Key CGL Exclusions and Endorsements
Key Takeaways
- Coverage A has fourteen exclusions (a-q); the business-risk group (j-n) bars coverage for the insured's own faulty product and work because the CGL is not a performance warranty.
- The 'Damage to Your Work' exclusion (l) has a subcontractor exception - damage from a subcontractor's work can be covered, but the named insured's own work is not.
- The absolute pollution exclusion (f) bars most environmental losses; broad coverage must be bought separately.
- Additional insured endorsements differ by phase: CG 20 10 covers ongoing operations and CG 20 37 covers completed operations; post-2013 forms cap AI coverage to what the contract requires.
- CG 20 01 makes coverage primary and noncontributory and CG 24 04 waives subrogation - both are standard construction-contract requirements.
Coverage A Exclusions a-q
The ISO CGL grants broad bodily-injury and property-damage coverage, then narrows it through fourteen lettered exclusions (a through q) in Coverage A. The exam tests the high-frequency ones and the endorsements that buy coverage back. The most-tested exclusions:
- (a) Expected or Intended Injury - injury the insured expected or intended is excluded, except reasonable force to protect persons or property.
- (b) Contractual Liability - liability assumed in a contract is excluded, EXCEPT liability the insured would have anyway and liability under an insured contract (the form names a closed list, including the part of a lease assuming tort liability of a third party).
- (c) Liquor Liability - applies only to those in the business of selling/serving alcohol; a host without that business is not excluded.
- (d)-(f) workers' compensation, employer's liability, and pollution.
The 'Your Work' / 'Your Product' Business-Risk Exclusions
Exclusions (j) through (n) are the business-risk group. The CGL is liability insurance, not a performance warranty - it will not pay to repair the insured's own faulty work or product. Key ones:
- (j) Damage to Property - includes the famous "property you are working on" pieces.
- (k) Damage to Your Product - the insured's product itself is not covered.
- (l) Damage to Your Work - the insured's completed work is excluded, but there is an exception when the damaged work or its cause arises from work performed by a subcontractor.
- (m) Damage to Impaired Property - loss of use of property not physically injured.
- (n) Recall of Products - the "sistership" exclusion; no coverage for withdrawing or recalling products.
Pollution, Auto, and Other Hard Exclusions
- Pollution (f): the absolute pollution exclusion bars coverage for discharge, dispersal, seepage, or release of pollutants. Narrow exceptions (e.g., certain hostile fire and limited heat/smoke/fumes from equipment) exist; broad environmental coverage must be bought separately.
- Aircraft, Auto, Watercraft (g): owned/operated autos are excluded - that is the auto policy's job - though parking and certain mobile equipment exceptions apply.
- (h) Mobile Equipment transportation and racing.
- (i) War.
- (o) Personal & Advertising Injury belongs under Coverage B, not A.
- (p) Electronic Data - loss of electronic data is not 'property damage' (cyber forms address this).
- (q) Recording And Distribution of Material In Violation of Law (TCPA/CAN-SPAM/fax laws).
Business-Risk Exclusions and the Additional-Insured Mechanism
The CGL's business-risk exclusions exist because the policy insures liability to others, not the quality of the insured's own work or product.
| Exclusion | What it bars | Why |
|---|---|---|
| Your Product (k) | Damage to the insured's own product | That is a business cost, not liability |
| Your Work (l) | Damage to the insured's completed work | Same - buy a warranty, not GL |
| Damage to Impaired Property (m) | Loss of use of property not physically injured | Economic loss, not BI/PD |
| Recall (n) | Cost to recall a product | Catastrophic business expense |
Exam trap: The CGL covers damage the insured's product causes to other property or people, but not damage to the product itself - that is the "your product" exclusion. Faulty work that injures a third party is covered; repairing the faulty work is not.
Additional Insured Endorsements
Contracts (leases, construction) routinely require naming another party as an additional insured. CG 20 10 adds a party for ongoing operations; CG 20 37 adds them for completed operations; CG 20 01 makes the named insured's coverage primary and noncontributory. Pairing these with a waiver of subrogation (CG 24 04) is the standard contractual-risk-transfer package the exam expects you to recognize.
A general contractor's defectively installed roof, built entirely by the GC's own crew, leaks and damages only the roof itself after the project is complete. Under the unendorsed ISO CGL, how does the 'Damage to Your Work' exclusion (l) apply?
Additional Insured Endorsements
Contracts routinely require a party to be named as an additional insured (AI) on another's CGL. The most common ISO AI endorsements:
| Endorsement | Adds as AI |
|---|---|
| CG 20 10 | Owners, lessees, or contractors - scheduled person/organization (ongoing operations) |
| CG 20 37 | Owners, lessees, or contractors - completed operations |
| CG 20 11 | Managers or lessors of premises |
| CG 20 26 | Designated person or organization |
Post-2013 ISO AI endorsements limit AI coverage to the extent permitted by law and to no more than the limits the contract requires - a tested change. To cover both phases of construction, a certificate often needs both CG 20 10 (ongoing) and CG 20 37 (completed).
Other Frequently Tested Endorsements
- CG 20 01 - Primary and Noncontributory: makes the named insured's policy primary and waives contribution from the AI's own insurer, as construction contracts often demand.
- CG 24 04 - Waiver of Transfer of Rights of Recovery (Waiver of Subrogation): the insurer gives up subrogation against a party named in the schedule.
- CG 21 47 - Employment-Related Practices Exclusion: removes coverage for wrongful termination, harassment, and similar - pushing those exposures to an EPLI policy.
- CG 22 79 / CG 21 06 - exclusions for specific exposures such as contractors' professional liability or access/disclosure of confidential data.
- Stop-gap endorsement: in monopolistic workers'-comp states, adds employer's-liability (Coverage B of WC) onto the CGL because no standard WC policy is sold there.
A construction contract requires the subcontractor's CGL to respond first and not seek contribution from the project owner's own liability policy. Which endorsement satisfies this requirement?