1. Forms
2. CG
3. CG-21-75

What the form is

The CG 21 75 is an endorsement used with Commercial General Liability (CGL) policies and potentially other commercial liability policies. Its primary function is to modify the policy's coverage concerning acts of terrorism. Specifically, it excludes coverage for two main categories of terrorism-related losses:

• Certified Acts of Terrorism: These are acts defined and certified as such by the Secretary of the Treasury in accordance with the Terrorism Risk Insurance Act (TRIA). This exclusion applies regardless of where the act occurs, although losses from certified acts within the U.S. are subject to a cap as outlined by TRIA.
• Other Acts of Terrorism Committed Outside The United States: This part of the endorsement excludes acts of terrorism that are not certified under TRIA and occur outside of the United States. The definition for these 'other acts' is typically broad and may not have specific limitations regarding the number of injuries or the value of property damage.

Classes of business it applies to

This endorsement is broadly applicable to a wide array of commercial enterprises that could face potential losses from acts of terrorism. It is particularly relevant for:

• Businesses with international operations, employees who travel abroad, or assets located outside the United States. For example, a multinational corporation with offices or factories in other countries.
• Companies situated in high-profile locations, near iconic landmarks, or in industries that might be considered potential targets for terrorism. For instance, businesses in major metropolitan centers or those involved in critical infrastructure.
• Any insured entity where the insurer aims to manage its exposure to terrorism-related losses, especially those that fall outside the federal TRIA backstop or involve terrorism events in foreign countries.

Special considerations

• TRIA Interplay: This endorsement operates within the framework of the Terrorism Risk Insurance Act. TRIA mandates that insurers make terrorism coverage available, but endorsements like CG 21 75 are used to define and limit the scope of that coverage, particularly for events not covered by TRIA's federal reimbursement mechanism.
• Definition of 'Certified Act of Terrorism': It's crucial to understand that a 'certified act of terrorism' has a specific definition under TRIA, requiring official certification by the Secretary of the Treasury and meeting certain criteria, such as causing insured losses exceeding a specified threshold (e.g., $5 million in aggregate).
• Exclusion of Non-Certified Foreign Terrorism: The exclusion for 'other acts of terrorism committed outside the United States' is significant as these events are not subject to TRIA's provisions and would otherwise represent an unquantified exposure for insurers.
• Mandatory Offering vs. Scope of Coverage: While TRIA obliges insurers to offer terrorism coverage, this endorsement allows them to specifically exclude certain types of terrorism risks, ensuring clarity on what is and isn't covered under the policy.

Key information for agents and underwriters

• Pricing and Risk Assessment: The application of this endorsement can affect policy premiums by carving out specific terrorism exposures. Underwriters must evaluate an insured's international footprint and overall terrorism risk profile to determine appropriate coverage and pricing. The form helps insurers manage their aggregate terrorism loss exposure.
• Identifying Coverage Gaps: Agents must clearly communicate the implications of this endorsement to insureds. Businesses with substantial international exposures might face a coverage gap for terrorism events occurring abroad that are not 'certified acts' and may need to explore specialized international terrorism insurance.
• Underwriting Strategy: CG 21 75 is a standard tool for insurers to manage terrorism risk. Its use is guided by an insurer's underwriting philosophy, the specific risk characteristics of the insured (such as their industry, geographic locations, and international activities), and the prevailing geopolitical landscape.
• Policy Context: Even with this exclusion, the standard terms, conditions, and other exclusions of the CGL policy continue to apply to any perils that remain covered.