Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 5 minutes
Not all commercial general liability policies offer the same level of protection. Many are issued with endorsements that narrow coverage for certain operations, job types, or contractual requirements. Identifying gaps early and addressing them with the right endorsements can materially reduce uninsured loss exposure, especially for contractors working under written contracts.
Products and completed operations coverage vs ISO CG 20 37
Contractors often assume liability ends when the job is finished. In reality, claims can arise months or years later, after the work is put to its intended use. That is where products-completed operations exposure matters.
Two separate ideas are commonly confused:
- Your completed operations liability
On many occurrence-based CGL policies, completed operations exposure is part of Coverage A, subject to the products-completed operations aggregate limit and policy exclusions. It generally responds to third-party bodily injury or property damage that occurs after completion, not as a blanket warranty for repairing defective work. - Additional insured completed operations (ISO CG 20 37)
If an owner or general contractor requires completed operations additional insured status, an endorsement such as ISO CG 20 37 is commonly used. It amends Who Is An Insured to include the scheduled additional insured, but only for liability caused in whole or in part by your work and included in the products-completed operations hazard.
Practical tip: Many contracts require both ongoing operations additional insured coverage and completed operations additional insured coverage. ISO CG 20 10 is a common ongoing operations form that typically ends once work is complete.
Waiver of subrogation
A waiver of subrogation is often required in construction contracts to reduce post-loss finger-pointing and litigation between project parties.
In CGL, this is frequently addressed through a form like ISO CG 24 04 (Waiver of Transfer of Rights of Recovery Against Others to Us) or an equivalent endorsement. The endorsement waives the insurer’s right of recovery against the scheduled person or organization for payments arising out of your ongoing operations or your work under contract, subject to the form’s wording.
What to watch for:
- The waiver may need to be scheduled for a specific party.
- The waiver does not eliminate your duty to manage losses or comply with claim reporting requirements.
- Waivers can have pricing and underwriting impact, so align them with real contract needs.
Explosion, collapse, and underground (XCU)
If you excavate, perform grading, shoring, pile driving, demolition, or work near underground utilities, you should specifically review XCU hazards.
Do not assume you can simply add explosion and collapse coverage. In many contractor liability programs, the bigger risk is that an endorsement excludes these hazards for certain operations. For example, ISO CG 21 42 adds an exclusion for property damage included within the explosion hazard, collapse hazard, or underground property damage hazard when scheduled as excluded.
Action step:
- Ask for a copy of your endorsements and confirm whether any XCU exclusions apply to your scope of work.
- If excluded, discuss alternatives. This can include revising the scope, negotiating contract terms, or moving to a program designed for higher-hazard operations.
Action over and employee injury claims
Action over (also called third-party over) exposure commonly arises when an injured employee of a subcontractor brings a claim against the general contractor or owner, and then those upstream parties seek defense and indemnity through contractual risk transfer or additional insured status.
The coverage pitfall is not that you forgot to buy an action over endorsement. The bigger issue is that some policies contain an action over exclusion or modified language that can restrict coverage for bodily injury claims involving employees of contractors or subcontractors, including when a tender is made under your policy. Training materials for contractors routinely flag action over exclusions and similar employee injury limitations as high-impact endorsements to watch for.
Action steps to reduce gaps:
- Confirm your policy does not include an action over exclusion that would conflict with your contracts.
- Require subcontractors to carry workers compensation with appropriate employers liability limits.
- Align hold harmless language, additional insured wording, and insurance requirements so they work together.
Project and building limitations
Many contractor liability policies include limitations that are easy to miss, as they may appear as endorsements, scheduled classifications, or designated work restrictions. Contractor coverage limitation endorsements are common in the marketplace and can materially change how your CGL responds.
Common limitation categories to review include:
- Residential or habitational limitations: May restrict coverage for single-family, multi-family, condos, or habitational risks.
- Commercial project limitations: May limit certain operations, specific trades, or projects with higher- hazard characteristics.
- High-rise limitations: Often based on a defined number of stories or a height threshold. Definitions matter.
- New construction limitations: Some programs prefer remodel work and restrict ground-up construction.
- Government project limitations: Some carriers restrict participation in public works, prevailing-wage projects, or projects with strict insurance specifications.
Tip: Ask for the exact endorsement wording and confirm the definitions of terms like residential, habitational, high-rise, and new construction as applied in your policy. Do not rely on a certificate of insurance as proof of coverage.
Quick checklist before you sign the next contract
- Do you need additional insured wording for ongoing operations and completed operations (often the CG 20 10 and CG 20 37 equivalents)?
- Is a waiver of subrogation required, and is it scheduled correctly (often CG 24 04 or equivalent)?
- Are there any XCU exclusions that conflict with your scope (excavation, shoring, demolition, utilities)?
- Are there action over exclusions or employee injury limitations that could block tenders?
- Do any project type limitations eliminate coverage for the job you are bidding?
Conclusion
Understanding your liability policy’s endorsements and limitations can make the difference between a covered claim and a costly coverage dispute. Focus on the endorsements that tie directly to contractor contracts and real jobsite loss drivers, including additional insured wording (ongoing and completed operations), waivers of subrogation, XCU hazards, action over limitations, and project-type restrictions.
If you want a faster way to identify gaps, request a policy and contract insurance review from a licensed commercial insurance professional. Bring the full policy, declarations, and endorsement schedule, not just the certificate of insurance.
