1. Forms
2. CG
3. CG-21-73

What the form is

The CG 21 73 Exclusion of Certified Acts of Terrorism is an endorsement used with various commercial liability insurance policies. Its primary purpose is to explicitly exclude coverage for losses or damages arising directly or indirectly from "certified acts of terrorism". This aligns the policy with the provisions of the Terrorism Risk Insurance Act (TRIA), a U.S. federal law that created a system for sharing losses from large-scale terrorist attacks. A "certified act of terrorism" is specifically defined by TRIA and requires certification by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General. This endorsement clarifies that such federally certified events are not covered under the standard terms of the liability policy to which it is attached.

Classes of business it applies to

This endorsement is broadly applicable and can be attached to a wide array of commercial liability policies. It is not specific to any single industry but rather to the type of coverage part it modifies. Examples of coverage parts that can be modified by CG 21 73 include:

• Commercial General Liability Coverage Part
• Liquor Liability Coverage Part
• Owners and Contractors Protective Liability Coverage Part
• Pollution Liability Coverage Part
• Products/Completed Operations Liability Coverage Part
• Railroad Protective Liability Coverage Part
• Underground Storage Tank Policy

Therefore, any commercial enterprise, regardless of its specific industry (e.g., retail, manufacturing, construction, hospitality, transportation), that has one of these underlying coverage parts could potentially have the CG 21 73 endorsement attached to its policy if the insurer is excluding certified acts of terrorism.

Special considerations

The use and implications of the CG 21 73 are closely linked to the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. Key considerations include:

• TRIA Requirements: Insurers are generally required under TRIA to make coverage available for certified acts of terrorism. If an insured declines to purchase this specific terrorism coverage (often offered as a buy-back), or if the insurer is otherwise excluding certified acts where permissible, this endorsement is used to effectuate that exclusion.
• Definition of "Certified Act of Terrorism": It is crucial to understand that this endorsement applies only to acts that meet the specific definition and certification process outlined in TRIA. Acts of terrorism that are not certified by the federal government may be treated differently under the policy, potentially being covered or excluded by other policy terms or endorsements.
• Disclosure: Insurers typically have disclosure obligations related to TRIA and the availability of terrorism coverage. The use of this exclusion should be clearly communicated to the insured.

For example, if a large-scale event occurs and is officially certified as an act of terrorism by the Secretary of the Treasury, any claims for bodily injury or property damage arising from that event would be excluded under a policy containing the CG 21 73 endorsement.

Key information for agents and underwriters

For insurance agents and underwriters, the CG 21 73 endorsement has several practical implications:

• Risk Management: Underwriters use this form to manage their company's exposure to potentially catastrophic losses from certified acts of terrorism, particularly when the insured has opted out of purchasing specific TRIA coverage.
• Client Communication: Agents must clearly explain to insureds the impact of this exclusion. This includes discussing what constitutes a "certified act of terrorism" and the potential coverage gap it creates if the insured does not purchase separate terrorism coverage.
• Pricing and Premiums: The attachment of this endorsement typically means that the policy premium does not include a charge for covering certified acts of terrorism. If an insured desires this coverage, it usually needs to be purchased separately, often via a TRIA-specific endorsement, and will involve an additional premium.
• Compliance: Ensure all regulatory requirements regarding TRIA disclosures and offers of coverage are met when this endorsement is part of the policy.
• Coverage Gaps: Be aware that while this form excludes certified acts, other policy language or endorsements might address non-certified acts of terrorism. It's important to review the entire policy to understand the full scope of terrorism-related coverage or exclusions.