ISO COMMERCIAL CRIME COVERAGES ARCHIVE

(July 2019)

This document is a repository of articles and analyses that relate to earlier editions of the above captioned program.

Archive Index
Analysis	Pre-Crime 2000 Program
Comparison	Coverage Comparison of ISO Pre-Crime 2000 Commercial Crime Forms
Quiz	Coverage Comparison of ISO Pre-Crime 2000 Commercial Crime Forms Quiz
Analysis	Changes to the Commercial Crime Program
Comparison	Commercial Crime Coverage Forms Comparison: 2002 Edition to the 2006 Edition
Comparison	Commercial Crime Coverage Forms Comparison: 2002 Edition to the 2007 Edition
Analysis	Commercial Crime Coverage Analysis (05 06 Edition)
Endorsements	Commercial Crime Coverages Available Endorsements and Their Uses (05 06 Edition)
Analysis	Government Crime Coverage Forms (05 06 Edition)
Analysis	CR 00 40 and CR 00 41–Kidnap/Ransom and Extortion Form and Policy (08 07 Edition)
Analysis	CR 00 28 and CR 00 29–Employee Theft and Forgery Policies (05 06 edition)
Analysis	CR 00 30 and CR 00 31–Government Employee Theft and Forgery Policies (10 10 edition)
Comparison	Commercial Crime Coverage Forms Comparison: 08 13 Edition to the 05 06 Edition
Analysis	Commercial Crime Coverage Analysis (08 13 Edition)
Endorsements	Commercial Crime Coverages Available Endorsements and Their Uses (08 13 Edition)
Analysis	Government Crime Coverage Forms (08 13 Edition)
Analysis	Reserved For Future Use
Analysis	Reserved For Future Use

PRE-CRIME 2000 PROGRAM

We believe that it is helpful to preserve older information, especially since not all companies rush to adopt the latest programs. Others still have proprietary programs that may be closely related to older forms and policy structure. We have condensed our previous section on the pre-2000 Crime Program into this article.

Commercial Crime Insurance Coverage Part

A Commercial Crime Coverage Part consists of six components developed by the Insurance Services Office and the Surety Association of America. It may be written under either a Commercial Package or a monoline Commercial Crime Policy. The program has a series of 17 Coverage Forms, each of which covers a particular set of circumstances. It also has 11 Crime Coverage Plans, which correspond to the former separately identified major types of Crime insurance associated with commercial risks.

THE SIX CRIME INSURANCE COVERAGE COMPONENTS

The six components in a Commercial Crime Coverage Part are: Common Policy Declarations; Common Policy Conditions; Commercial Crime Declarations; Crime General Provisions Form (and/or Safe Depository General Provisions Form); one or more Crime Coverage Forms; endorsements (if applicable).

Deductible amounts are shown on the Declarations pages instead of on an endorsement. Common Policy Conditions apply to all Coverage Parts included in a policy. The insured is given 30 days’ notice of cancellation (10 days for nonpayment of premium). The time allowed on the company's right to examine the insured's books and records is three years.

Crime General Provisions Form CR 10 00 contains general exclusions, general conditions and general definitions that apply to all Crime coverage forms (except Coverage Forms K, L, M and N) that form part of a policy. Liability for Guests’ Property Forms K and L contain their own exclusions, conditions and definitions and Safe Depository Forms M and N are used in conjunction with a specialized Safe Depository General Provisions Form.

CRIME GENERAL PROVISIONS FORM

The Crime General Provisions form applies to and must be added to the following crime coverage forms:

A -- Employee dishonesty

B -- Forgery or alteration

C -- Theft, disappearance, destruction

D -- Robbery and safe burglary

E -- Premises burglary

F -- Computer fraud

G -- Extortion

H -- Premises theft and robbery outside

I -- Lessees of safe deposit boxes

J -- Securities deposited with others

Q -- Robbery and safe burglary, money and securities

EXCLUSIONS

Dishonest or criminal acts committed by you or any partner whether acting alone or in collusion; seizure or destruction of property by order of government authority; indirect loss resulting from any covered act; business income "type" losses; legal liability for damage for property of others for consequential loss but coverage for direct damage; cost to establish the existence or amount of loss; expenses related to any legal action; nuclear; war.

GENERAL CONDITIONS

Notification Limit–insured must notify Company within 30 days; one-year discovery period on loss. After discovery of loss: notify insurer as soon as possible; submit to exam under oath and signed statement; sworn proof of loss within 120 days; cooperate in investigation.

