PF&M COMPANION
Approved by individual states, through December 2002
By Bruce Hicks, CLU, CPCU
COUNTRYWIDE
Terrorism Risk Insurance Act of 2002
Insurance Services Office has introduced a plethora of forms related to the recent approval of the Terrorism Risk Insurance Act of 2002. The forms affect a variety of lines of business and have been offered in two different bases. One group of forms has been individually filed with state regulators in the regular manner. In other words, these forms are subject to the particular state's review and decision process. The other group of forms has been "fast-tracked." Ironically, this is a step that may further developments for federal insurance oversight.
The Terrorism Act includes a provision that exempts certain forms from state review and which makes them immediately available for use by insurers. The exemption applies to forms that provide mandated coverage for losses that are due to certified acts of terrorism. It is these acts for which the federal government has agreed to financially backstop the insurance industry with a maximum amount of $100 billion. An act of terrorism is certified when the act:
* involves a total loss exceeding $5 million in property and casualty damages
* involves violence and direct destruction of property and
* has been committed by a party working on behalf of a foreign interest
The fast track forms allow companies to take action on policies at any time, new business, renewal or mid-term. The set of forms that has been individually filed with state regulators involves terrorist acts that do not qualify for certification and which are subject to pre-existing policy exclusions. Besides individual insurer action on adopting available forms (once available or approved), form use also depends upon:
* insurers' development of pricing for terrorism coverage premiums
* the line of business
* for commercial property lines, the particular state requirement regarding the inclusion of Standard Fire Policy wording
* how a particular state acted upon previous terrorism form filings
Here is what is being made available or has been filed for approval for various lines of business:
Commercial Liability Umbrella and General Liability
Fast-tracked Forms - Mid-Term Policies
CG 21 77 11 02 Exception to Terrorism Exclusion for Certified Acts of Terrorism: Cap On Losses From Certified Acts of Terrorism
CU 21 37 11 02 Exception to Terrorism Exclusion for Certified Acts of Terrorism: Cap On Losses From Certified Acts of Terrorism
CG 21 78 11 02 Removal of Terrorism Exclusion for Certified Acts of Terrorism: Cap On Losses From Certified Acts of Terrorism
CU 21 38 11 02 Removal of Terrorism Exclusion for Certified Acts of Terrorism: Cap On Losses From Certified Acts of Terrorism
Fast-tracked Forms - New and Renewal Policies
CG 21 70 11 02 Cap On Losses From Certified Acts
of Terrorism
CU 21 30 11 02 Cap On Losses From Certified Acts
of Terrorism
CG 21 73 11 02 Exclusion of Certified Acts of Terrorism
CU 21 33 11 02 Exclusion of Certified Acts of Terrorism
Normally Filed Forms
CG 21 71 11 02 Limited Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
CU 21 31 11 02 Limited Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
CG 21 72 11 02 Nuclear, Biological Or Chemical Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism Endorsement
CU 21 32 11 02 Nuclear, Biological Or Chemical Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism Endorsement
CG 21 74 11 02 Exclusion of Certified Acts of Terrorism And Other Nuclear, Biological or Chemical Acts of Terrorism
CU 21 34 11 02 Exclusion of Certified Acts of Terrorism And Other Nuclear, Biological or Chemical Acts of Terrorism
CG 21 75 11 02 Exclusion of Certified Acts of Terrorism And Other Acts of Terrorism
CU 21 35 11 02 Exclusion of Certified Acts of Terrorism And Other Acts of Terrorism
CG 21 76 11 02 Exclusion of Punitive Damages Related to a Certified Acts of Terrorism
CU 21 36 11 02 Exclusion of Punitive Damages Related to a Certified Acts of Terrorism
Boiler And Machinery, Commercial Property, Commercial Inland Marine, Crime And Fidelity, And Farm
Fast-tracked Forms - Mid-Term Policies
IL 09 50 11 02 Coverage for Certified Acts of Terrorism: Cap On Losses
IL 09 51 11 02 Removal of Exclusion of Acts of Terrorism: Cap On Certain Losses
Fast-tracked Forms - New and Renewal Policies
IL 09 52 11 02 Cap On Losses From Certified Acts of Terrorism
IL 09 58 11 02 Exclusion Of Certified Acts Of Terrorism
