11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- CGL Coverage A exclusions route specific exposures elsewhere: employee injury to workers' comp, auto/aircraft to commercial auto/aviation, and pollution to specialty pollution policies.
- The property-damage exclusions (j-n) keep the CGL from acting as a warranty on the insured's own product (k), own work (l), or property in its care (j).
- Exclusion (l) Damage to Your Work has a subcontractor carve-back, so a GC's CGL can respond to completed-operations damage caused by a subcontractor's faulty work.
- CG 20 10 adds an additional insured for ongoing operations while CG 20 37 adds completed-operations status; the two are usually paired.
- CG 25 03 gives each designated construction project its own General Aggregate so one bad job cannot exhaust the limit for all other projects.
Coverage A Exclusions (a) through (q)
The ISO CG 00 01 04 13 Coverage A insuring agreement is broad, then narrowed by exclusions (a) through (q). Exam questions rarely ask you to recite the letters; they test whether you can recognize that a loss falls into a named exclusion and route it to a different policy (auto, workers' comp, pollution, professional liability). Group them by purpose:
- Expected/intended injury (a) - no coverage for harm the insured expected or intended (except reasonable force to protect persons/property).
- Contractual liability (b) - excludes assumed liability, but carves back liability you'd have without the contract and liability under an insured contract.
- Liquor liability (c) - applies only if the insured is in the business of selling/serving alcohol; host liquor liability stays covered.
- Workers' comp / employers liability (d)(e) - injury to employees in the course of employment routes to WC.
The Property-Damage Exclusions (j) through (n)
These are the most heavily tested because they police the line between liability insurance and property/warranty coverage. The CGL is not a guarantee of the insured's own work or product.
| Exclusion | Excludes damage to... | Why |
|---|---|---|
| (j) Damage to Property | Property in the insured's care, custody, or control (CCC); the particular part being worked on | That is a bailee/inland-marine exposure |
| (k) Damage to Your Product | The insured's own product | A warranty risk, not liability |
| (l) Damage to Your Work | The insured's completed work ("your work") | Repair-your-own-mistake is not insurable liability |
| (m) Impaired Property | Loss of use of non-physically-injured property from a defect in the insured's product/work | Pure economic/recall-type loss |
| (n) Recall ("Sistership") | Cost to recall/withdraw the insured's product | Catastrophic recall expense |
The Subcontractor Carve-Back ("Your Work" Exception)
Exclusion (l) Damage to Your Work contains the single most tested carve-back in commercial lines: it does not apply if the damaged work, or the work out of which the damage arises, was performed by a subcontractor on the insured's behalf. So a general contractor's CGL can pay for completed-operations damage caused by a sub's faulty work, but not for the GC's own self-performed defective work. This is why GCs require subs to carry CGL and name the GC as additional insured - to pull the sub's policy in as primary.
Major CGL Coverage A Exclusions
The CGL excludes a tested list of exposures, many of which are insured elsewhere:
| Exclusion | Why / where covered instead |
|---|---|
| Expected or intended injury | Not fortuitous (a-exclusion) |
| Contractual liability | Except "insured contracts" (leases, agreements to indemnify) |
| Liquor liability | Needs separate liquor-liability policy if "in the business" |
| Workers comp / employers liability | Covered by WC policy |
| Pollution | Needs environmental/pollution policy |
| Aircraft, auto, watercraft | Covered by auto/aviation/marine |
| Damage to your product / your work | "Business risk" - quality is the insured's job |
| Damage to property in your care/custody/control | Bailee or inland marine |
| Recall of products ("sistership") | Recall insurance |
The "Your Work / Your Product" Business-Risk Exclusions
The CGL is not a performance bond: it excludes damage to the insured's own product or work (so an insured cannot use it to redo a bad job), but it does cover consequential property damage to others caused by the faulty work or product - the products-completed operations exposure.
Common CGL Endorsements
- Additional Insured (CG 20 10/20 37) - adds owners, lessees, contractors.
- Primary and Noncontributory - makes the policy primary for the additional insured.
- Waiver of Subrogation - gives up recovery rights against a named party.
- Amendment of Limits / Designated Premises - tailors scope.
Worked Example
An HVAC contractor wires a unit incorrectly; the unit itself is ruined ($8,000) and the resulting electrical fire damages the customer's building ($120,000). The damage to "your work" (the HVAC unit) is excluded - the CGL will not pay the $8,000 to redo the contractor's own job. But the $120,000 fire damage to the customer's building is covered as products-completed operations property damage to a third party. This split - excluded self-damage vs. covered consequential third-party damage - is the classic business-risk exclusion question.
A general contractor's completed building suffers water damage because a plumbing SUBCONTRACTOR installed a pipe incorrectly. Under the GC's CGL (CG 00 01 04 13), is the resulting damage to other parts of the building covered?
Pollution, Auto, Aircraft, and War Exclusions
Several exclusions exist to push exposures onto specialty policies:
- (f) Pollution - the broad "absolute" pollution exclusion bars BI/PD from release of pollutants; buy back via a Pollution Liability policy or CG 00 01 hostile-fire/heat exceptions.
- (g) Aircraft/Auto/Watercraft - liability arising from owned/operated autos, aircraft, or large watercraft routes to Commercial Auto (CA 00 01) or aviation/marine forms; small watercraft and parking exceptions apply.
- (h) Mobile Equipment - transport by auto and use in prearranged racing excluded.
- (i) War - excludes war, including undeclared war and terrorism handled separately (TRIA endorsement).
- (o) Personal & Advertising Injury under Coverage A - P&AI is Coverage B, not Coverage A.
Common Modifying Endorsements
| Endorsement | ISO form | Effect |
|---|---|---|
| Additional Insured - Owners, Lessees or Contractors (Scheduled) | CG 20 10 | Adds a party as AI for ongoing operations |
| Additional Insured - Completed Operations | CG 20 37 | Adds AI for products-completed operations (pair with CG 20 10) |
| Amendment of Limits / Designated Construction Project Aggregate | CG 25 03 | Gives each project its own General Aggregate |
| Waiver of Transfer of Rights (Waiver of Subrogation) | CG 24 04 | Insurer waives subrogation against a named party |
| Primary and Noncontributory | CG 20 01 | Makes the policy primary over the AI's own coverage |
The Designated Construction Project Aggregate (CG 25 03) is heavily tested: without it, all of a contractor's projects share one $2,000,000 General Aggregate; with it, each project gets its own aggregate so a single bad job cannot exhaust the limit for every other site.
Coverage B and Coverage C Exclusions
Coverage B (Personal & Advertising Injury) has its own exclusion list. It excludes injury the insured knew was false, statements made before the policy period, injury arising from breach of contract, and injury from the insured's wrong description of price of goods. P&AI offenses that are covered include false arrest, malicious prosecution, wrongful eviction, slander/libel, and infringing on another's advertising idea or slogan — but not patent or trade-secret infringement.
Coverage C (Medical Payments) is excluded entirely where Coverage A's BI exclusions would apply, and for injury to the insured, employees, tenants, and athletics participants. Knowing which coverage part an exclusion sits under prevents the common error of citing a Coverage A property-damage exclusion to deny an advertising-injury claim.
A contractor wants each construction project to have its OWN General Aggregate limit, so that losses on one job do not erode coverage available for other jobs. Which endorsement accomplishes this?