1. Forms
2. CU
3. CU-21-47

What the form is

The CU 21 47, titled "Exclusion Of Terrorism Involving Nuclear, Biological Or Chemical Terrorism," is an endorsement used with the ISO Commercial Liability Umbrella Coverage Form. Its primary function is to eliminate coverage for bodily injury, property damage, or personal and advertising injury that arises from acts of terrorism specifically involving nuclear, biological, or chemical (NBC) agents. This endorsement helps insurers manage their exposure to potentially catastrophic losses resulting from these types of terrorist events.

Classes of business it applies to

This endorsement can be applied to virtually any class of business that carries a Commercial Liability Umbrella policy. Its use is not restricted to specific industries but rather driven by the insurer's underwriting guidelines and the perceived risk associated with NBC terrorism. Examples include:

• Businesses located in high-profile urban areas or near potential terrorist targets.
• Industries that, if targeted, could result in widespread contamination or harm (e.g., chemical plants, research facilities, large public venues).
• Any insured where the insurer deems the risk of NBC terrorism to be an uninsurable exposure under the standard umbrella policy terms.

Special considerations

Important points to consider regarding CU 21 47 include:

• TRIA Context: This endorsement is often used in conjunction with the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. While TRIA provides a federal backstop for certain certified acts of terrorism, insurers may still use this endorsement to exclude the particularly hazardous NBC exposures.
• Specificity of Exclusion: It's crucial to understand that this endorsement specifically targets terrorism involving nuclear, biological, or chemical materials. Other acts of terrorism (e.g., conventional bombings) might still be covered or addressed by other terrorism-related endorsements or policy provisions.
• Interaction with Underlying Coverage: The presence of this exclusion in an umbrella policy should be considered in light of the terrorism coverage provided (or excluded) in the underlying primary liability policies.

For example, if a commercial property is located near a major government building, the insurer might attach CU 21 47 to the umbrella policy to specifically exclude catastrophic losses from an NBC terrorist attack, even if other forms of terrorism might have some level of coverage based on TRIA elections.

Key information for agents and underwriters

• Agents: Agents must clearly communicate the impact of this exclusion to their clients. It's essential that insureds understand that their umbrella policy will not respond to claims arising from NBC terrorism if this endorsement is attached. This discussion should be part of the broader conversation about terrorism coverage options and the insured's overall risk management strategy.
• Underwriters: Underwriters use this form to manage aggregation risk and limit exposure to severe NBC terrorism events. The decision to use this endorsement will be based on the insurer's risk appetite, the specific characteristics of the risk being insured (location, industry, potential target status), and the pricing and availability of reinsurance for terrorism risks. It is a tool to ensure the solvency of the insurer in the face of potentially massive claims from such an event. When this endorsement is attached, it means the insurer has decided not to provide coverage for this specific peril under the umbrella policy.