A Florida-based independent contractor is hired to remodel a client's kitchen. During the demolition phase, the contractor negligently cuts into a water pipe, causing significant water damage to the client's home. The contractor has a Commercial General Liability (CGL) policy. Which of the following exclusions in a standard CGL policy would likely apply to the damage to the pipe itself, but NOT to the resulting water damage to the rest of the home?
- AContractual Liability
- BDamage to Your Product
- CDamage to Property of Others in Your Care, Custody, or Control
- DDamage to Your Work
Show answer & explanationAnswer & explanation
Correct answer: D. Damage to Your Work
The 'Damage to Your Work' exclusion (also known as the 'work performed' exclusion) in a CGL policy typically excludes coverage for property damage to the insured's own work that arises out of that work. In this scenario, the pipe is part of the 'work' being performed by the contractor. However, the resulting water damage to other parts of the home (not the specific work being performed) would generally be covered, as it's consequential damage to 'other property.' This exclusion is intended to prevent the CGL policy from acting as a warranty for the contractor's workmanship.
Why the other options are wrong
- A. Contractual Liability exclusion applies to liability assumed under a contract, not direct property damage caused by negligence.
- B. This exclusion applies to damage to the insured's product (e.g., a manufactured item), which is not relevant to a service-based contractor's work.
- C. This exclusion typically applies to property that the insured is temporarily holding or working on, and could apply to the entire home, not just the pipe. However, in this specific context, the 'Your Work' exclusion is more precise for the pipe itself.
CGL 'Damage to Your Work' Exclusion
Excludes coverage for property damage to the insured's own work arising out of that work, preventing the CGL from guaranteeing workmanship.
- Also known as the 'work performed' exclusion.
- Distinguishes between damage to the contractor's work and damage to other property.
- Aims to cover 'occurrence' based damage, not faulty workmanship itself.
Memory trick: CGL won't fix your own poor work, just the ripple effect.