CGL exclusions explained - what isn't covered by commercial general liability insurance? The purpose of policy exclusions is to expressly eliminate coverages that without the exclusion would most likely be covered.
CGL Exclusions Explained
Commercial General Liability (CGL) insurance is an important coverage for any major business. It protects against lawsuits and damages to be paid for any injury sustained by third parties on the business' premises or as a result of their operations. And while CGL policy coverage can often be very broad, this comes with a catch.
There are numerous exclusions within a standard CGL agreement that can be nightmarish for a policyholder to find out about later on. No business wants to be sued then discover that their policy won't pay and they are on the hook for thousands of dollars - out-of-pocket.
Here are common CGL exclusions explained and list of some of the most used exclusions in a commercial general liability insurance policy:
Coverage A: Expected or Intended
Coverage A agreement (the standard agreement for bodily/property injuries and medical expenses as a result of injury) is generally pretty broad. So, insurance companies try to limit it with various exclusions. The most standard one is the expected/intended exclusion. If an employer intentionally causes the damage or injury they are trying to protect themselves against, they cannot be covered by their insurance agreement.
Coverage A: Liability by Contract
When the policyholder has assumed risk or liability in a contractual agreement with a third party, they have signed away their right to be protected by the initial insurance agreement. This holds true even when you, as a business owner, signed your insurance agreement separately and prior to this contract, so be careful what you sign onto after the fact. Your contracts influence each other.
This is a nuanced area however, and there are exceptions to the exceptions. CGL exclusions explained - take for example that you are the manager of a construction company and you presume liability for the site you are working on. Then, your insurance company is not liable to third parties for damages caused by the site under the exclusion. However, they may still pay if the injury that was caused was something you would be liable for no matter what, (i.e. it's not the contract that makes you responsible, but the law itself) or you have signed what is called an "insured contract," a way to get around this exclusion.
Liability for Liquor
If you make, sell, serve, or furnish alcohol in any sort of way as part of your business model, your insurance company probably won't cover bodily injury or property damage that results from alcohol use. This is a concern for most bar owners, as that is a very common occurrence in their establishments. That's not to say you can never be insured, but that your CGL is too broad to cover it alone. You can buy liquor liability insurance specifically tailored to your situation.
Insurance companies are not necessarily unsympathetic to the plight of employees who are injured or policyholders that need to compensate these employees. However, they also recognize that you likely have, or need to get a specific insurance plan tailored to your workers' compensation needs. The price you pay for your monthly CGL won't cut it, and thus is excluded from the package you buy. Even if you do not have a specific plan, your insurance company may not be willing to pick up the bill if this exclusion is included (and it often is in a standard contract).
Coverage A insurance typically does not cover your lawsuit by your own employees. Similar to the workers' compensation model, the idea behind this is that certain matters should be handled internally, or though a much more specific insurance plan. If your employee is injured while working for you, you are not covered for a lawsuit brought by them, their family, or any other third party that is claiming damage as related to the employees' injury. (Note: this is different than damage to third parties themselves, which is typically included in your CGL). This is true even where employees are suing you outside of the scope of the employment relationship (for example, for injury as a result of a malfunctioning product that caused them harm). If they are your employee, you are not covered.
CGL exclusions explained - this one is fairly straightforward. Don't harm the planet, if for no other reason than the fact that it is not covered by your general liability policy. This includes any damage for property you used to own and do business on. You are not covered and you may be liable. This includes any waste from your operations or premises that causes harm to others, regardless of if the release is not on your property itself. If you can be tied as a cause, and it's pollution, you won't be covered. See Pollution Legal Liability.
Sample List Of CGL Exclusions
We have pulled some exclusions from real general liability insurance policies so you can see what some of them look like . This list is only a small sample as exclusions can differ by company and class of business.
- Amendment Employer's Liability Exclusion
- Automobile Liability Exclusion Endorsement
- Continuous Or Progressive Injury And Damage Exclusion
- Contractors Errors and Omissions (Without Labor)
- Employment-Related Practices Exclusion
- Exclusion - Aircraft, Auto or Watercraft
- Exclusion - Condominiums, Townhouses, Timeshares And Tracts
- Exclusion - Contractors - Professional Liability
- Exclusion - Cross Liability - Broad Form
- Exclusion - Designated Ongoing Operations
- Exclusion - Designated Operations Covered By a Consolidated (Wrap-up) Insurance
- Exclusion - Designated Work
- Exclusion - Engineers, Architects or Surveyors Professional Liability CG 22 43 07 98
- Exclusion - Exterior Insulation And Finish Systems
- Exclusion - Prior Completed Or Abandoned
- Exclusion - Professional Services
- Exclusion - Punitive or Exemplary Damages
- Exclusion Earth Movement
- Exclusion of Certified Acts of Terrorism
- Fungi Or Bacteria Exclusion
- Independent Contractors Limitation Endorsement
- Limitation Of Coverage To Business Description
- Nuclear Energy Liability Exclusion Endorsement
- Recording And Distribution Of Material Or Information In Violation Of Law Exclusion
- Sexual Misconduct Exclusion
- Total Pollution Exclusion with Exceptions for Building Heating, Cooling, Dehumidifying and Personal Hot Water Heating Equipment and Hostile Fire
- War Liability Exclusion
CGL Exclusions Explained - The Bottom Line
We hope this article on CGL exclusions explained has been informative. These are just some of the many exclusions that can be written into an agreement. To get a full sense of what coverage is included, it's best to read your agreement and discuss with your insurance company the nuances of any deal you sign.
Further Reading On Commercial General Liability Insurance
- CGL Exclusions Explained
- Contractors General Liability Insurance
- Difference Between General Liability And Auto Liability Insurance
- Does General Liability Insurance Cover Subcontractors?
- General Liability Insurance Claims-Made vs Occurrence
- Product Liability Insurance vs General Liability
- What Damages Are Covered By A CGL Policy?
- What Is Products And Completed Operations Coverage?
- What Is The Difference Between Per Occurrence And Aggregate Liability Limits?