1. Forms
2. CG
3. CG-21-88

What the form is

The CG 21 88, titled "Conditional Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism (Relating to Disposition of Federal Terrorism Risk Insurance Act)", is an endorsement used with Commercial General Liability (CGL) policies. Its primary function is to exclude coverage for bodily injury or property damage arising from acts of terrorism that involve nuclear, biological, or chemical materials (NBC terrorism). The 'conditional' aspect of this exclusion is crucial: its application is tied to the status of the federal Terrorism Risk Insurance Act (TRIA) or a similar successor act. If TRIA is terminated and not replaced, this exclusion is intended to apply. However, if TRIA is in effect, this endorsement may not apply, or its provisions might be superseded by other terrorism endorsements or the requirements of TRIA itself.

Classes of business it applies to

This endorsement can be attached to CGL policies for a wide array of businesses. It is not specific to a single industry but rather addresses a type of catastrophic risk. Examples of entities where this form might be seen include:

• Property management companies
• Condominium associations
• General commercial enterprises requiring liability coverage
• Businesses in areas perceived as higher risk for terrorism events

Essentially, any insured with a CGL policy where the insurer wishes to manage its exposure to NBC terrorism events, particularly in relation to the federal TRIA program, might have this endorsement.

Special considerations

The most significant consideration for the CG 21 88 is its conditional nature, which is directly linked to the existence and status of TRIA.

• TRIA Status: If the Terrorism Risk Insurance Program (or a similar federal program) is terminated, the exclusionary language of this endorsement becomes active. If the program is renewed or otherwise in effect, this specific exclusion might not apply, and coverage for terrorism (including NBC events) would be governed by TRIA's provisions and other policy endorsements.
• Interaction with other terrorism endorsements: Policies often contain multiple terrorism-related endorsements. The CG 21 88 must be read in conjunction with these other forms (e.g., those that provide coverage, cap losses, or exclude other types of terrorism) to understand the full picture of terrorism coverage.
• Definition of Terrorism: The definition of "terrorism" and specifically "nuclear, biological, or chemical terrorism" within the policy and this endorsement is critical.

For example, if TRIA were to expire without renewal, a business with this endorsement would likely find that any losses from an NBC terrorism event are excluded by their CGL policy. Conversely, while TRIA is active, this exclusion might be dormant, and coverage for certified acts of NBC terrorism would be subject to TRIA and other policy terms.

Key information for agents and underwriters

• Agents: It is crucial for agents to clearly explain the conditional nature of this endorsement to insureds. Clients need to understand that their coverage for NBC terrorism can change based on federal legislation (TRIA). Agents should also clarify how this form interacts with other terrorism endorsements in the policy.
• Underwriters: Underwriters use this form to manage their company's aggregate exposure to potentially catastrophic NBC terrorism losses, particularly in scenarios where a federal backstop like TRIA might not be available. The decision to include this endorsement will depend on the insurer's risk appetite, the insured's risk profile, and the prevailing legislative environment regarding terrorism risk. Pricing for terrorism coverage will also reflect the presence or absence of such conditional exclusions and the overall TRIA framework. Risk assessment should consider the insured's location, industry, and potential as a target for terrorism.