1. Forms
2. CG
3. CG-21-84

What the form is

The CG 21 84 endorsement is an exclusionary endorsement used with the Commercial General Liability (CGL) Coverage Part. Its primary purpose is to eliminate coverage for 'bodily injury' or 'property damage' arising out of a 'certified act of terrorism' that involves nuclear, biological, chemical, or radiological (NBCR) materials. A 'certified act of terrorism' is defined by the Terrorism Risk Insurance Act (TRIA) as an act certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States, to be an act of terrorism.

Furthermore, this endorsement incorporates a cap on losses from certified acts of terrorism. If the aggregate insured losses from such acts exceed $100 billion in a calendar year, and the insurer has met its deductible under TRIA, the insurer will not be liable for any portion of losses exceeding this $100 billion cap. In such cases, insured losses up to that amount are subject to pro rata allocation as established by the Secretary of the Treasury.

Classes of business it applies to

This endorsement can be applied to a wide range of commercial general liability policies across various industries. It is particularly relevant for businesses that could be potential targets or have significant exposure to losses from acts of terrorism, especially those involving NBCR materials. Examples include:

• Businesses located in high-profile urban areas or near critical infrastructure.
• Companies involved in transportation, energy, chemical manufacturing, or large public venues.
• Any insured seeking clarity on how their CGL policy responds to large-scale, certified NBCR terrorism events.

For instance, a chemical plant located in a major city might have this endorsement attached to its CGL policy. If a certified act of terrorism involving the release of chemical agents occurred, this endorsement would generally exclude coverage for the resulting bodily injury and property damage, subject to the TRIA cap provisions.

Special considerations

Key considerations for this endorsement include:

• TRIA Compliance: The endorsement is designed to work in conjunction with the Terrorism Risk Insurance Act. Understanding TRIA's mechanisms for certifying acts of terrorism and for managing losses is crucial.
• Definition of NBCR Terrorism: The exclusion specifically targets certified acts of terrorism that are nuclear, biological, chemical, or radiological in nature. Other types of certified terrorism might still be covered, subject to other policy terms and any other applicable terrorism endorsements.
• Interaction with other terrorism endorsements: Insurers may use a suite of terrorism endorsements (e.g., CG 21 70, CG 21 73, CG 21 87) to define the scope of terrorism coverage. The CG 21 84 is specific to NBCR events.
• No Creation of Coverage: The endorsement clarifies that the terms and limitations of any terrorism exclusion, or the absence of one, do not create coverage for injury or damage that is otherwise excluded under the CGL Coverage Part.

For example, if a business has this endorsement and experiences a certified act of terrorism that does not involve NBCR materials, the exclusion in CG 21 84 would not apply, but other terrorism-related endorsements or policy terms would then dictate coverage. Conversely, if an event is not a 'certified act of terrorism' under TRIA, this specific endorsement's exclusion and cap provisions would not be triggered, though other policy exclusions (like a general war exclusion or pollution exclusion) might still apply.

Key information for agents and underwriters

Agents and underwriters should note the following:

• Risk Assessment: The necessity and appropriateness of this endorsement depend on the insured's specific exposures and the underwriter's risk appetite for terrorism, particularly NBCR terrorism.
• Pricing: While this is an exclusionary endorsement, the overall pricing for terrorism coverage (or the lack thereof) is a complex underwriting decision influenced by TRIA and the perceived risk.
• Coverage Gaps: Agents should clearly explain to insureds that this endorsement creates a significant exclusion for NBCR terrorism events. If an insured has a high exposure or desire for this type of coverage, alternative solutions (if available) would need to be explored.
• Clarity and Disclosure: It is vital that insureds understand the impact of this endorsement. The cap on losses is a federal provision under TRIA, and its implications in a catastrophic terrorism scenario should be communicated.
• State Applicability: While this is an ISO multistate form, underwriters should verify any state-specific rules or endorsements that might interact with or modify its application.