1. Forms
2. IL
3. IL-00-31

What the Form Is

The IL 00 31 - Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism endorsement is designed to be attached to various commercial insurance policies. Its primary function is to explicitly exclude coverage for losses or damages directly or indirectly caused by acts of "terrorism" that involve nuclear, biological, or chemical (NBC) agents. This exclusion applies regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

A significant aspect of this endorsement is Paragraph C, the "Exception Covering Certain Fire Losses." This exception may provide coverage for direct loss or damage by fire to covered property, even if caused by NBC terrorism, but only if the state where the property is located is specifically listed in the endorsement's schedule and the relevant coverage form applies.

Classes of Business It Applies To

This endorsement is versatile and can be attached to a broad array of commercial insurance coverage parts and policies. These include, but are not limited to:

• Boiler and Machinery Coverage Part
• Commercial Crime Coverage Form
• Commercial Inland Marine Coverage Part
• Commercial Property Coverage Part (e.g., used for manufacturing, retail, cannabis facilities)
• Equipment Breakdown Protection Coverage Form
• Farm Coverage Part
• Government Crime Coverage Form
• Standard Property Policy

It is broadly applicable across many industries and types of commercial insureds who face potential exposure to large-scale catastrophic events, where insurers aim to limit their liability for NBC-related terrorism.

Special Considerations

• Interaction with TRIA: The application and interpretation of terrorism-related endorsements like IL 00 31 are often linked to the status of the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations. This form is designed to exclude NBC terrorism regardless of whether an event is certified as an act of terrorism under TRIA.
• Fire Loss Exception: The fire loss carve-back is a critical component. It typically applies in states that have Standard Fire Policy (SFP) laws, which may restrict how broadly fire coverage can be excluded. The endorsement schedule must list the specific state(s) for this exception to apply.
• Definition of "Terrorism": The endorsement will contain a specific definition of "terrorism" which is crucial for its application.
• Completeness of Exclusion: While this form excludes NBC terrorism, it does not exclude all forms of terrorism. Other endorsements (like IL 00 30 for a broad terrorism exclusion, or IL 00 32 for a sub-limit) or the main policy terms would address non-NBC terrorism.

Key Information for Agents and Underwriters

• Clarity for Insureds: Agents must clearly explain the scope of this exclusion, particularly what constitutes nuclear, biological, or chemical terrorism, and how it differs from other acts of terrorism that might be covered, limited, or excluded elsewhere in the policy. The fire loss exception and its state-specific nature must also be highlighted.
• Risk Assessment: Underwriters should assess the insured's overall terrorism exposure. While this form excludes NBC events, the potential for other types of terrorism remains. The location of the insured property is crucial, especially concerning the applicability of the fire loss exception.
• Coverage Gaps: This endorsement creates a significant exclusion. Agents and underwriters should discuss whether the insured needs or wants to explore any available buy-back options for terrorism coverage, if available and appropriate for their specific exposures, keeping in mind that NBC perils are exceptionally difficult to insure.
• Documentation: Proper documentation, including the correct scheduling of states for the fire loss exception, is essential. Ensure the correct edition date of the form is used and that it aligns with the rest of the policy forms.
• Regulatory Landscape: Be aware of any state-specific regulations or interpretations regarding terrorism exclusions and the Standard Fire Policy.