7 Common CGL Exclusions Found in Insurance Policies

No matter what your insurance type is, knowing what’s excluded is just as important as knowing what’s covered. 

Exclusions in a CGL policy or CGL exclusions are situations or hazards that will not be covered by the insurance provider. These aren’t only found in commercial general liability policies— all types of insurance have their own exclusions. 

CGL is known for its broad coverage against third-party lawsuits. Therefore, it is considered by many as a foundational type of insurance for businesses, big and small. However, being aware of CGL exclusions allows business owners to take necessary caution (and/or get additional insurance) to effectively protect their business. 

In this guide, we discuss the most common CGL exclusions. Let’s get started! 

An Overview of CGL or Commercial General Liability

Commercial general liability is a type of business insurance that provides coverage for the following:

• Injury sustained by third-party individuals within the business premises
• Third-party injury or property damage in connection with business operations
• Third-party injury or property damage in connection with the product sold, manufactured, or built
• Advertising/reputational injuries

Thanks to the broad scope of CGL, it offers immense peace of mind to many businesses. As one of the most vital types of business insurance, CGL is often included (along with commercial property insurance) in an insurance bundle called “Business Owner’s Policy (BOP).”

Are Exclusions Found in the Insuring Agreement? 

The insuring agreement (a.k.a insurance agreement or insurance policy) contains the details of what an insurance provider will give in exchange for the regularly-paid premium. It would also detail the policy’s exclusions.  

Typically, insurance documents of any kind will have a section called “Exclusions and Limitations.” Since insurance policies can differ, it is important to review this section to know the specific perils or exposures that are not covered in your own policy.  

The Most Common CGL Exclusions 

There are two reasons why a situation is not covered in a CGL policy:

1. The situation is not insurable (such as in the case of intentional damage)  
2. The peril is covered by another type of insurance (such as in the case of commercial vehicle accidents).

Up next, we go into the most common CGL exclusions, why they’re excluded, and what you can do about them. 

1. Intentional Acts of Property Damage or Bodily Injury

When CGL insurance policies talk about what’s covered, they usually have the term “covered peril.” Essentially, a “peril” is an event that is unexpected or accidental. By this definition, we can see why intentional acts of property damage or injury are CGL exclusions. 

Moreover, intentional acts that are meant to cause property destruction or harm can be considered felonies or misdemeanours, respectively. Though CGL insurance is meant to provide protection in the event of third-party lawsuits, it does not support criminal acts. Hence, deliberate acts with an intent to cause harm are always excluded in CGL policies.  

2. Employee Injuries

Commercial general liability insurance plans are designed to cover the legal fees and medical costs when third-party individuals are harmed, and the business is found liable for it. Third-party individuals include the general public, customers, clients, suppliers, and the like. 

Therefore, employees are not covered by CGL insurance policies. This simply isn’t what CGL insurance is designed for. Instead, this is under what’s known as workers’ compensation coverage.

3. Accidents Involving Commercial Vehicles

CGL insurance is not just for in-premise third-party injuries. In fact, if your business works on project sites away from your workplace or if you regularly work on other properties, injuries arising from your business operations are still covered. 

However, property damage or physical injury caused by your commercial vehicle is among the CGL exclusions. The type of insurance you need to cover vehicular accidents is commercial auto insurance or fleet insurance. 

4. Personal Property That is Under The Insured’s Care, Custody, or Control

CGL insurance provides coverage for a wide array of property damages. However, there is a CGL exclusion that applies to personal properties such as electronics, equipment, and so on. 

When personal property that does not belong to the business is damaged (but is under the business’s care, custody, or control), this incident is generally not covered by CGL. 

One example would be if an office worker accidentally breaks leased office equipment, such as a commercial printer. In this scenario, the printer is not owned by the insured but is under the care of the insured. So even though this personal property was damaged in connection with business operations (i.e. the office worker using the printer), this incident is typically not covered by CGL. 

5. Faulty Workmanship

Faulty workmanship in and of itself is not covered. Commercial general liability insurance will not give payouts for the replacement, repair, or rebuilding in case of faulty construction or installation. 

However, what can trigger CGL coverage is when faulty workmanship results in bodily injury or property damage (wherein the damaged property is not the insured’s work). 

6. Faulty Products

This exclusion clarifies the scope of the product liability coverage that CGL policies have. Product liability coverage, under a CGL insurance policy, only provides coverage for bodily injury or property damage caused by faulty products. However, the cost of repairing or refunding faulty products is not covered. 

7. Bodily Injury or Property Damage Connected to Pollution

Pollution occurs when a contaminant (e.g. spilled oil, mould, Legionella, silica dust) or form of energy (e.g. noise pollution) is released into an area and causes adverse effects to the following: 

• People
• Wildlife
• The environment

CGL insurance is not designed for sudden or gradual cases of pollution. The right type of add-on insurance for this would be “pollution liability insurance.”

Tailor-Fit Commercial General Liability Insurance for Your Business 

This wraps up our guide on CGL exclusions. Throughout the read, we mentioned other types of insurance that take over where CGL insurance ends. If you would like to have customized CGL insurance for your business, complete with the add-ons that you need, we’re here to help. 

KASE Insurance is an award-winning, Ontario-based insurance brokerage firm that specializes in providing customized insurance solutions. Our dedicated team is always here to answer any questions you may have about business insurance. 

If you would like to get started, please feel free to reach out today!