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CGL Exclusions HVAC Contractors Must Know: Pollution, Professional Services and More

Commercial General Liability (CGL) policies are a foundation of risk management for HVAC contractors, but policy exclusions can leave critical gaps. This guide explains the most common CGL exclusions for HVAC businesses in the USA, how they affect operations in major markets (Los Angeles, CA; Houston, TX; Chicago, IL; Miami, FL; New York City, NY), what coverages you should add, and real-world pricing context so you can make informed purchasing and contracting decisions.

Why exclusions matter for HVAC contractors

CGL policies typically respond to third‑party bodily injury and property damage resulting from your operations, products, or completed work. However, standard exclusions—if not addressed—can mean claims are denied even when a customer or a contract expects coverage. For HVAC contractors who perform installations, maintenance, ductwork, refrigerant handling, and small design or system layout tasks, the most important exclusions to know are:

  • Pollution exclusion
  • Professional services / professional liability exclusion
  • Contractual liability and waiver exclusions
  • Damage to your work / products-completed operations limitations
  • Expected or intended injury
  • Employee injury (workers’ compensation primary)

Below we unpack the top exclusions and how to mitigate them.

1. Pollution exclusion — HVAC relevance and solutions

Most CGL policies include a broad pollution exclusion that bars coverage for pollution-related losses. For HVAC contractors, pollution issues can arise from:

  • Refrigerant leaks (e.g., R‑410A, R‑22) that damage property or cause health responses
  • Fuel or oil spills from furnaces, boilers, or transport
  • Asbestos or mold disturbance during replacements or demolitions

Why it matters in major markets:

  • California (Los Angeles): strict environmental regs and higher litigation frequency increase exposure and claim cost.
  • Gulf Coast (Houston): industrial and flood-related contamination risks can compound claims.

How to mitigate:

  • Add a Limited Pollution Liability or Contractor’s Pollution Liability (CPL) policy to cover third‑party cleanup, bodily injury and property damage from pollution incidents.
  • Consider per‑project pollution riders for high‑risk jobs (e.g., HVAC retrofits, refrigerant recovery).

2. Professional services exclusion — when “installation” crosses into design

CGL policies commonly exclude coverage for professional services (errors in design, engineering calculations, drawings). HVAC contractors who provide:

  • Load calculations, system design, or controls programming
  • Specification or design recommendations
  • Commissioning services

may face denied claims under a CGL with a professional services exclusion.

Solutions:

  • Buy Professional Liability (Errors & Omissions) coverage to cover negligence in design/consulting.
  • Negotiate contract language limiting your exposure and clearly state the scope of design responsibility.

3. Damage to your work, products-completed operations

Standard CGL policies have nuances around whether damage to the contractor’s own work is covered. Typically:

  • Damage to your own completed work may be excluded if it’s a defect or faulty workmanship (CGL is not a performance bond).
  • However, if your defective work causes damage to other property, CGL may respond to that resulting damage.

Best practices:

  • Use wrap‑up or builder’s risk where appropriate for large projects.
  • Maintain completed operations coverage with adequate retroactive period.

4. Contractual/liability assumed under contract

Many construction contracts require indemnification or additional insured status. CGL policies often exclude liability assumed under contract unless it’s an insured contract endorsement. To satisfy owners/GCs:

  • Add additional insured endorsements for the contractual parties (CG 20 10 / CG 20 37 variants), but be mindful of the limits and status of coverage.
  • Consider contract review and limit indemnity to fair, insurable obligations.

See more on structuring limits and additional insureds:
How to Structure General Liability Limits for HVAC Contractors: Choosing 1M/2M vs Higher
Additional Insureds, Endorsements and Waivers: Customizing CGL for HVAC Contracts

5. Pollution vs professional exclusion — an example

A faulty control sequence (a design error) causes a freeze and refrigerant leak that damages a tenant’s electronics. Which exclusion applies?

  • The professional services exclusion might bar coverage for the design error.
  • The pollution exclusion might bar coverage for refrigerant release.
  • Recommended approach: combined CPL + Professional Liability to close both gaps.

Table: Common CGL Exclusions and Recommended Coverages

Exclusion Typical HVAC scenario Recommended add‑on(s)
Pollution exclusion Refrigerant leak, fuel/oil spill, mold disturbance Contractor’s Pollution Liability (CPL), Limited Pollution (per project)
Professional services exclusion Load calculations, controls programming errors Professional Liability / E&O
Damage to your work Improper installation causing system failure Wrap‑up, Completed Operations coverage, Project-specific endorsements
Contractual liability Indemnities to GC/owner Additional Insured endorsements, contract review
Expected/Intended injury Deliberate or foreseeable acts Risk management; policies exclude intentional acts

Pricing reality — what HVAC contractors pay

Pricing depends on location, payroll, revenue, scope of services, claims history, and limits. Here are representative industry figures to guide budgeting (USA):

Sample city effects (approximate annual GL-only ranges):

  • Los Angeles, CA: $700–$2,500+ (higher litigation/environmental risk)
  • Houston, TX: $600–$1,800 (industrial/pollution exposure higher)
  • Chicago, IL: $650–$1,900
  • Miami, FL: $700–$2,200 (hurricane/flood-related risk factors)
  • New York City, NY: $800–$3,000+ (higher limits and litigation cost)

Always get tailored quotes — insurers assess each account individually.

Practical steps HVAC contractors should take now

  1. Review your CGL declarations and policy forms: find pollution, professional services, and contractual liability language.
  2. Identify high‑risk operations: refrigerant handling, boiler/furnace work, retrofit projects, and any design work.
  3. Purchase targeted coverages:
    • Contractor’s Pollution Liability for refrigerants/contaminants.
    • Professional Liability for design/commissioning services.
    • Completed Operations and Products Liability extensions.
  4. Negotiate contract language: cap indemnities, limit additional insured requests where possible, and require certificates only when necessary. See Contract Clauses That Affect Your General Liability Coverage — What to Negotiate.
  5. Document risk control: refrigerant recovery logs, employee training, equipment maintenance records to reduce premium impact and strengthen your defense in a claim.

When to escalate: claims and limits

Final checklist before quoting a job

  • Have you disclosed refrigerant handling and design services to your carrier?
  • Do you have CPL and Professional Liability if you need them?
  • Are additional insured endorsements in place with appropriate CG forms and limitation language?
  • Is your limits structure adequate for the project size and venue?

Understanding CGL exclusions—and proactively purchasing endorsements or separate policies (CPL, E&O)—is essential to protect your HVAC business and comply with modern contracting requirements across Los Angeles, Houston, Chicago, Miami, New York City and beyond.

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