Commercial Crime Coverage Part
Overview
Crime Insurance provides protection against the peril of dishonesty. Coverage is divided into two primary classes: those designed to cover designed to cover theft or dishonesty on the part of the employees of the insured, and those designed to cover dishonest acts of persons who aren’t employees of the insured.
With the advent of multi-line underwriting, open peril property insurance coverage forms have been expanded to include loss by theft. This has resulted in a decrease in the need for non-employee crime insurance; however, virtually all property forms exclude losses due to employee dishonesty and loss to money and securities, therefore Crime Coverage still has an important function in risk management.
Definitions of Crimes
Burglary
1. Burglary – The taking of property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by visible signs of forcible entry or exit. Example: A thief breaks down a door to enter a store and steals merchandise.
2. Premises – The interior of that portion of a building occupied by the insured to conduct business.
Robbery
1. Robbery – The taking of property from the care and custody of a person by one who has:
a. Caused or threatened bodily harm to that person.
b. Committed an obviously unlawful act witnessed by that person.
2. Robbery includes the taking of property in the presence of an employee.
Theft
1. The broadest of the crime coverages, theft includes any act of stealing. Example: A shoplifter steals a diamond ring while the store is opened.
2. Coverage includes losses by burglary or robbery.
Coverage Part Components
Coverage Part Components The Commercial Crime Coverage Part to the Commercial Package Policy consists of the following components:
1. Common Policy Declarations
2. Common Policy Conditions
3. Commercial Crime Declarations Form B (includes amount of coverage)
4. Crime General Provisions Form and/or Safe Depository General Provisions Form
5. Crime Coverage Forms ( one or more)
6. Any applicable endorsements
Commercial Crime Coverage may also be written as a separate monoline policy. When coverage is written as a monoline policy, the Common Policy Declarations is not necessary. In this instance, the Common Policy Conditions are accompanied by a Commercial Crime Declarations Form A, which contains the information that would ordinarily appear on the Common Policy Declarations.
Note: A Cause of Loss Form isn’t needed in the Commercial Crime Coverage Part.
Crime General Provisions Form
General Exclusions Crime coverage doesn’t cover:
1. Losses committed by the named insured or any partner.
2. Losses resulting from property seizure or destruction by order of a governmental authority.
3. Losses resulting from nuclear hazard or war risk.
4. Legal expenses relating to any legal action.
5. Losses that are an indirect result of an occurrence that is covered.
General Conditions
1. Property covered is limited to property that the insured owns or holds, or which the insured is legally liable.
2. To prevent overpayment, coverage acts as excess over any other collectible insurance.
3. Losses are subject to a discovery period, which means that a loss will be covered only if it is discovered no later than one year after the end of the policy period.
4. Losses of property, other than moneys and securities, will be paid on an actual cash value basis, or at the cost of repairing the property. Or at the cost of replacing the property. Loss of money will be paid at face value. Loss of securities will be paid at their value at the close of business on the day the loss was discovered.
5. Coverage will automatically apply both to new employees and to any additional premises acquired by the insured as a result of a merger or consolidation, if the insured notifies the insurer within 30 days and pays any additional premium.
6. In the event of loss, the insured must notify the insurer as soon as possible, and provide proof of such loss with 120 days.
General Definitions
1. Employee – A natural person in the insured’s service, whom the insured compensates and has the right to direct. A person remains an employee for a period of 30 days after termination of service. Agents, brokers, and independent contractors aren’t employees.
2. Money – Coins, currency, bank notes in current use, traveler’s checks, money orders, and registered checks held for sale to the public. The definition of money doesn’t include evidences of debt.
3. Securities – Negotiable and non-negotiable instruments or contracts representing money or other property, including tokens, tickets, revenue stamps, and other stamps in current use, and evidences of debt in connection with charge or credit cards.
4. Property Other than Money and Securities – Any tangible property, other than money and securities, which has essential value.
5. Messenger – The insured or any of the insured’s partners or employees, while having care and custody of the property while outside the premises.
6. Custodian – The insured or any of the insured’s partners or employees, while having care & custody of the property while inside the premises, excluding anyone while acting as a watchperson or janitor.
7. Watchperson – Any person the insured retains to have care and custody of property inside the premises. This person has no other duties.
8. Mysterious Disappearance – The disappearance of property without and identifiable cause of loss. Many policies exclude coverage for losses due to mysterious disappearance. Because some insurance policies that cover theft don’t contain this exclusion, they wholly insure against mysterious disappearance. Example: The loss of a diamond from the insured’s ring, even if the insured doesn’t remember how it was lost.
9. Extortion: The surrender of property away from the premises because of a threat communicated to the insured to do bodily harm to an insured or an employee, or a relative or guest of either, who is allegedly is being held captive.
Crime Coverage Forms
Coverage Form A – Employee Dishonesty
1. Provides coverage for losses resulting from employee dishonesty.
2. Covers money and securities, and property other than money and securities.
3. Coverage may be written on a blanket or scheduled basis. If written on a blanket basis, new employees are automatically covered.
