What it does
IL 09 53 modifies the Boiler and Machinery, Commercial Inland Marine, Commercial Property, Crime and Fidelity, Equipment Breakdown and Farm coverage parts and the Standard Property Policy. It adds a Certified Act of Terrorism Exclusion: no coverage for loss or damage caused directly or indirectly by a "certified act of terrorism", regardless of any other cause or event contributing concurrently or in any sequence.
Key provisions
- "Certified act of terrorism" follows the TRIA definition: certified by the Secretary of the Treasury, more than $5 million in aggregate insured losses, and a violent or dangerous act committed to coerce the U.S. civilian population or influence U.S. government policy or conduct.
- Exception Covering Certain Fire Losses: in states listed in the Schedule, fire resulting from a certified act is covered for direct damage to covered property only. It does not extend to business income, extra expense, legal liability or leasehold interest. The specimen schedule lists Alabama, Connecticut, Delaware, Florida, Illinois, Louisiana, Maryland, Michigan, Mississippi, New Jersey, New York, Ohio, Pennsylvania and Wisconsin for the commercial property coverage part.
- The $100 billion cap language applies to any certified-act losses that remain covered, such as the fire exception.
- Omitting or limiting a terrorism exclusion does not create coverage that other exclusions remove, such as nuclear hazard or war.
Quoting and selling notes
- Document the client's informed rejection of TRIA coverage. The premium for it is usually small.
- Lenders and landlords sometimes require terrorism coverage. Check loan and lease terms before accepting a rejection.
- Alaska has its own version, IL 09 78.
