1. Forms
2. CA
3. CA-23-84

What the form is

The CA 23 84 Exclusion of Terrorism endorsement is an Insurance Services Office (ISO) form used to modify various commercial auto insurance policies. Its primary purpose is to exclude coverage for losses or damages caused by acts of "terrorism" as defined within the endorsement. Importantly, the definition of terrorism in this form is not necessarily contingent on an official government declaration. Instead, the exclusion typically applies if the act is attributed to a nuclear, biological, or chemical incident, or if it results in aggregate property damage exceeding a specified threshold (commonly $25 million), or causes a certain number of deaths or serious injuries (often 50 or more persons).

Classes of business it applies to

This endorsement can be attached to policies for a wide range of businesses that have commercial automobile exposures. Examples include:

• Businesses with fleets of vehicles (delivery services, sales fleets, etc.)
• Trucking companies and motor carriers.
• Auto dealerships.
• Any entity utilizing vehicles in their operations that could be impacted by a terrorist event. For instance, a construction company whose vehicles are damaged at a site targeted in an attack, or a taxi service whose vehicles are involved in an incident.

Special considerations

• The use of this and similar endorsements is closely linked to the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations, which require insurers to make terrorism coverage available. This endorsement is one tool insurers use to manage their terrorism exposure by specifically excluding certain types or magnitudes of terrorist events.
• It is crucial to distinguish CA 23 84 from other terrorism-related endorsements, such as CA 23 85 (Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism), as the scope of the exclusion can differ.
• The definition of a single "incident" can be significant, as the endorsement may specify that multiple acts of terrorism occurring within a defined timeframe (e.g., 72 hours) and appearing related will be considered one incident for the purpose of applying the thresholds.
• The applicability and wording of terrorism endorsements can be subject to state-specific regulations and amendments.

Key information for agents and underwriters

• Agents: It's vital to discuss terrorism coverage options thoroughly with commercial clients, explaining what is covered, what is excluded by endorsements like CA 23 84, and the implications of TRIA. Clients need to understand the specific triggers for this exclusion.
• Underwriters: Risk assessment should include evaluating the insured's potential exposure to terrorism losses. The decision to apply this endorsement, and which version, will depend on the insurer's underwriting guidelines, the nature of the insured's operations, and geographic location.
• Pricing for terrorism coverage is typically stated separately, and this endorsement clarifies the extent of the base policy's response to terrorism.
• Understanding the financial thresholds ($25 million in property damage) and casualty counts (50 or more persons) is critical for determining if the exclusion applies to a particular event.
• Ensure that the use of this endorsement aligns with all applicable federal and state laws regarding terrorism coverage.