Coverage Form B – Forgery or Alteration
1. Protects against losses due to forgery or alteration of outgoing checks, drafts or promissory notes drawn against the insured’s account.
2. Form B doesn’t cover:
a. Incoming checks that have been forged.
b. Losses caused by dishonest or criminal acts of any of the insured’s employees, directors, or trustees.
Coverage Form C – Theft, Disappearance and Destruction
1. Covers:
a. Money and securities from losses resulting from theft, disappearance, and destruction inside the premises.
b. Damage caused to the premises or its exterior, committed in the course of the crime.
c. Loss to cash containers in the premises, and money and securities outside the premises, while in the custody of an armored vehicle company.
2. The form also offers like coverage for money and securities outside the premises, when in the custody of a messenger.
3. The form doesn’t cover loss from fire, as fire would be covered under a property coverage form.
Coverage Form D – Robbery and Safe Burglary – Property Other Than Money and Securities
1. Covers property, other than money and securities, against inside or outside loss or damage by actual or attempted robbery, including robbery of a messenger outside the premises, and robbery of property in the care and custody of an armored vehicle company.
2. The form would also cover robbery of a custodian inside the premises.
3. Covers inside loss or damage by safe burglary, including the removal of a safe from the premises.
4. The form doesn’t cover loss from an unauthorized transfer of property outside the premises.
Coverage Form E – Premises Burglary
1. Covers property, other than money or securities, inside the premises against loss caused by burglary.
2. Covers losses of property by actual or attempted burglary or robbery of a watchperson if the premises were forcibly entered.
3. The form doesn’t cover loss resulting from fire, vandalism, or losses resulting from employees, directors, or trustees of the insured.
Coverage F – Computer Theft and Fund Transfer Fraud
1. Covers money, securities, and other tangible property against loss caused by computer fraud.
2. Computer fraud – Theft of property, following and directly related to the use of any computer, to fraudulently cause a transfer from inside the premises to a person outside the premises.
Coverage Form G – Extortion
1. Covers money, securities, and property other than money and securities, for losses caused by extortion.
2. The form doesn’t cover loss resulting from acts of the employees, or loss of property surrendered before a reasonable effort to report the extortionist’s demand to an associate, the police, of the FBI.
Coverage Form H – Premises Theft/Outside – Property Other Than Money and Securities
1. Covers property, other than money and securities, for loss by theft while inside the premises and for loss by robbery of such property while in the care & custody of a messenger outside the premises.
2. The form also covers loss, from damages to premises or its exterior, resulting from theft and loss from outside robbery, while in the care and custody of an armored vehicle company.
Coverage Form I – Lessee’s Safe Deposit Box
1. Protects the contents, other than money, of the insured’s safe deposit box, while in a depository premises.
2. The form doesn’t cover loss of property owned by the depository or held by it as collateral or in a trust for more than 30 days.
Coverage Form J- Securities Deposited With Others
1. Covers securities against loss caused by theft, disappearance, or destruction while inside a custodian’s premises, while being transported by an employee of the custodian, or while on deposit in a custodian’s depository.
2. Custodian – means a party with whom the insured has deposited securities.
Coverage Forms K and L – Guests’ Property
1. Form K covers property of guests while it is in a safe deposit box on the premises of the insured, such as a hotel, motel, or lodging facility.
2. Form L covers any property belonging to the insured’s guest, other than that specifically excluded, which is in the insured’s possession or in the insured’s premises. This form a legal liability form, and therefore the guest must prove the insured was negligent.
Coverage Forms M and N – Safe Depository
1. Form M covers those sums for which the insured becomes legally liable as the result of damage to a customer’s property while in a safe deposit box, in a vault, or on the insured’s remises.
2. Form N covers a loss to customer’s property while in a safe deposit box, in a vault, or on the insured’s premises because or robbery, burglary, destruction, or damage. Proof that the insured was negligent isn’t required for payment.
Coverage Form O and P – Public Employee Dishonesty
1. Form O is written for public entities such as state universities, schools, political subdivisions, public utilities, etc. to cover public employee dishonesty on a per loss basis.
2. Form P offers the same protection as does Form O, but covers on a per employee basis as opposed to a per loss basis.
Coverage Form Q – Robbery and Safe Burglary Money and Securities
1. Protects against robbery and safe burglary of money and securities in the care and custody of a custodian, or robbery or money and securities in the care and custody of a messenger.
2. The form also covers premises damage resulting from a covered loss.
Coverage Form R – Money Order and Counterfeit Paper Currency
1. This form provides coverage for the insured for losses related to the receipt of a money order that is not paid, or the receipt of a counterfeit paper currency accepted in good faith by the insured in exchange for merchandise, money, or services.
2. The acquisition of the money order or counterfeit paper currency must have occurred during the regular course of business.
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