Los Angeles Claims Adjuster Property and Causality Practice Exam

What type of liabilities does the CGL Coverage A exclusion not cover related to contracts?

1. Liabilities assumed in casual agreements

2. Liabilities for damages the insured would have had without a contract

3. Liabilities under verbal agreements

4. Liabilities assumed in oral contracts

The correct answer is: Liabilities for damages the insured would have had without a contract

The exclusion related to contracts in Commercial General Liability (CGL) Coverage A specifically addresses liabilities that arise from contract assumptions. The correct answer indicates that the CGL does not cover liabilities for damages that would exist regardless of any contract being in place. This means if the insured would have faced the liability irrespective of a contractual agreement, that liability falls outside the scope of what the CGL is designed to cover. In evaluating the other options, it is important to note that liabilities assumed in casual agreements, verbal agreements, and oral contracts tend to be viewed under specific contractual language or context. The CGL coverage would still apply to liabilities from these contracts unless the contract itself specifically excludes coverage for such liabilities. Therefore, the option reflecting liabilities the insured would have faced regardless of a contract is the most clear-cut example of what is not covered under the CGL exclusion. This emphasizes the intent of the coverage to protect against specific contractual liabilities rather than general or pre-existing liabilities.