1. Forms
2. DL
3. DL-98-29

What the form is

The DL 98 29 01 02, titled "Personal Umbrella Liability Policy War and Terrorism Exclusion Endorsement," is an endorsement used with personal umbrella liability insurance policies. Its main purpose is to explicitly exclude coverage for bodily injury, property damage, or personal injury arising out of acts of war (declared or undeclared), warlike actions, insurrection, rebellion, revolution, civil war, usurped power, or actions taken by governmental authorities in hindering or defending against such occurrences. Furthermore, it excludes losses related to terrorism, which typically involves violent acts or threats dangerous to human life, property, or infrastructure, committed for political, religious, ideological, or similar purposes, and intended to influence a government or intimidate the public.

Classes of business it applies to

This endorsement applies to personal lines insurance, specifically for individuals who have or are purchasing a personal umbrella liability policy. Personal umbrella policies provide an additional layer of liability coverage above the limits of underlying homeowners, auto, and watercraft policies. For example, if an individual has a $1 million personal umbrella policy, this endorsement would clarify that this excess coverage does not apply to incidents deemed acts of war or terrorism as defined in the endorsement.

Special considerations

Key considerations for this endorsement include:

• Post-9/11 Context: The development and use of such exclusions became more widespread in the insurance industry following the September 11, 2001 terrorist attacks, as insurers sought to manage their exposure to large-scale, potentially correlated losses from terrorism.
• State Approvals: Insurers typically need to file this endorsement with state insurance departments for approval before it can be used in a particular state. The search result indicates that interested insurers might need to make separate filings. For instance, it was noted as available in Arizona and California around February 2002, contingent on such filings.
• Definition Specificity: The exact definitions of "war" and "terrorism" within the endorsement are critical and can vary. It's important for both the insurer and the insured to understand the scope of these definitions.
• Coverage Gap: The application of this endorsement creates a significant coverage gap for losses stemming from war and terrorism under the personal umbrella policy. Insureds should be made aware of this exclusion.

Key information for agents and underwriters

• Agents: Agents must clearly communicate the presence and implications of this exclusion to their clients. It's crucial that policyholders understand that their umbrella policy will not respond to losses from events falling under the war and terrorism exclusion. This helps manage expectations and avoid disputes at the time of a claim.
• Underwriters: For underwriters, this endorsement is a tool to manage the insurer's overall catastrophic risk exposure. While personal umbrella policies are designed for excess individual liability, systemic events like widespread terrorism could lead to numerous large claims. This exclusion helps maintain the solvency and stability of the insurer by carving out these specific, high-magnitude risks. The decision to attach this endorsement can be part of the insurer's broader underwriting strategy and reinsurance considerations.
• Pricing: While this form adds an exclusion, the overall pricing of the umbrella policy reflects the risks covered. Broad exclusions like this help keep umbrella policies more affordable by removing coverage for unpredictable and potentially massive events.