Nuclear energy exclusions to liability coverage agreements are common to insurance policies. A limited form is written as part of homeowners policies and personal auto policies. A broad form nuclear energy exclusion is written as a separate endorsement, IL 00 21, and modifies several commercial coverage forms, including, but not limited to: the commercial general liability forms, the business auto coverage forms, liquor liability forms, and pollution liability forms. Incidentally, for information on the nuclear exclusion found in property insurance forms, see Nuclear Exclusion Clauses. This article can also be found on the Misc. Property M.75 pages in the Fire & Marine volume.

IL 00 21 consists of two main sections. The first section details the circumstances under which the insurance does not apply—the exclusions themselves. The second section lists the definitions specific to the form.

This endorsement modifies liability coverage so that insurance does not apply to bodily injury or property damage with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by certain entities; this is, of course, to combat the possibility of dual coverage. The exclusion also applies to bodily injury or property damage resulting from the hazardous properties (a defined term) of nuclear material with respect to which any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954 or any amendatory laws.

The nuclear material discussed in this exclusion must be at any nuclear facility owned by, or operated by or on behalf of an insured, or must have been dispersed from such nuclear facility. Also, the exclusion applies if the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, or transported by an insured. For example, if, while disposing of some contaminated water from a nuclear power plant or a nuclear fission manufacturing plant, the insured or someone acting on behalf of the insured causes injury or damage, this exclusion applies to such injury or damage that results from the hazardous properties of the nuclear material.

Furthermore, coverage for bodily injury or property damage resulting from hazardous properties of nuclear material is excluded if the injuries or damages arise out of the furnishing by an insured of services, materials, parts, or equipment in connection with the planning, construction, operation, or maintenance of any nuclear facility. It should be noted, however, that if the facility is in the United States or Canada , this exclusion applies only to property damage to such facility and any property at the facility. The Three Mile Island incident and the Chernobyl disaster of past years could serve as examples for this part of the exclusion. If the insured supplied some parts for the nuclear reactor at Three Mile Island, this part of the exclusion would apply only to damage to the Three Mile plant itself and not to claims for injuries and damages from people living in the surrounding countryside since this facility is in the United States . But if the insured's parts were used at Chernobyl, a facility not in the United States or Canada, the exclusion would apply to damage at the Chernobyl plant itself and to bodily injury and property damage claims from people living in the surrounding countryside. Regardless, however, of the applicability of this part of the nuclear exclusion, all bodily injury and property damage claims are still subject to the other exclusions that appear on the liability coverage forms (for example, the war exclusion or the damage to property exclusion).

Under any medical payments coverage, the nuclear energy liability exclusion applies to expenses incurred with respect to bodily injury resulting from hazardous properties of nuclear material, and arising out of the injuries from the operation of a nuclear facility by any person or organization.

The definitions section of the endorsement contains eight items:  hazardous properties, nuclear material, source material, spent fuel, waste, nuclear facility, nuclear reactor, and property damage.

“Hazardous properties” means radioactive, toxic, or explosive properties. Nuclear material is defined as source material which, in turn, is listed as having the meanings given them in the Atomic Energy Act of 1954 or in any amendatory law. Spent fuel is any fuel element that has been exposed to radiation in a nuclear reactor, which is any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction. It should be noted, of course, that hazardous properties, nuclear material, source material, and spent fuel could be considered pollutants and any claim or lawsuit based on their dispersal or release could face a denial based on the pollution exclusion in addition to this nuclear exclusion. However, since the pollution exclusion does allow some limited liability coverage, any insurer faced with a potential nuclear energy claim should not rely simply on the pollution exclusion to deny coverage.

A nuclear facility means any nuclear reactor or any equipment or device designed or used for separating the isotopes of uranium or plutonium or used for the processing of spent fuel or the handling of waste. It is further defined as any equipment or device used for the processing of special nuclear material if that special material contains more than 25 grams of plutonium or uranium 233 or more than 250 grams of uranium 235.

Furthermore, any structure, excavation, or premises prepared or used for the storage or disposal of waste is included in the definition. This intent to exclude any coverage for damages from a nuclear dump site is strengthened by a final catch-all paragraph that includes as a nuclear facility the site on which any of the foregoing is located, all operations conducted on such site, and all premises used for such operations.

Waste is defined as any waste material containing by-products resulting from the operation of any nuclear facility.

Property damage includes all forms of radioactive contamination of property. This term encompasses not only actual physical damage but also loss of use of property that is not physically injured.