Reviewed March 25, 2013

Coverage by Endorsement

Summary: Radioactive contamination damage is effectively excluded from property (and casualty) insurance contracts by one or more standard exclusions referred to as nuclear hazard exclusions. While relatively few risks require such coverage, a number of insureds have a definite need for insurance. Many such insureds can secure this protection by purchasing CP 10 37 10 00, the Radioactive Contamination endorsement. This endorsement modifies the causes of loss forms and the standard property policy. There are two applicable coverages offered by CP 10 37, limited and broad radioactive contamination.

Topics covered: The endorsement Rate information

The Endorsement

Commercial property coverage forms contain a general exclusion pertaining to nuclear damage. The nuclear hazard exclusion states that the insurer will not pay for loss or damage from nuclear reaction, radiation, or radioactive contamination, however caused; if loss or damage by fire results from the nuclear hazard, that loss will be covered. See Causes of Loss Forms. The exclusion shows the need for the CP 10 37 endorsement if an insured requires any type of radioactive contamination coverage, be it limited or broad contamination coverage.

The limited radioactive contamination section of the endorsement offers coverage for contamination that directly results from any other covered cause of loss. For example, if a fire on an insured premises burns away a lining that guards some radioactive material resulting in contamination of that building, this coverage will apply to the loss or damage from both the fire and the radioactive contamination. Radioactive contamination, incidentally, is defined as direct physical loss or damage caused by sudden and accidental radioactive contamination, including resultant radiation damage to the described property.

There is a limitation to the coverage offered. The insurer will not pay for loss or damage caused by or resulting from radioactive contamination if the described premises contains a nuclear reactor capable of sustaining nuclear fission or any new or used nuclear fuel intended for use in such a nuclear reactor. Also, if the contamination arises from radioactive material not located at the described premises, this endorsement will not respond to any loss or damage. For example, contamination that arises from material while it is being transported from the described premises to a nuclear dump or while at the dump itself is not covered.

This limitation on coverage is sweeping. If there is a reactor or a nuclear fuel element on the insured premises, the insured simply does not have any coverage whether the prohibited installation is operated by the insured or someone else and also whether or not the loss is from a cause that would be covered if the reactor or fuel were not there. A risk with that type of exposure should have coverage through the nuclear energy insurance pools.

The broad radioactive contamination clause applies to direct physical loss or damage caused by sudden and accidental radioactive contamination, including resultant radiation damage to the described property. Therefore, no intermediate other cause of loss, such as fire, is required to trigger the coverage under this section of the endorsement. This section has the same limitations on coverage that are present in the limited contamination part of CP 10 37.

It should be noted that if endorsement CP 10 37 is not to apply to all buildings or personal property included on a blanket basis, the insured should designate in the declarations the specific piece or pieces of property to which the endorsement applies. A separate limit of insurance for the designated property should also be shown on the declarations page.

Rate Information

Rates for the radioactive contamination endorsement are not shown in the commercial property rating manual. Instead, producers are instructed to submit risks with such an exposure to the rating organization.

The proper procedure is to file the authorized application form with the rating authority. The rate quotation is valid only for a certain time period from the date of the quotation. Certain changes in the risk void the quotation and necessitate a new application. Such changes include changes in quantity or kind of radioactive materials or a change in location where materials are stored or used.