1. Forms
2. CG
3. CG-21-90

What the form is

The CG 21 90, titled "Exclusion of Terrorism," is an endorsement used with various commercial liability insurance policies. Its primary function is to eliminate coverage for bodily injury, property damage, or personal and advertising injury arising out of acts of "terrorism." The exclusion is broad and applies even if the act is not certified as an act of terrorism by the government. However, for the exclusion to apply, the act must either involve the use of nuclear, biological, or chemical agents, or cause an aggregate property loss exceeding $25,000,000, or result in the death or serious physical injury of 50 or more persons.

Classes of business it applies to

This endorsement is not limited to a specific industry. It can be attached to a variety of ISO commercial liability coverage parts, including:

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

Therefore, it can be found on policies for a wide range of businesses, from small enterprises to large corporations, across various sectors. For example, real estate owners, manufacturers, contractors, retailers, and event organizers could all have this endorsement modifying their liability coverage.

Special considerations

• Definition of Terrorism: The definition of "terrorism" within the endorsement is critical and dictates the scope of the exclusion. It is important to review this definition carefully.
• Interaction with TRIA: This endorsement operates in the context of the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. While TRIA provides a federal backstop for certain certified acts of terrorism, this endorsement typically seeks to exclude a broader range of terrorism-related losses from the primary policy coverage.
• Thresholds for Application: The specific triggers for the exclusion (e.g., use of nuclear, biological, chemical agents, $25 million property damage, or 50+ serious injuries/deaths) are key elements. If an event does not meet these thresholds, the exclusion may not apply, even if the event is considered an act of terrorism in a general sense.
• Availability of Coverage: Insureds seeking coverage for terrorism may need to purchase specific terrorism coverage, either through a buy-back endorsement or a standalone policy, which would be subject to its own terms, conditions, and pricing.

Key information for agents and underwriters

• Agents: It is crucial for agents to clearly explain the impact of this exclusion to their clients. Insureds need to understand that their standard liability policy, when this endorsement is attached, will not cover significant terrorism events as defined in the form. Agents should discuss potential coverage options if the insured has a terrorism exposure they wish to cover.
• Underwriters: Underwriters use this form to manage their company's exposure to catastrophic losses resulting from terrorism. The decision to attach this endorsement will depend on the insurer's underwriting guidelines, the nature of the risk, the geographic location, and the availability of reinsurance for terrorism risks.
• Risk Assessment: Both agents and underwriters should consider the insured's specific exposures. Businesses in high-profile locations, critical infrastructure sectors, or those with large concentrations of people might have a higher terrorism risk profile.
• Clarity is Key: Given the potential for significant uninsured losses, ensuring the client understands the limitations imposed by CG 21 90 is paramount to avoid errors and omissions claims.