ISO COMMERCIAL CRIME COVERAGES OVERVIEW

(July 2019)

INTRODUCTION

While we often associate crime with acts committed by strangers, the source of crime is often much closer at hand. The ones we trust the most are the ones who can steal the most because our defenses are down. The more barriers that a business can place between its valuables and the ones who want to take them, the lower the chance of a loss. Crime insurance provides insurance coverage when those barriers fail.

Property and inland marine insurance coverage forms and policies provide some coverage for losses due to criminal acts. However, they have limitations on the type of property covered, the amount of coverage available, and the perils or causes of loss that apply. They always exclude money and securities, employee theft, and extortion.

Crime insurance was developed to deal with those limitations. Having different coverage forms available lets the insured make intelligent decisions about the kind of coverage to buy. In addition, most crime coverage forms and policies are not subject to coinsurance clauses or penalties for inadequate insurance-to-value. As a result, the insured can choose the exact limit of insurance it needs for the specific coverage(s) involved. The "one size fits all" approach does not apply to crime insurance coverage. Some coverage forms or policies are used more often than others but each has a specific use and has been developed to apply to particular situations.

Crime insurance coverage can be written as a monoline, stand-alone product or as part of a package policy.

POLICY MAKEUP

Commercial crime policies consist of two basic parts:

The appropriate Crime Declarations–CR DS 02, CR DS 04, CR DS 05, CR DS 07, or CR DS 08
The appropriate Crime Policy–CR 00 22, CR 00 23, CR 00 26, CR 00 27, CR 00 28, CR 00 29, CR 00 30, CR 00 31, or CR 00 41

The commercial crime coverage part of a package policy consists of four basic forms:

IL DS 00–Common Policy Declarations

IL 00 17–Common Policy Conditions Form. This contains conditions common to all commercial lines of insurance. It is mandatory on most monoline or multi-line policies.

The appropriate Crime Declarations–CR DS 01, CR DS 03, or CR DS 06
The appropriate Crime Coverage Form–CR 00 20, CR 00 21, CR 00 24, CR 00 25, or CR 00 40

POLICIES AND COVERAGE PARTS

The following crime coverage forms and policies are available for commercial entities:

CR 00 20–Commercial Crime Coverage Form (Discovery Form)
CR 00 21–Commercial Crime Coverage Form (Loss Sustained Form)
CR 00 22–Commercial Crime Policy (Discovery Form)
CR 00 23–Commercial Crime Policy (Loss Sustained Form)

Related Article: Commercial Crime Coverage Analysis

The following crime coverage forms and policies are available for governmental entities:

CR 00 24–Government Crime Coverage Form (Discovery Form)
CR 00 25–Government Crime Coverage Form (Loss Sustained Form)
CR 00 26–Government Crime Policy (Discovery Form)
CR 00 27–Government Crime Policy (Loss Sustained Form)

Related Article: Government Crime Coverage Forms

The following crime policies provide only employee theft and forgery coverage:

CR 00 28–Employee Theft and Forgery Policy (Discovery Form)
CR 00 29–Employee Theft and Forgery Policy (Loss Sustained Form)
CR 00 30 Government Employee Theft and Forgery Policy (Discovery Form)
CR 00 31 Government Employee Theft and Forgery Policy (Loss Sustained Form)

The following crime forms provide only kidnap/ransom and extortion coverage:

CR 00 40–Kidnap/Ransom and Extortion Coverage Form
CR 00 41–Kidnap/Ransom and Extortion Policy

AVAILABLE ENDORSEMENTS

There are many optional insuring agreements available for complementing the seven insuring agreements in the coverage forms and policies. Each covers a unique crime-related situation that may be industry specific or may apply to all industries.

Every available endorsement is listed. There is a brief explanation of the use of each endorsement and information on coverage parts or policies to which it may be attached. Attaching an inappropriate endorsement to a coverage form or policy can cause confusion, ambiguity and coverage gaps in some cases.

UNDERWRITING AND RATING

The most important parts of underwriting crime insurance is to suspect everyone and to place appropriate barriers between the covered property and potential thieves. The more barriers and procedures in place to protect valuables, the less likely it is that a loss will occur.

Commercial crime coverage rating is prescribed in the ISO Commercial Crime Manual. It is very specific but some of the details can be extremely confusing.