1. Forms
2. IL
3. IL-09-96

What the form is

The IL 09 96, titled "Conditional Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism (Relating to Disposition of Federal Terrorism Risk Insurance Act)", is an endorsement that alters an insurance policy's coverage for terrorism. Its primary function is to exclude coverage for acts of terrorism that involve nuclear, biological, or chemical (NBC) agents, but only under the specific condition that the federal Terrorism Risk Insurance Act (TRIA) or a similar successor program is no longer in effect. If TRIA expires or is terminated, this endorsement becomes active and takes precedence over any other terrorism endorsements on the policy concerning NBC terrorism events.

Classes of business it applies to

This endorsement is not specific to particular industries but applies broadly to commercial lines of insurance where terrorism coverage is a consideration and the policy is subject to the provisions of TRIA. It would be relevant for any business or organization that has purchased terrorism coverage and whose policy includes this conditional endorsement. For example:

• Commercial property policies for office buildings, manufacturing plants, or retail centers.
• Commercial general liability policies for businesses of various types.

The key factor is the presence of terrorism coverage that is subject to TRIA and the insurer's decision to include this conditional exclusion based on the potential expiration of the federal backstop.

Special considerations

Several important points to consider regarding IL 09 96:

• Conditional Nature: This exclusion is not active while TRIA is in effect. It is a contingency endorsement, preparing the policy for a scenario where the federal terrorism insurance backstop is removed.
• Scope of Exclusion: The exclusion is specific to terrorism involving nuclear, biological, or chemical agents. Terrorism acts not involving these elements might still be covered or addressed by other policy terms or endorsements.
• Supersedes Other Endorsements: If TRIA terminates and an NBC terrorism event occurs, this endorsement's exclusionary language will apply and override other terrorism endorsements on the policy related to NBC events.
• TRIA Renewals: If TRIA is renewed or extended, this endorsement remains dormant. Its activation is tied to the disposition of the federal program.

For example, if a commercial property is insured and TRIA expires, and subsequently the property suffers damage from a terrorist act involving a chemical agent, this endorsement, if part of the policy, would exclude coverage for that damage.

Key information for agents and underwriters

Agents and underwriters should be aware of the following:

• Client Communication: It is crucial to explain the conditional nature of this endorsement to insureds. They need to understand that their coverage for NBC terrorism events is contingent on the status of TRIA.
• Risk Assessment: For risks with higher exposure to potential NBC terrorism events, the implications of this conditional exclusion are more significant if TRIA were to expire.
• Coverage Alternatives: If TRIA expires and this exclusion becomes active, insureds would have a significant coverage gap for NBC terrorism. Agents might need to explore standalone terrorism policies or other risk transfer mechanisms, though availability and affordability for NBC perils could be challenging.
• Interaction with Other Terrorism Endorsements: Underwriters must understand how this form interacts with other terrorism endorsements on the policy, such as IL 09 86 (Exclusion Of Certified Acts Of Terrorism Involving Nuclear, Biological, Chemical Or Radiological Terrorism; Cap On Covered Certified Acts Losses Endorsement), which applies while TRIA is active, versus IL 09 96 which applies if TRIA is not. The IL 09 96 is designed to address the scenario *after* TRIA's potential termination for NBC events.
• Regulatory Environment: Stay informed about the status of TRIA and any discussions regarding its renewal or replacement, as this directly impacts the relevance and potential activation of this endorsement.