IL 09 53 11 02 Exclusion of Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 63 11 02 Exclusion of Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 68 11 02 Exclusion of Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 73 11 02 Exclusion of Certified Acts of Terrorism; Coverage For Certain Fire Losses
Normally Filed Forms Non-SFP States
IL 09 59 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
IL 09 60 11 02 Exclusion Of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism
IL 09 61 11 02 Exclusion Certified Acts And Other Acts of Terrorism
IL 09 62 11 02 Exclusion Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism
SFP States Without Commercial Inland Marine Exception
IL 09 54 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 64 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
IL 09 55 11 02 Exclusion Of Acts of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 65 11 02 Exclusion Of Acts of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism
IL 09 56 11 02 Exclusion Of Certified Acts And Other Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 66 11 02 Exclusion Of Certified Acts And Other Acts
of Terrorism
IL 09 57 11 02 Exclusion Of Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 67 11 02 Exclusion Of Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism
SFP States With Commercial Inland Marine Exception
IL 09 69 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 74 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
IL 09 70 11 02 Exclusion Of Acts of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism; Coverage For Certain
Fire Losses
IL 09 75 11 02 Exclusion Of Acts of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism
IL 09 71 11 02 Exclusion Of Certified Acts And Other Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 76 11 02 Exclusion Certified Acts And Other Acts of Terrorism
IL 09 72 11 02 Exclusion Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism; Coverage For Certain Fire Losses
IL 09 77 11 02 Exclusion Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism
Businessowners
Fast-tracked Forms - Mid-Term Policies
BP 05 21 11 02 Coverage for Certified Acts of Terrorism: Cap On Losses
BP 05 22 11 02 Removal of Exclusion of Acts of Terrorism: Cap On Certain Losses
Fast-tracked Forms - New and Renewal Policies
BP 05 23 11 02 Cap On Losses From Certified Acts of Terrorism
BP 05 25 11 02 Exclusion Of Certified Acts Of Terrorism
BP 05 24 11 02 Exclusion Of Certified Acts Of Terrorism; Coverage For Certain Fire Losses
Normally Filed Forms
Non-SFP States
BP 05 30 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
BP 05 31 11 02 Exclusion Of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism
BP 05 32 11 02 Exclusion Certified Acts And Other Acts of Terrorism
BP 05 33 11 02 Exclusion Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism
SFP States
BP 05 34 11 02 Limited Exclusion Of Acts of Terrorism (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism; Coverage For Certain Fire Losses
BP 05 35 11 02 Exclusion Of Acts of Biological or Chemical Terrorism; Cap On Losses From Certified Acts of Terrorism; Coverage For Certain Fire Losses
BP 05 36 11 02 Exclusion Of Certified Acts And Other Acts of Terrorism; Coverage For Certain Fire Losses
BP 05 37 11 02 Exclusion Of Certified Acts of Terrorism And Biological or Chemical Acts of Terrorism; Coverage For Certain Fire Losses
All States
BP 05 38 11 02 Limited Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
BP 05 39 11 02 Nuclear, Biological or Chemical Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
BP 05 40 11 02 Exclusion Of Certified Acts of Terrorism And Other Nuclear, Biological or Chemical Acts of Terrorism
BP 05 41 11 02 Exclusion Of Certified Acts Of Terrorism And Other Acts of Terrorism
BP 05 40 11 02 Exclusion Of Punitive Damages Related To A Certified Act Of Terrorism
Commercial Automobile
Fast-tracked Forms - Mid-Term Policies
CA 23 63 11 02 Exception To Terrorism Exclusion For Certified Acts of Terrorism; Cap On Losses From Certified Acts Of Terrorism
CA 23 64 11 02 Removal of Terrorism Exclusion For Certified Acts of Terrorism: Cap On Losses From Certified Acts Of Terrorism
Fast-tracked Forms - New and Renewal Policies
CA 23 56 11 02 Cap On Losses From Certified Acts of Terrorism
CA 23 57 11 02 Exclusion Of Certified Acts Of Terrorism
Normally Filed Forms
CA 23 58 11 02 Limited Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts
of Terrorism
