Background: Hypoglycemia remains a risk for closed loop insulin delivery particularly following exercise or if the glucose sensor is inaccurate. The aim of this study was to test whether an algorithm that includes a limit to insulin delivery is effective at protecting against hypoglycemia under those circumstances. Methods: An observational study on 8 participants with type 1 diabetes was conducted, where a hybrid closed loop system (HCL) (Medtronic™ 670G) was challenged with hypoglycemic stimuli: exercise and an overreading glucose sensor. Results: There was no overnight or exercise-induced hypoglycemia during HCL insulin delivery. All daytime hypoglycemia was attributable to postmeal bolused insulin in those participants with a more aggressive carbohydrate factor. Conclusion: HCL systems rely on accurate carbohydrate ratios and carbohydrate counting to avoid hypoglycemia. The algorithm that was tested against moderate exercise and an overreading glucose sensor performed well in terms of hypoglycemia avoidance. Algorithm refinement continues in preparation for long-term outpatient trials.