1. Forms
2. CU
3. CU-21-33

What the Form Is

The CU 21 33 is an endorsement developed by the Insurance Services Office (ISO) for use with Commercial Liability Umbrella insurance policies. Its primary purpose is to exclude coverage for bodily injury, property damage, or personal and advertising injury arising out of "certified acts of terrorism." A "certified act of terrorism" is one that is officially designated as such by the U.S. Secretary of the Treasury in accordance with the Terrorism Risk Insurance Act (TRIA). By attaching this endorsement, the insurer removes coverage for these specific, government-certified catastrophic events from the scope of the umbrella policy. Importantly, the endorsement allows the policy to continue providing coverage for other acts of terrorism that are not certified, subject to all other policy terms, conditions, and exclusions.

Classes of Business It Applies To

This endorsement is not limited to specific industries and can be applied to a wide range of commercial insureds who purchase Commercial Liability Umbrella policies. Any business or organization could potentially be exposed to losses from a terrorist event. Examples of entities where this endorsement might be considered include:

• Commercial property owners and managers (e.g., office buildings, shopping malls)
• Manufacturing and industrial companies
• Retail and hospitality businesses (e.g., stores, hotels, restaurants)
• Educational institutions and healthcare facilities
• Public venues and event organizers
• Transportation and logistics companies

The decision to use this endorsement often depends on the insured's risk appetite, the availability and cost of broader terrorism coverage, and contractual requirements.

Special Considerations

• TRIA Framework: The endorsement's function is intrinsically linked to the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. The definition of a "certified act of terrorism" is specific and governed by this federal legislation.
• Informed Rejection of Coverage: The CU 21 33 is often used when an insured has been offered terrorism coverage (which may be required to be offered by insurers under TRIA) but chooses to reject coverage for "certified acts of terrorism," likely to reduce premium costs. It is crucial that the insured makes an informed decision, understanding the significant coverage gap this creates for large-scale, certified events.
• Coverage for Non-Certified Terrorism: It's important to note that this form only excludes certified acts. The umbrella policy, even with this endorsement, might still respond to acts of terrorism that do not meet the TRIA certification criteria, provided no other exclusions in the policy apply.
• Interaction with Underlying Policies: The terrorism coverage provided (or excluded) in the insured's primary liability policies should be carefully reviewed in conjunction with this umbrella endorsement to identify potential gaps or inconsistencies in the overall insurance program.
• Program Cap: Losses from a certified act of terrorism are subject to a TRIA program cap (currently $100 billion in aggregate insured losses), beyond which the government and insurers may have limited liability.

Key Information for Agents and Underwriters

• For Agents:
  • Client Education: Agents must clearly explain the ramifications of this exclusion to insureds, ensuring they understand that there will be no umbrella coverage for liability arising from a TRIA-certified terrorist act.
  • Documentation: It is best practice to document the insured's rejection of broader terrorism coverage when this endorsement is applied.
  • Alternative Options: Agents should be prepared to discuss alternative terrorism coverage endorsements if the insured wishes to have some level of protection for certified acts (e.g., CU 21 30 - Caps on Loss From Certified Acts of Terrorism).
• For Underwriters:
  • Risk Assessment: While this endorsement removes the risk of certified acts, underwriters should still evaluate the potential exposure to non-certified terrorism events that would remain covered by the umbrella policy.
  • Pricing: The premium for the umbrella policy should reflect the exclusion of this significant hazard.
  • Consistency: Underwriters should check for consistency with terrorism endorsements used on the underlying general liability and other primary policies.
  • Regulatory Compliance: Ensure compliance with any state-specific regulations regarding the offer and rejection of terrorism insurance.