1. Forms
2. CU
3. CU-21-30

What the form is

The CU 21 30, titled "Caps on Loss From Certified Acts of Terrorism," is an endorsement to a Commercial Liability Umbrella insurance policy. Its primary function is to address how coverage applies to losses resulting from "certified acts of terrorism," as defined under the Terrorism Risk Insurance Act (TRIA). This endorsement specifies that if the total insured losses from a single certified act of terrorism exceed $100 billion in a calendar year, and the insurance company has met its own deductible as required by TRIA, the insurer will not be responsible for paying losses beyond this $100 billion aggregate cap. The form also clarifies that in such an event, the Department of Treasury would be responsible for the pro rata distribution of claim settlements. It is important to note that this endorsement does not, by itself, grant terrorism coverage; rather, it defines the limitations of such coverage when it is already part of the policy.

Classes of business it applies to

This endorsement is applicable to any commercial insured that carries a Commercial Liability Umbrella policy and for whom terrorism coverage is being provided or considered. Due to its connection with the federal TRIA program, it has broad applicability across numerous industries and business types that could potentially be affected by or be targets of terrorist acts. Real-world examples include:

• Owners and operators of large commercial properties such as office towers, shopping centers, and entertainment venues.
• Businesses situated in high-profile urban areas or those involved in industries considered to be at higher risk.
• Companies with a significant concentration of employees, customers, or valuable assets in one location.
• Organizations involved in critical infrastructure sectors (e.g., energy, transportation, communication).

Special considerations

There are several important points to consider regarding the CU 21 30 endorsement:

• It is specifically used when terrorism coverage is included in the Commercial Liability Umbrella policy.
• The endorsement serves as a notification and imposes a limitation based on TRIA's $100 billion aggregate loss cap for a certified act of terrorism.
• The definition of what constitutes a "certified act of terrorism" under TRIA is broad and determined by the Secretary of the Treasury in concurrence with the Secretary of State and the Attorney General.
• This form is about limiting payouts for catastrophic terrorism events; it does not provide the initial grant of terrorism coverage.
• Insureds should be aware that if they reject the full scope of Certified Acts of Terrorism coverage, alternative endorsements might be offered, such as those excluding losses from nuclear, biological, chemical, or radiological events.

Key information for agents and underwriters

Insurance agents and underwriters should be mindful of the following practical insights:

• For Agents: It is crucial to clearly communicate to insureds that the CU 21 30 is a limitation tied to the federal TRIA program for very large-scale, certified terrorism events. It is not the form that provides the actual terrorism coverage. Emphasize that the $100 billion cap is an aggregate for all insured losses from a certified event, not a per-policy limit.
• For Underwriters: This endorsement should be attached whenever terrorism coverage is being provided under the Commercial Liability Umbrella policy and is intended to be subject to TRIA's limitations. Careful attention must be paid to ensure its use is consistent with the overall terrorism coverage strategy for the account.
• It's vital to differentiate this form from others that might exclude terrorism entirely or offer more restricted forms of terrorism coverage (e.g., CU 21 33 - Exclusion of Certified Acts of Terrorism).
• The pricing of terrorism coverage is a distinct underwriting consideration. The CU 21 30 primarily addresses how TRIA's financial backstop and limitations apply.
• Verify that underlying policies (e.g., Commercial General Liability) are also appropriately endorsed for terrorism coverage, as the umbrella policy typically follows the terms of the underlying insurance.
• Be aware of the interplay with other terrorism-related endorsements. For instance, CU 21 31 (Exclusion of Other Acts of Terrorism Committed Outside the United States; Cap on Losses from Certified Acts of Terrorism) might be used in conjunction to address non-certified acts or acts outside the U.S. while still applying the cap for certified domestic acts.