What the form is
The IL 00 30, titled "Exclusion Of Terrorism", is an insurance policy endorsement developed by the Insurance Services Office (ISO). Its primary function is to remove coverage for losses and damages directly or indirectly caused by acts of terrorism. While it generally excludes terrorism, it may contain specific provisions or exceptions. For instance, some versions might require that the excluded acts involve nuclear, biological, or chemical agents, or that the resulting aggregate property loss surpasses a significant monetary threshold, such as $25,000,000, to trigger the exclusion.
Classes of business it applies to
This endorsement is broadly applicable across various commercial lines of insurance where terrorism risk is a concern. It can be attached to:
- Commercial Property Coverage Parts
- Boiler and Machinery Coverage Parts / Equipment Breakdown Protection Coverage Forms
- Commercial Crime Coverage Forms
- Commercial Inland Marine Coverage Parts
- Farm Coverage Parts
- Standard Property Policies
Real-world example: A large commercial property owner in a major metropolitan area might have this endorsement on their property policy. If a terrorist event occurs that does not meet specific criteria for being covered under a TRIA-related provision (or if TRIA is not in effect), this endorsement would generally preclude coverage for damage to their building from that event.
Special considerations
The application and interpretation of this exclusion can be complex, particularly in relation to the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. It's important to understand whether the exclusion applies to all acts of terrorism or only those not certified by the Secretary of the Treasury under TRIA. Some versions of this form are intended for use when TRIA is in effect, while others might be for scenarios where TRIA has expired. The form may also include exceptions, for example, for certain fire losses in specific states, as indicated in a schedule.
Real-world example: If an act of terrorism occurs and is certified under TRIA, other endorsements (like IL 09 85 - Disclosure Pursuant to Terrorism Risk Insurance Act) and policy provisions would come into play, potentially providing some level of coverage despite the IL 00 30. However, if an event is deemed terrorism but not certified, or if it falls under specific excluded criteria within IL 00 30 (e.g., involving nuclear, biological, or chemical agents where a more specific exclusion like IL 00 31 might also apply), then the IL 00 30 exclusion would likely be upheld.
Key information for agents and underwriters
For Agents: It is crucial to clearly explain the impact of this endorsement to policyholders. Clients need to understand what types of events will be excluded and what, if any, terrorism coverage might still be available, perhaps through buy-back options or specific TRIA-related endorsements. The presence of this endorsement significantly limits the policy's response to terrorism-related losses.
For Underwriters: Risk assessment involves evaluating the insured's exposure to potential terrorist acts. While this form excludes terrorism, the underwriter must still consider the overall risk profile and ensure that the policy, with this endorsement, accurately reflects the intended scope of coverage. Pricing considerations for terrorism are often handled separately, especially in relation to TRIA. Underwriters should ensure that the correct set of terrorism-related endorsements is used based on whether the insured has accepted or rejected TRIA-related coverage and the specific nature of the risks insured. It's also important to be aware of state-specific regulations that might impact the application of terrorism exclusions.