Certain risks, such as excavation, tunneling, subway construction, landscaping, and building wrecking, carry with them exposures that present problems for an insurer. Among these are risks that relate to blasting and other explosion, collapse, or structural injury to property from various operations, and damage to certain underground property. The current commercial general liability coverage form automatically provides coverage for the explosion, collapse, and underground property damage hazards. This is in stark contrast to the comprehensive general liability policy and it means that the burden of policing such exposures has fallen upon the insurers. If a potential insured engages in operations that might even remotely include the hazards of explosion, collapse, or underground property damage, the insurer must recognize the exposure and underwrite the risk accordingly.

There are currently two standard endorsements that can be used by insurers to exclude explosion, collapse, and underground property damage hazards. CG 21 42 is an exclusion endorsement for specified operations and CG 21 43 is a general exclusion endorsement that allows specified operations to be covered. As a point of reference in the following discussion, the definitions these two forms add to the CGL are as follows:

CG 21 42 can be used when an insurer has an insured that may only occasionally engage in operations that could be included in the explosion, collapse, or underground property hazard category. For example, the activity of landscape gardening may once in awhile include the collapse or underground property damage hazard, particularly with many new office buildings' insistence on a park-like setting incorporating a man-made pond. Irrigation or drainage system construction may call for the use of explosives in certain situations. If the insurer wants to insure the general operations of a company, but shy away from certain activities, then CG 21 42 can be endorsed onto the CGL form to exclude the scheduled hazard.

This endorsement states that the insurance does not apply to property damage (bodily injury is not mentioned) included within the explosion hazard, the collapse hazard, or the underground property damage hazard if any of these hazards is entered as an excluded hazard on the schedule. The form then goes on to define those hazards.

The explosion hazard includes property damage arising out of blasting or explosion, but does not include damage arising out of the explosion of air or steam vessels, piping under pressure, prime movers, or machinery or power transmitting equipment.

The collapse hazard includes structural property damage and any resulting property damage to any other property at any time. This definition is expanded to show that structural property damage means the collapse of or structural injury to any building or structure due to grading of land, excavating, tunneling, pile driving, or moving, shoring, raising, or demolition of any building or structure. This part of the endorsement seems to attempt an all-encompassing exclusion of property damage caused by the collapse hazard. As it is defined, the collapse hazard means not only collapse but any structural damage arising out of the activities of the insured. Thus, if the insured is pile driving in one area and that causes the building across the street to crack or in any way suffer structural damage, this endorsement would act to deny coverage for a claim.

The underground property damage hazard includes underground property damage and any resulting property damage to any other property at any time. Considering the breadth of the definition, this exclusion seems to be unsure of its own scope. For instance, the definition applies to any resulting property damage to any other property at any time — a very omnibus phrase. Conversely, the definition states that the damage must be caused by the use of mechanical equipment and must be caused during the use of that equipment. Does this mean that if the insured digs a tunnel by hand and causes damage, the damage is not excluded? Or if the insured digs a tunnel using mechanical equipment but the damage occurs only after the job is done, is the damage not excluded? If a dispute over a claim should arise based on this exclusion, it obviously is a question of fact to be decided by a jury on a case-by-case basis, but insurers and insureds should be aware of the issue.

There are two exceptions on the endorsement that apply to all of the hazards. The exclusion of explosion, collapse, and underground property damage hazards does not apply to operations performed for the named insured by others, or to property damage included within the products-completed operations hazard. So, for example, if a general contractor has a subcontractor blasting or pile driving for him, any resulting claim against the contractor for property damage is not going to be excluded by this endorsement.

This endorsement, CG 21 43, is worded exactly as CG 21 42 when it comes to the exclusions and the definitions. The difference is that CG 21 43 applies when the insurer chooses to insure a specifically described operation that otherwise would have been excluded by the endorsement. The exclusion thus will not apply to any operation described in the schedule on the endorsement, if any of the hazards is entered as a covered hazard. For example, if the named insured is a subcontractor that has taken on the job of bulldozing an area for a project and must take the precaution of shoring up nearby walls or foundations, the insurer may choose to cover that one operation for any or all of the hazards listed on the endorsement. So if the bulldozing causes a foundation on the property across the street to collapse or sag, the insured will have coverage if a claim is made and the applicable hazard is listed as covered on CG 21 43.