1. Forms
2. CU
3. CU-21-35

What the Form Is

The CU 21 35, titled "Exclusion of Certified Acts of Terrorism and Exclusion of Other Acts of Terrorism Committed Outside the United States," is an endorsement used with Commercial Umbrella liability policies. Its primary function is to remove coverage for specific types of terrorism-related losses. Specifically, it excludes coverage for 'certified acts of terrorism.' A 'certified act of terrorism' is one formally declared as such by the U.S. Secretary of the Treasury in accordance with the Terrorism Risk Insurance Act (TRIA). Additionally, this endorsement excludes coverage for acts of terrorism, other than 'certified acts,' that occur outside of the United States.

Classes of Business It Applies To

This endorsement is not specific to particular industries but applies broadly to any commercial insured that has a Commercial Umbrella policy where this endorsement is attached. Insurers use this form to manage their terrorism risk exposure across their portfolio. It can be applied to policies for various types of businesses, large or small, that require excess liability coverage, when the insurer and insured agree to exclude these specific terrorism risks from the umbrella policy, or when the insured rejects coverage for certified acts of terrorism.

Special Considerations

• TRIA Compliance: The use and wording of this endorsement are closely tied to the provisions of the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. TRIA established a federal program that provides a transparent system for sharing losses from certified acts of terrorism.
• Definition of 'Certified Act': Coverage hinges on the official certification of an event as an act of terrorism by the Secretary of the Treasury. If an event is not certified, this specific part of the exclusion related to 'certified acts' would not apply, though other policy terms and exclusions (like the exclusion for other acts of terrorism committed outside the U.S., or a war exclusion) might still affect coverage.
• Scope of Exclusion: It's crucial to understand that this form excludes both certified acts (regardless of location, subject to TRIA's scope) and other non-certified acts of terrorism if they occur outside the United States.
• Policyholder Awareness: Insureds must be made clearly aware of the implications of this endorsement, as it significantly limits coverage for terrorism-related events.

Key Information for Agents and Underwriters

• Clear Communication: Agents must thoroughly explain to clients how this endorsement curtails their terrorism coverage under the umbrella policy, particularly the distinction between certified and non-certified acts, and the geographical limitation for non-certified acts.
• Risk Management: For underwriters, this form is a tool to manage the insurer's potential aggregated losses from catastrophic terrorism events.
• Underlying Coverage Coordination: It is vital to ensure that the umbrella policy's terrorism coverage (or lack thereof due to this endorsement) aligns appropriately with the terrorism coverage provided in the underlying primary policies. For instance, if underlying commercial auto coverage includes terrorism, an endorsement like CU 21 55 (Amended Terrorism Coverage – Covered Auto) might be necessary on the umbrella if CU 21 35 is also attached, to address how the umbrella responds to terrorism losses covered by the underlying auto policy.
• Pricing: The premium for the Commercial Umbrella policy may be lower if terrorism coverage is excluded through this endorsement.
• Regulatory Obligations: Insurers must adhere to TRIA requirements regarding the offer and disclosure of terrorism coverage.