There has been a large increase in the amount of questionsreceived recently by FC&S concerning the damage to property anddamage to your work exclusions on the commercial general liability(CGL) coverage form. These exclusions come into play when aninsured performs work on a customer's property and that work isthen judged to be faulty, causing the customer to make a claim forproperty damage against the insured. The exclusions are applied toprevent the CGL form from guaranteeing the work of the insured;that is, to prevent the CGL form from providing liability coveragefor the insured for the costs of replacing and repairing defectivematerials or poor workmanship. Such damage is a business risk thatthe insured must bear himself.

However, the exclusions that would prevent coverage for damageto the insured's work are written in such a way that insureds andclaim adjusters alike often have problems understanding the correctapplication. The standard damage to property exclusions on the ISOCGL form read as follows:

“This insurance does not apply to: property damage to thatparticular part of real property on which you or any contractors orsubcontractors working directly or indirectly on your behalf areperforming operations, if the property damage arises out of thoseoperations — exclusion 2(j)(5); or to that particular part of anyproperty that must be restored, repaired, or replaced because yourwork was incorrectly performed on it — exclusion 2(j)(6). Thedamage to your work exclusion applies to property damage to yourwork arising out of it or any part of it and included in theproducts-completed operations hazard — exclusion 2(l).”

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