CA 23 59 11 02 Nuclear, Biological Or Chemical Terrorism Exclusion (Other Than Certified Acts of Terrorism); Cap On Losses From Certified Acts of Terrorism
CA 23 60 11 02 Exclusion Of Certified Acts Of Terrorism And Other Nuclear, Biological or Chemical Acts of Terrorism
CA 23 61 11 02 Exclusion Of Certified Acts Of Terrorism And Other Acts of Terrorism
CA 23 62 11 02 Exclusion Of Punitive Damages Related To A Certified Act Of Terrorism
Farm
ISO has introduced a multi-state revision consisting of the introduction of the following forms:
FP 05 30 12 02 Limited Coverage For Fungi, Wet Rot, Dry Rot And Bacteria - Property
FP 05 31 12 02 Limited Coverage For Fungi, Wet Rot, Dry Rot And Bacteria - Farm Dwellings, Appurtenant Structures And Household Personal Property
FL 05 32 12 02 Limited Coverage For Fungi, Wet Rot, Dry Rot And Bacteria - Liability
FL 10 35 12 02 Fungi Or Bacteria Exclusion - Liability
FB 10 14 12 02 Fungi Or Bacteria Exclusion
These forms modify the coverage provided by the Farm Property, Farm Liability and Farm Umbrellas Liability policies. FP 05 30, Limited Coverage For Fungi, Wet Rot, Dry Rot And Bacteria - Property adds limited coverage against mold or rot. It allows a maximum of $15,000, but the loss must be caused by a peril named in the form. While it also covers such loss that arises from leaks and seepage, the damage has to have occurred within a couple of weeks of the originating moisture condition.
FP 05 31, Limited Coverage For Fungi, Wet Rot, Dry Rot And Bacteria - Farm Dwellings, Appurtenant Structures And Household Personal Property form provides coverage similar to the FP 05 30 with the following exceptions: Its basic coverage is capped at $10,000 and there is no protection for farm (real or personal) property. Note that both of the above forms' coverage is provided as an annual aggregate. Also, both forms may, with payment of additional premium, be increased to a maximum of $25,000. The coverage does not apply to livestock loss.
The liability forms provide options to either allow a limited amount of coverage for BI or PD related to fungi/bacteria (with an exemption for food poisoning) or to totally exclude the exposure (again with the exception for liability related to food poisoning). Finally, the FB 10 14, Fungi Or Bacteria Exclusion eliminates mold/rot related coverage (except for food poisoning) from the Farm Umbrella Liability Policy. The forms also introduce the term "fungi or bacteria incident."
Homeowners
ISO has introduced a multi-state form HO 04 55, Identity Fraud Expense Coverage Endorsement.
The form expands coverage under the HO 2000 base policy forms to help with expenses related to recovering from identity theft. Specifically the form allows a maximum of $15,000 to handle:
* Limited amount of income loss due to time taken to meet with authorities or attorneys
* Defense of lawsuits filed against the insured by defrauded creditors
* Payment of certain loan application fees
* Long distance telephone expense to businesses, authorities, financial institutions
* Notary and certified mail costs related to paperwork to deal with fraud damage
The $15,000 is a maximum, per occurrence limit, for any fraudulent incident discovered during the policy term. *
Editor's note: The list of individual states and which changes each has approved appears exclusively at the "PF&M Companion" link at the Rough Notes Web site: www.roughnotes.com.
What follows is a list of individual states and which of the above changes each has approved involving ISO forms and programs. The text will not be repeated but will refer back to this Countrywide section.
CONNECTICUT
Commercial Lines - The following forms have been approved:
* IL 01 43 12 87 Connecticut Changes - Cancellation And Nonrenewal
* IL 02 60 09 00 Connecticut Changes - Cancellation And Nonrenewal
* IL 00 02 11 85 Effective Time Changes
* IL 00 22 05 87 Effective Time Changes - Replacement Of 12 Noon
The forms are available for use by all participating insurers for all policies written on or after April 1, 2003. The forms were amended so that they made the proper references to the Capital Asset Program and the Farm Umbrella Liability Coverage Part.
Farm - The program changes referred to in the Countrywide section along with the following forms have been approved:
* FB 01 03 07 02 Connecticut Changes
* FB 04 66 07 02 Connecticut Changes - Farm Premises And Personal Umbrella Liability
The forms are available for use by all participating insurers for all policies written on or after April 1, 2003.
