11.3 Key CGL Exclusions and Endorsements

Why exclusions exist

The Commercial General Liability (CGL) form insures third-party liability, not the insured's own business risk. Many exclusions exist to keep the CGL from acting as a performance bond or product warranty. The exam tests whether you can tell a covered third-party loss from an excluded business risk.

The Coverage A (Bodily Injury and Property Damage Liability) exclusions are lettered (a) through (n). The high-yield ones are below.

The most-tested Coverage A exclusions

Business-risk exclusions: Your Work and Your Product

The Damage to Your Product (k) and Damage to Your Work (l) exclusions are pure business-risk exclusions. If a contractor's faulty pipe joint leaks, the CGL will not pay to repair the contractor's own defective pipework, because that is the cost of doing the job right, which belongs in pricing and warranty, not insurance.

But the CGL will pay for resulting damage to other property. If the leaking pipe ruins a customer's hardwood floors, that third-party property damage is covered. The exam loves this split:

• Repairing the defective work itself: excluded.
• Resulting damage to other property: covered.

Contractual liability and the Insured Contract

Exclusion (b) removes liability the insured assumes by contract. That sounds broad, but the form gives back an exception for an Insured Contract. An Insured Contract includes specified agreements such as leases of premises, easement agreements, and, importantly, the part of any contract where the insured assumes the tort liability of another to pay damages (the classic hold-harmless or indemnification clause).

So if a tenant signs a lease agreeing to indemnify the landlord for liability arising from the tenant's operations, that assumed liability is restored as an Insured Contract. Trap: liability the insured would have had anyway (its own negligence) is covered regardless; the Insured Contract provision specifically restores liability of another party that the insured agreed to assume.

Pollution and Employers Liability gaps

Two exclusions create gaps that other policies must fill:

• The Absolute Pollution Exclusion (f) bars bodily injury and property damage arising from the discharge, dispersal, or escape of pollutants. Pollution legal liability must be bought separately or via specialty endorsement.
• The Employers Liability Exclusion (e) bars injury to the insured's own employees in the course of employment. This is intentional: Workers Compensation and Employers Liability policies handle that exposure, not the CGL.

A candidate who forgets these gaps will wrongly assume the CGL is a catch-all liability policy.

Additional insured endorsements

Contracts often require one party to name another as an additional insured on the CGL. ISO publishes scheduled endorsements for this:

• Additional Insured - Owners, Lessees or Contractors - Scheduled Person or Organization (CG 20 10) typically covers the additional insured for ongoing operations.
• Additional Insured - Owners, Lessees or Contractors - Completed Operations (CG 20 37) covers the additional insured for completed operations and is paired with CG 20 10 to give full-cycle protection.

Trap: naming a party as an additional insured on the certificate is not enough; the actual endorsement must be attached, and CG 20 10 alone leaves a completed-operations gap that CG 20 37 fills.

The Most-Tested CGL Exclusions

Coverage A's exclusions define the gaps an insured must fill elsewhere:

The damage to your work (exclusions j and l) and your product exclusions push warranty-type losses outside the CGL - the policy covers the damage your faulty work causes to others, not the cost to redo the work itself.

Insured Contracts and Additional Insured Endorsements

The contractual-liability exclusion has a major carve-back: the "insured contract" definition restores coverage for certain liability the insured assumes under specified agreements - leases of premises, sidetrack agreements, easements, and the tort liability of another assumed in a contract (a typical construction hold-harmless). This is why a properly drafted hold-harmless clause can shift a subcontractor's CGL to respond for the general contractor.

Additional Insured endorsements extend the named insured's coverage to others who require it by contract:

• CG 20 10 - owners, lessees, or contractors for ongoing operations.
• CG 20 37 - the same parties for completed operations.

The Absolute Pollution Exclusion and the Employers Liability Exclusion are the two most heavily tested coverage gaps: pollution must be insured under a separate environmental policy, and employee injury is covered by workers' compensation, not the CGL.