11.3 Key CGL Exclusions and Endorsements
Key Takeaways
- Many CGL exclusions exist to push exposures onto the correct policy (auto, WC, liquor, pollution, professional), preventing overlap.
- The contractual liability exclusion has an 'insured contract' carve-back that restores typical construction hold-harmless agreements.
- Your Work / Your Product exclusions reflect the business-risk doctrine; faulty work damaging only the insured's own work is not covered.
- Exclusion (l) has a subcontractor exception that restores coverage for completed-operations damage involving a subcontractor's work.
- Key endorsements - CG 20 10/20 37 additional insured, CG 20 01 primary/noncontributory, CG 24 04 waiver, CG 25 03/25 04 separate aggregates - must be matched to the specific contractual need.
Reading the Coverage A Exclusions
Section I, Coverage A of the CGL contains a lettered list of exclusions (a through q in CG 00 01 04 13). Exam questions rarely ask you to recite them verbatim; instead they describe a loss and ask whether it is covered. The strategy is to know the purpose of each major exclusion and the standard endorsement that can buy back or restrict coverage. Many exclusions exist because the exposure belongs on a different policy (auto, workers comp, professional liability), preventing overlap and double recovery.
Major Coverage A Exclusions
| Exclusion | What it removes | Where the exposure belongs |
|---|---|---|
| (a) Expected or Intended Injury | Intentional harm by the insured (self-defense to persons excepted) | Uninsurable / criminal |
| (b) Contractual Liability | Liability assumed in a contract, except an "insured contract" | Insured contract carve-back restores coverage |
| (c) Liquor Liability | Injury from furnishing alcohol if in that business | Liquor Liability policy (CG 00 33/34) |
| (d) Workers Comp / Employers Liability | Injury to employees in the course of employment | WC and Employers Liability policy |
| (g) Auto/Aircraft/Watercraft | Liability from owned autos, aircraft, large watercraft | Commercial Auto / Aviation policies |
| (j) Damage to Property | Insured's own property, property in care/custody/control | Property policy / installation floater |
| (k) Damage to Your Product | The insured's own product | Business risk, not insurable here |
| (l) Damage to Your Work | The insured's completed work | Subcontractor exception may apply |
| (m) Impaired Property | Loss of use of property not physically injured | Business risk |
| (f) Pollution | Most pollution-related injury/cleanup | Pollution Liability / CPL policy |
The "Insured Contract" Carve-Back
The contractual liability exclusion (b) is one of the most tested because it has a major exception: liability assumed under an "insured contract" is covered. The CGL defines six categories of insured contract, including a lease of premises, an easement agreement, an obligation to indemnify a municipality, and - most importantly - the tort liability of another party assumed in a contract (a typical hold-harmless agreement in a construction contract).
So if a general contractor signs a subcontract agreeing to indemnify the project owner for the owner's tort liability, that assumed liability is restored to coverage because it fits the insured-contract definition. Liability the insured would have had anyway (sole negligence) is always covered regardless.
A general contractor's CGL excludes contractual liability. The contractor signed a hold-harmless agreement assuming the project owner's tort liability for bodily injury at the jobsite. Is that assumed liability covered?
Your Work / Your Product and the Subcontractor Exception
Exclusions (k) and (l) reflect the business-risk doctrine: the CGL is liability insurance, not a performance warranty. Faulty workmanship that damages only the insured's own product or work is a business risk the contractor must absorb. However, exclusion (l) - Damage to Your Work - contains a subcontractor exception: damage to completed work is covered if the damaged work, or the work causing the damage, was performed by a subcontractor. This is why general contractors require subs to carry their own CGL and name the GC as additional insured.
Key distinction: the CGL pays when faulty work causes injury to other property or persons (the leaking pipe floods the tenant's inventory) - but not to repair the defective pipe itself.
Common CGL Endorsements
Producers must match the right endorsement to a coverage need:
- Additional Insured - Owners, Lessees or Contractors (CG 20 10 / CG 20 37): Adds a project owner/upstream party as an insured; CG 20 10 covers ongoing operations, CG 20 37 covers completed operations.
- Primary and Noncontributory (CG 20 01): Makes the named insured's coverage primary and prevents it from sharing with the additional insured's own policy.
- Waiver of Transfer of Rights of Recovery (CG 24 04): Waives the insurer's subrogation rights against a designated party - often required by contract.
- Designated Locations/Operations General Aggregate (CG 25 03 / CG 25 04): Provides a separate general aggregate per project or location, so one bad project does not exhaust limits for all jobs.
- Amendment of Limits / Exclusion endorsements: Add or remove specific exposures (e.g., reinstate limited pollution, exclude designated work).
A contractor wants each construction project to have its own separate General Aggregate so a loss on one job cannot exhaust limits available to other jobs. Which endorsement accomplishes this?
The Pollution Exclusion
The absolute (or total) pollution exclusion (f) is broad: it removes coverage for bodily injury or property damage arising from the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants, plus any government-mandated cleanup costs. "Pollutants" means any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, chemicals, and waste.
This exposure must be covered elsewhere - on a Pollution Liability or Contractors Pollution Liability (CPL) policy. The exam will frequently describe a chemical spill or fume injury and expect you to recognize the CGL does not respond. Limited buy-backs exist (e.g., the hostile-fire exception, or a limited products pollution endorsement), but the default standard CGL treats pollution as excluded.
Coverage B and C Exclusions in Brief
Coverage A is not the only place exclusions appear:
- Coverage B (Personal and Advertising Injury) excludes, among others, injury caused by the insured knowing the statement was false, material published before the policy period, criminal acts, breach of contract (except implied in advertising 'your goods'), and infringement of patent/trade secret (though copyright, trade dress, and slogan in advertisements are covered).
- Coverage C (Medical Payments) excludes payments to any insured, to a tenant injured on premises rented to that tenant, to anyone eligible for workers compensation, and for injury arising from the products-completed operations hazard.
A classic trap: a customer slips in the store and the insured offers Med Pay regardless of fault - covered. But an employee who slips is excluded from Med Pay because workers compensation is the proper response. Matching the injured party to the correct coverage line is a high-yield exam skill.