1. Forms
2. IL
3. IL-09-68

What is Form IL 09 68 and its Purpose?

Form IL 09 68, titled "EXCLUSION OF CERTIFIED ACTS OF TERRORISM AND EXCLUSION OF OTHER ACTS OF TERRORISM COMMITTED OUTSIDE THE UNITED STATES (RELATING TO OTHER THAN WORKERS COMPENSATION INSURANCE)", is an insurance policy endorsement. Its primary purpose is to exclude coverage for losses stemming from acts of terrorism when the insured has chosen to reject such coverage. This form is used in conjunction with the provisions of the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations.

Specifically, this endorsement comes into play when an insured party formally rejects the terrorism coverage that insurers are required to offer under TRIA. By attaching this endorsement, the policy is modified to clearly state that losses or damages directly or indirectly caused by 'certified acts of terrorism' (as defined by TRIA) are not covered. Furthermore, it typically also excludes coverage for acts of terrorism committed outside the United States that do not fall under the TRIA definition of a 'certified act'. This form is not used for Workers Compensation insurance, which has its own specific rules regarding terrorism coverage.

Classes of Business it Applies To with Real-World Examples:

This endorsement can apply to a wide range of commercial lines of insurance, excluding Workers Compensation. Examples include:

• Commercial Property Insurance: A business owner with a commercial property policy who rejects terrorism coverage would have this endorsement attached. If a certified act of terrorism damages their building, this form would preclude coverage for those damages. For instance, if a manufacturing plant in the U.S. is damaged by an event certified as terrorism by the Secretary of the Treasury, and the policyholder had rejected terrorism coverage via this endorsement, the property damage would not be covered.
• Commercial General Liability (CGL) Insurance: A company holding a CGL policy that has rejected terrorism coverage would find this endorsement applicable. If an event deemed a certified act of terrorism leads to third-party bodily injury or property damage claims against the company, this endorsement would exclude coverage for those claims. For example, if a terrorist act occurs at a shopping mall, and customers sue the mall owner (who had rejected terrorism coverage) for inadequate security, the IL 09 68 would likely bar coverage for the mall owner's defense and any settlements or judgments.
• Commercial Auto Insurance: While less common for this specific exclusion to be the primary concern, it could apply if a commercial vehicle fleet policy had terrorism coverage rejected.
• Inland Marine Insurance: For businesses with inland marine policies covering specialized equipment or property in transit, rejection of terrorism coverage would lead to the attachment of this endorsement. If a piece of mobile construction equipment insured under an inland marine policy is destroyed in a certified act of terrorism, and this endorsement is on the policy, the loss would not be covered.

Special Considerations, Limitations, and Requirements:

• TRIA Compliance: The use of this form is closely tied to the requirements of the Terrorism Risk Insurance Act. TRIA mandates that insurers offer coverage for certified acts of terrorism and that this offer must be clearly accepted or rejected by the insured. This form is evidence of that rejection.
• Definition of Terrorism: The endorsement relies on the definition of a 'certified act of terrorism' as outlined in TRIA. This involves certification by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General. It also addresses other acts of terrorism outside the U.S. not meeting this specific certification.
• Informed Rejection: It is crucial that the insured understands the implications of rejecting terrorism coverage. Agents and brokers have a responsibility to explain what is being excluded.
• Not Applicable to Workers Compensation: This form explicitly states it relates to 'other than workers compensation insurance'. Workers compensation policies have different, often mandatory, provisions for terrorism-related injuries.
• Potential for Uncovered Losses: The most significant limitation for the insured is the potential for substantial, uncovered losses if a terrorist event occurs and this exclusion is in place.

Key Information for Agents and Underwriters:

• Documentation is Key: Agents must ensure that the insured's rejection of terrorism coverage is clearly documented, typically through a signed rejection form, and that the IL 09 68 endorsement is properly attached to the policy.
• Premium Disclosure: When terrorism coverage is offered, the premium for that coverage must be disclosed to the insured. If rejected, this endorsement is added, and no premium for certified acts of terrorism is charged (or a nominal charge for other terrorism risks if applicable and not excluded).
• Understanding Scope of Exclusion: Underwriters and agents need to be clear on the scope of the exclusion – it applies to 'certified acts' under TRIA and often other non-certified acts outside the U.S.
• Interaction with Other Endorsements: This endorsement may interact with other policy exclusions or conditions. For example, IL 09 52 is an endorsement used when certified acts of terrorism coverage *is* provided.
• State Variations: While TRIA is a federal law, specific state regulations or interpretations might occasionally influence how terrorism coverage and its rejection are handled, though this form is a standard ISO form.
• Client Education: Agents should proactively educate clients about TRIA, the nature of terrorism risk, the coverage being offered, the cost, and the significant implications of rejecting the coverage by signing a form that leads to the attachment of IL 09 68.