability (EIL) policy for genuine environmental exposure.
Exam tip: an insured who works with chemicals or fuels and relies on the CGL alone has a real coverage gap.
Contractual Liability and the Insured Contract
Exclusion (b) removes liability the insured assumes under a contract - but immediately gives back coverage for an 'insured contract.' Insured contracts include leases of premises, sidetrack agreements, easement agreements, obligations to indemnify a municipality, and the part of any contract where the insured assumes the tort liability of another to pay for BI/PD to a third party.
This is why hold-harmless and indemnity clauses in construction and lease agreements are typically backed by the CGL - the assumed liability fits the insured-contract definition.
Endorsements That Modify the CGL
Know these by name and effect:
- CG 20 10 - Additional Insured: Owners, Lessees or Contractors (ongoing operations) and CG 20 37 (completed operations): add an upstream party as an additional insured. Often required by contract.
- CG 25 03 / CG 25 04 - Designated Construction Project / Location General Aggregate: gives each project or location its own separate aggregate, so one project's losses do not erode another's limit.
- CG 21 47 - Employment-Related Practices Exclusion: confirms the CGL does not cover EPLI exposures.
Additional Insured Status and Primary/Non-Contributory Wording
Construction and lease contracts routinely require the insured to add an upstream party as an additional insured and to make the coverage primary and non-contributory. The standard endorsements are CG 20 10 (additional insured for ongoing operations) and CG 20 37 (for completed operations). "Primary and non-contributory" means the named insured's policy pays first and does not seek contribution from the additional insured's own coverage.
| Endorsement | Adds AI for |
|---|---|
| CG 20 10 | Ongoing operations |
| CG 20 37 | Products-completed operations |
Trap: CG 20 10 alone does not cover the additional insured for completed-operations claims that surface after the job ends - CG 20 37 is needed too. Contracts that require completed-ops AI status but accept only CG 20 10 leave a gap.
The Subcontractor Exception and Pollution Routing
Two high-yield carve-outs. The "your work" exclusion (l) does not apply when the damaged work or the work causing damage was performed by a subcontractor - so a general contractor can recover for faulty sub work that damages other completed work. For genuine environmental exposure, the absolute pollution exclusion pushes the risk to a Contractors Pollution Liability (CPL) or Environmental Impairment Liability (EIL) policy.
| Loss | Where it belongs |
|---|---|
| Faulty sub work damaging other work | CGL (subcontractor exception) |
| Pollution discharge | CPL / EIL policy |
| Employee injury | Workers' comp / employer's liability |
Trap: Exclusion (b) (contractual liability) gives back coverage for an "insured contract" - leases, sidetrack/easement agreements, and tort liability of another the insured assumes - which is why hold-harmless clauses in construction contracts are backed by the CGL.
A general contractor wants assurance that liability losses on Project A will not reduce the limits available for losses on Project B under one CGL policy. Which endorsement accomplishes this?