1. Forms
2. CA
3. CA-23-85

What the Form Is

The CA 23 85, titled "Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism," is an endorsement used with commercial auto insurance policies. Its primary function is to eliminate coverage for bodily injury or property damage arising from acts of terrorism that specifically involve the use or release of nuclear, biological, or chemical (NBC) substances. This means that if a covered auto is involved in a terrorist event utilizing NBC agents, this endorsement would preclude coverage for liability claims and, where applicable, personal injury protection benefits.

Classes of Business It Applies To

This endorsement is applicable to a wide range of businesses that have commercial auto exposures, regardless of size or industry. This includes, but is not limited to:

• Transportation companies (trucking, delivery services)
• Contractors with work vehicles
• Sales and service fleets
• Any business that owns, leases, or uses vehicles for commercial purposes

For example, if a delivery van owned by a local bakery is damaged, and its driver injured, as a direct result of a terrorist attack involving a chemical agent, this endorsement, if attached to the bakery's commercial auto policy, would likely exclude coverage for the van's damage and the driver's injuries under liability and PIP coverages.

Special Considerations

It's crucial to understand that the CA 23 85 is a specific type of terrorism exclusion. Insurers may offer various terrorism endorsements, some providing broader exclusions (like CA 23 84, which excludes all defined acts of terrorism meeting certain criteria) and others that might exclude terrorism coverage above statutory limits (like CA 23 86 or CA 23 87). The CA 23 85 narrows the exclusion specifically to NBC-related terrorism. The applicability and wording of terrorism endorsements can also be influenced by federal legislation such as the Terrorism Risk Insurance Act (TRIA) and its subsequent reauthorizations, which may mandate that insurers offer terrorism coverage, though exclusions can still apply.

Key Information for Agents and Underwriters

For Agents:

• It is essential to clearly explain the impact of this endorsement to clients. Insureds should understand that while some terrorism events might still be covered, those involving NBC agents will be excluded for liability and PIP.
• Discuss the availability of other terrorism endorsements and help clients choose the option that best aligns with their risk tolerance and understanding of potential exposures.
• Document the discussion and the client's decision regarding terrorism coverage.

For Underwriters:

• Assess the specific terrorism-related risks associated with the insured's operations and geographic location.
• Ensure the correct terrorism endorsement is applied based on the insurer's guidelines and the coverage elections made by the insured.
• Be aware of how TRIA or other relevant legislation impacts the policy's response to terrorism events and the function of this endorsement.
• The decision to use CA 23 85 versus a broader terrorism exclusion (like CA 23 84) or a more limited one (like CA 23 86 or CA 23 87) depends on the insurer's filings and the specific risk characteristics.