The following are some of the questions received concerning these exclusions:

Q: Our insured was hired to fix a plumbing problem. In order to do that, he had to cut cement to gain access to the water line. The insured marked the area and then subcontracted the actual concrete cutting to someone else. The subcontractor started cutting the concrete and hit an electrical line. The insured admits fault for not checking the drawings before marking the area to be cut. Would exclusions 2(j)(5) or 2(j)(6) on the CGL form apply to prevent coverage for damage to the electrical line and the concrete that mistakenly was cut?

A: The damage to the electrical line is covered by the CGL form because neither exclusion would apply. The insured was not performing operations on the electrical line and his work was not incorrectly performed on the line at the time of damage. This was an example of the insured's work negligently damaging another person's property and that is what the CGL form is meant to cover.

As for the damage to the concrete, exclusion 2(j)(5) would prevent coverage (leaving aside the issue of whether this was even an occurrence as defined on the CGL form). This exclusion prevents coverage for property damage to that particular part of real property on which the insured or any subcontractor of the insured is performing operations if the damage arises from those operations. In this case, the damage to the concrete, which is real property, arose out of the operations of the subcontractor while the operations were occurring. So, exclusion 2(j)(5) would apply.

Q: The insured was hired as a subcontractor for various work at a particular location. The insured then subcontracted out some of his work to someone else. Part of the work subcontracted out was tile work in the various bathrooms involved in the project. While the subcontractor was doing the tile work, he got grout on the tubs, causing damage. Would the claim for this damage be covered under our insured's CGL form or is there an exclusion that would apply? We are thinking that either 2(j)(5) or 2(j)(6) would exclude coverage.

A: Neither of the exclusions you mention would apply to this claim. Both exclusions apply to situations where a particular part of property is affected by the insured's work on them at the time of the damage. Exclusion 2(j)(5) pertains to that particular part of real property on which the insured, or any subcontractor working on the insured's behalf, is performing operations. The other exclusion, 2(j)(6), pertains to that particular part of any property on which the insured's work was incorrectly performed.

In this instance, the insured was not performing operations and was not working on the tubs. He, through his subcontractor, was working on the tiles when the damage occurred. If the tiles had been damaged, that would be excluded property damage, but since exclusions have to be read and applied narrowly and in favor of the insured whenever reasonably possible, the damage to the tubs is just collateral and indirect damage since the subcontractor was not actually working on the tubs. The claim for damage to the tubs is not excluded.

Q: Our insured installed a hardwood floor, but subcontracted out the sanding and finishing. After the job was done, the floor started to buckle. It was determined that the floor was not installed properly and moisture was getting under the floor, causing the buckling. We think that exclusion 2(l) would prevent coverage in this situation, but would the work of the subcontractor change the situation?

A: From your description of the insured's work as being done improperly, the damage to your work exclusion — 2(l) — would prevent coverage in this case. This was a completed operations claim since the damage occurred after the work of the insured was finished, and damage to the insured's work arose out of that work. The exception to exclusion 2(l) does provide coverage for the damage if the work was performed by a subcontractor on behalf of the named insured, but the sanding and finishing work was not the cause of the damage; it was the improper installation work of the insured that caused it. So the exception does not apply, and the insured does not have coverage for this claim.

Q: The insured was hired by the claimant to do various home repairs, including work on the windows, gutters, and roof. The insured did the window and gutter work, but subcontracted out the work on the roof. The work on the roof was completed by the subcontractor and, as part of this work, a “torch down” was required. Later that day, a fire started because of this torch down and it destroyed the roof and some of the work that had been finished by the insured. Would this property damage claim be excluded from coverage due to exclusion 2(l), or does the exception provide coverage? And, if there is coverage, does it apply to the roof damage only or to all the damage done by the fire?

A: This is a completed operations claim since the requirements of completed work under the terms of the CGL form have been met, and the property damage occurred after the work was finished. Exclusion 2(l) would not apply because the subcontractor's work caused the damage. That exception allows coverage if the damaged work or the work out of which the damage arises was performed by a subcontractor. In this instance, the damage to the work of the insured and to the work of the subcontractor will be covered because the work out of which the damage arose was done by the subcontractor, thus empowering the exception to exclusion 2(l).

Q: The insured was hired as a general contractor to build a house for the claimant, with the entire job being subcontracted out to others. At issue is damage to the deck. The insured hired one subcontractor to frame and side the house. That subcontractor built the deck with plywood, but another subcontractor then came in to install a rubberized underlayer over the plywood; this subcontractor then installed slate on the deck. The allegation against the second subcontractor is that the underlayer was installed improperly and not up to manufacturing specifications. Eventually, water got underneath the tiles and underlayer and rotted the plywood and framing. The water also entered the house and damaged the interior floors. So what part of the deck, if any, would be covered? And if the work of the second subcontractor damaged the plywood installed by the first subcontractor, is there coverage for that damage?

A: The exception to exclusion 2(l) applies to any property damage that arises out of the work of subcontractors. If the damaged work was done by a subcontractor, then it is not excluded. If the damage arises out of the work of a subcontractor, it also is not excluded.

The purpose behind this exception is to give the named insured coverage for property damage for which he may be held legally responsible due to his status as the general contractor, but for which he did not actually perform himself. In this case, since the property damage arose out of the work done by the second subcontractor, the damage he caused because of his work is covered by the CGL form. This includes the damaged plywood installed by the first subcontractor.

David Thamann is managing editor for the Fire, Casualty, and Surety Bulletins. Claims Queue is prepared and written by the editorial staff of the Fire, Casualty, and Surety (FC&S) Bulletins, the most widely used encyclopedic reference service devoted to insurance policy interpretation and coverage topics. FC&S is published by The National Underwriter Company.