Final answer:
A sidetrack agreement which is an insured contract under the CGL policy makes it an exception to the Contractual Liability exclusion, allowing the policy to provide coverage for liabilities under such an agreement.
Step-by-step explanation:
Which of the following best describes a sidetrack agreement which is an insured contract under the CGL? The correct answer is that this designation makes it an exception to the Contractual Liability exclusion. A sidetrack agreement is typically a lease agreement where a railroad company agrees to maintain a sidetrack that is installed on another party's premise. In the context of a Commercial General Liability (CGL) policy, an insured contract such as a sidetrack agreement is an exception to the policy's contractual liability exclusion meaning the CGL policy can provide coverage for liabilities assumed under a sidetrack agreement.
Options suggesting specific scenarios, such as the Baltimore & Ohio (B&O) Railroad building an extension track to the Ford Motor Company serve as examples of a sidetrack agreement but do not help to explain the insurance coverage aspect. It is important to understand that the key part of the question involves insurance coverage and how the CGL policy addresses such agreements which is why a correct description focuses on the policy exception rather than physical details of the track.