What Does General Liability Insurance Not Cover?

Posted by Insurance City on June 13, 2026

General liability pays when someone outside your business says you hurt them, damaged their property, or injured them through things like defamation or advertising. Everything else it leaves out is written into the policy as an exclusion, and the exclusions are where most coverage surprises come from. This guide walks through them in the order they appear on the standard form, says in plain English what each one means, and names the policy that fills each gap.

Where the exclusions live in your policy

Many small-business general liability policies are written on the Insurance Services Office (ISO) Commercial General Liability Coverage Form CG 00 01, or on a carrier form modeled on it. The form number and edition date print in the corner of each page and on the forms schedule in your declarations. The 04 13 edition, still common, is the one quoted here.

The form is split into coverages. Coverage A is bodily injury and property damage. Coverage B is personal and advertising injury. Coverage C is medical payments. Each has its own list of exclusions, and after the printed form come the endorsements — added pages that can widen coverage or take more away. To know what your policy really excludes, read the Coverage A exclusions, the Coverage B exclusions, and every endorsement whose title starts with “Exclusion.”

Coverage A exclusions, one by one

Coverage A paragraph 2 opens with “This insurance does not apply to” and then runs from a to q:

• a. Expected or intended injury. Harm you meant to cause, or expected to happen, is not an accident, so it is not covered. The form carves out one case: bodily injury from using reasonable force to protect people or property.
• b. Contractual liability. If you sign a contract promising to pay for someone else’s losses, that promise is excluded — unless the contract is an “insured contract.” The definition includes a lease of premises and the part of a business contract where you take on another party’s liability for injury or damage to a third person. That carve-out is why the indemnity clause in a lease or a subcontract is often still covered.
• c. Liquor liability. Claims for causing someone’s intoxication, serving a minor or an intoxicated person, or breaking an alcohol law — but only if you are in the business of making, distributing, selling, serving or furnishing alcohol. Letting guests bring their own bottles is not, by itself, that business. Bars, restaurants and caterers need liquor liability; our restaurant checklist covers how California law treats those claims.
• d. Workers’ compensation and similar laws. Anything you owe under workers’ comp, disability or unemployment law belongs to those systems. In California, that means a workers’ compensation policy.
• e. Employer’s liability. Injury to your own employees on the job, including claims by their spouse or family because of that injury. Employer’s liability is Part Two of a workers’ comp policy, which is where this belongs.
• f. Pollution. The longest exclusion on the form: injury or damage from the discharge or release of “pollutants,” plus cleanup and testing costs a government or a regulation demands. Three exceptions are worth knowing: smoke or fumes from a building’s own heating or cooling equipment, injury or damage from heat, smoke or fumes of a “hostile fire,” and, for contractors, injury inside a building from fumes of materials they brought in for the job. Some policies replace this exclusion with a broader one that drops those exceptions. Pollution liability is the separate coverage.
• g. Aircraft, auto or watercraft. Anything arising from owning, maintaining, using, loading or unloading an aircraft, auto or watercraft owned, operated, rented or loaned to you. Narrow exceptions cover parking a customer’s car on your premises and small non-owned boats. Vehicles belong on commercial auto, including hired and non-owned auto; a food truck is the classic example.
• h. Mobile equipment. Transporting mobile equipment (a forklift, a skid steer) on an auto you own or use, and racing or demolition events.
• i. War. War, warlike action, insurrection and the government’s response to them.
• j. Damage to property. Several things GL does not treat as “someone else’s property”: property you own, rent or occupy; premises you sold or gave away; property loaned to you; personal property in your care, custody or control; the particular part of real property you or your subcontractors are working on, if the damage comes from that work; and the particular part that has to be redone because your work was done wrong. A separate small limit gives back fire damage to premises rented to you. Your own building and equipment belong on commercial property; customer goods you hold need inland marine or a bailee policy.
• k. Damage to your product and l. damage to your work. GL pays for the damage your faulty product or finished work causes to other property, not for replacing the product or redoing the work itself. Exclusion l has a well-known exception: it does not apply when the damaged work, or the work that caused the damage, was done for you by a subcontractor.
• m. Impaired property. Loss of use of property that is not physically damaged, when the cause is a defect in your product or work or your failure to perform a contract on time or as agreed.
• n. Recall. The cost of pulling your product or work off the market. Product recall coverage is separate.
• o. Personal and advertising injury. Bodily injury that arises from those offenses is pushed to Coverage B instead.
• p. Electronic data. Damages from loss, corruption or inability to access electronic data, except for bodily injury. Data and breach losses belong on cyber liability.
• q. Recording and distribution of material in violation of law. Claims under the Telephone Consumer Protection Act, CAN-SPAM, the Fair Credit Reporting Act and similar laws. A business that texts or auto-dials customers should know this one.

Coverage B exclusions in brief

Coverage B (libel, slander, wrongful eviction, false arrest, use of another’s advertising idea and similar offenses) has its own list: injury done knowingly, material published knowing it was false or before the policy started, criminal acts, contractual liability and breach of contract, goods that fail to match what your ads promised, wrong price descriptions, most intellectual-property infringement other than in your own advertising, businesses in media and internet-type operations, chat rooms or bulletin boards you control, unauthorized use of another’s name or product, pollution, war, and the same recording-and-distribution laws as exclusion q.

What general liability never covered to begin with

Some of the biggest gaps are not exclusions on the form at all. They are risks the insuring agreement never reaches, or ones a carrier removes by endorsement:

• Professional mistakes. Advice, design, bookkeeping or consulting errors that cause financial loss, with no injury or property damage. Many policies for service businesses add a professional services exclusion endorsement on top. That gap is errors & omissions.
• Employment claims. Wrongful termination, discrimination and harassment claims from your own staff are handled under EPLI.
• Your own losses. GL is third-party coverage. Your fire, theft or lost income is property and business interruption coverage.

Three questions to ask before you sign a contract or renew

1. Which form and edition is my policy on, and is it a carrier form? The exclusions above are the standard ones; a carrier form can word them differently.
2. Which exclusion endorsements are attached? Ask for the forms schedule and read the titles: total pollution, professional services, classification limitation, designated operations and similar pages change what the policy does.
3. Does the contract ask for something GL excludes? Leases and subcontracts ask for additional insured status, waivers and indemnity. Check that the indemnity fits the insured contract definition, and that your policy carries the endorsements the certificate has to show.

Have us read your policy

Insurance City is an independent brokerage in Stockton. Send us your declarations page and forms schedule, and we will tell you which of these exclusions apply to your operation and which policy closes each gap. Call (209) 670-1556, or start with the Central Valley Business Insurance Guide.