IDAHO
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
INDIANA
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
KENTUCKY
Commercial Auto - Form CA 01 25 12 02 - Kentucky Changes has been approved. This form was revised in response to the former House Bill 260. The amended form now complies with the statute's preference on handling losses involving temporary substitute autos that are damaged through an insured's negligence. The form is available for use by all participating insurers for all policies written on or after April 1, 2003.
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
MASSACHUSETTS
Businessowners - ISO's multi-state filing introducing its optional mold/fungi forms has been approved. The forms are available for use by all interested insurers. The forms are available with a distribution date of November 2002. (For more details on this change, please refer to the PF&M Companion in the November 2002 issue of Rough Notes nagazine at http://www.roughnotes.com)
MINNESOTA
Commercial Liability Umbrella - ISO's multi-state filing introducing the commercial liability umbrella program, including Form CU 04 01, Electronic Data Liability Endorsement, has been approved for use. The forms are available for use by all participating insurers for all policies written on or after May 1, 2003. (For more details on this change, please refer to the PF&M Companion in the May 2002 issue of Rough Notes magazine at http://www.roughnotes.com)
MISSISSIPPI
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after April 1, 2003.
MONTANA
Homeowners - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
NEBRASKA
Homeowners - Form HO 01 26 03 03 - Special Provisions - Nebraska has been approved. This form was revised in response to the decision reached in Volquardson v. Hartford Ins. Co. In that case, the state's Supreme Court determined that the policy did provide the equivalent of the 1943 New York Standard Fire Policy. The form amends the policy Intentional Acts exclusion so that it is in compliance with state law. The form is available for use by all participating insurers for all policies written on or after March 1, 2003.
NEW JERSEY
Commercial Liability Umbrella - The ISO multi-state introduction of optional fungi or bacteria endorsements for use with the commercial liability umbrella program has been made available (the form is exempt from the state's filing requirements). Interested insurers must make their own arrangements regarding this form, documenting their action and, if applicable, implementing its use. The form will carry a February 2003 distribution date.
General Liability - The following forms have been approved:
* CG 24 25 04 02 Limited Fungi Or Bacteria Coverage (CGL)
* CG 31 32 04 02 Limited Fungi Or Bacteria Coverage (OCP and Prod/Completed Ops)
The forms were introduced in order to comply with the requirements of New Jersey Bulletin No. 02-14. The bulletin requires a base amount of $50,000 liability (with an option to increase to $100,000) be made available for handling liability losses involving exposure to mold, fungi, etc. The forms are available for use by all participating insurers for all policies written on or after February 1, 2003.
Homeowners - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after July 1, 2003.
OKLAHOMA
Homeowners - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
SOUTH CAROLINA
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after March 1, 2003.
VERMONT
Businessowners - ISO's multi-state filing introducing its optional mold/fungi forms has been approved. The forms are available for use by all interested insurers. The forms are available for use by all participating insurers for all policies written on or after February 1, 2003. (For more details on this change, please refer to the PF&M Companion in the November 2002 issue of Rough Notes magazine at http://www.roughnotes.com)
Commercial Liability Umbrella, General Liability-ISO's multi-state introduction of optional fungi or bacteria endorsements and the commercial liability umbrella program has been approved for use. The forms are available for use by all participating insurers for all policies written on or after February 1, 2003.
Commercial Property -ISO's multi-state filing introducing revisions related to the handling of electronic data, commerce transacted in cyberspace, mold and other items has been approved. The forms are available for use by all participating insurers for all policies written on or after February 1, 2003.
Farm - The program changes referred to in the Countrywide section have been approved. The forms are available for use by all participating insurers for all policies written on or after February 1, 2003.
VIRGINIA
Commercial Property -ISO's multi-state filing introducing revisions related to the handling of electronic data, commerce transacted in cyberspace, mold, other items and state-specific form CP 04 06, Ordinance Or Law Coverage - Virginia (Broad Form) has been approved. The forms are available for use by all participating insurers for all policies written on or after April 1, 2003.
General Liability - Form CG 01 79 02 03, Virginia Changes has been approved along with the withdrawal of several state forms. This form was revised and the withdrawals were made in conjunction with the state's approval of a recent Commercial Auto filing. The change was necessary to accommodate the removal of some obsolete definitions. The form is available for use by all participating insurers for all policies written on or after February 1, 2003. *