Joint insured clause–care is very important in naming of the first named insured for it will act not only for itself but also for every other insured.

No legal action–against insurance company unless insured complies with all policy terms, waits 90 days after filed proof of loss, and files suit within 2 years of date of loss discovery.

Loss covered under more than one coverage in this policy–the insurance company will pay the lesser of the actual amount of loss or the sum of the limits applicable insurance.

The period of discovery–is extended when PRIOR insurance would have covered the loss and this insurance took effect at termination of PRIOR insurance. However, the loss must have been eligible under this insurance. For a Loss covered under this insurance and prior insurance and issued by the same insurance group and if: covered partly by this and prior insurance, will pay LARGER of amount recoverable under this or prior insurance; will not add two policies together.

No limit of insurance cumulates from year to year (loss occurring over a multi-year period is still one occurrence).

If another policy covers the loss, this insurance will apply to that part of the loss above the deductible and not recoverable under the other insurance but will not apply to the amount of loss that is more than the limit of this insurance.

Covered property–is limited to that which you own or hold or for which you are legally responsible. This insurance is for your benefit only. Policy period is shown in declarations page. Losses sustained through acts or events must occur during the policy period. You must keep records of covered property.

Recovered property–goes to you for loss that exceeds limit of insurance and deductible; then to insurance company until they are reimbursed; then the rest to you for your deductible.

Territory–USA, U.S. Virgin Islands, Puerto Rico, Canal Zone and Canada.

Subrogation–essentially the same as current policy forms.

Valuation–money is up to and including its face value; other country's money is at face value or at the U.S. dollar equivalent rate of exchange on the day the loss was discovered. Securities are at the value at close of business on the day that loss was discovered. Property other than money or securities is actual cash value, or the cost to repair or replace. Arbitration rights exist for disagreement on valuation.

GENERAL DEFINITIONS

Employee–natural person in your service and 30 DAYS AFTER TERMINATION, whom you compensate directly by wages, salary or commissions; "employment contractor" is when you hire people from a temporary employment firm, they are considered employees for on premises exposure, but not for property in their care outside the premises.

Not an employee–agent, broker, factor, commission merchant, independent contractor (the machinist you have in your plant as an independent contractor who is not employed by an employment contractor); directors/trustees -- except while performing acts coming within the usual duties of an employee (Director who is also vice president is an employee. Outside director is not).

Money–currency, coins, bank notes in current use and having a face value, traveler’s checks, register checks, money orders held for sale to the public.

Property other than money or securities–any other tangible property that has intrinsic value and is not excluded under property not covered.

Securities–negotiable and nonnegotiable instruments or contracts representing either money or other property, include tokens, tickets, revenue, other stamps (also unused stamps in a meter) and evidence of debt issued in conjunction with credit or charge cards which are not issued by you. (Insured can't be issuer of charge card.)

JOINT INSUREDS

Eligible entities may be included as joint insureds under certain conditions, notably when there is substantial stock ownership or a large degree of ownership or control, when operations are conducted by way of a holding company, or when an operating entity directs the affairs of another under lease or contract.

Joint insureds may be included with a principal insured in the Declarations by specific naming or, automatically, by language such as "and any interest that is owned, controlled or operated by any one or more of those named as Insureds."

CRIME COVERAGE PLANS

Eleven Crime Coverage Plans are included in ISO's Commercial Crime program. Protection provided by any one of the previously used Crime policies or major forms of Crime insurance is made effective by use of one of the Coverage Plans. Insurance companies, of course, apply their individual underwriting standards in the determination of the coverage they will write and the acceptability of risks.

An overview of Commercial Lines Manual, Crime Division, eligibility rules establishes fundamental guidelines, however, for determining the types of insurance that are appropriate for risks and for knowing those risks that are not eligible for certain ones of the Coverage Plans. Each Coverage Plan, a description and its general eligibility guidelines follow.

COMBINATION CRIME Plan 1

Plan 1 uses any combination of Coverage Forms A-J. It is the equivalent of a Comprehensive Dishonesty, Disappearance and Destruction policy or a Comprehensive Crime Coverage endorsement under a package policy and may be used to provide coverage comparable to Blanket Crime insurance.

Plan 1, the numerical designation for this Coverage Plan, is designed for any insured except one eligible for a financial institution blanket bond. However, the following are eligible for Plan 1 even though eligible for a financial institution blanket bond: endowment funds, foundations and mutual funds having non-employee sales representatives.

Specific rules for use of certain Coverage Forms are notable: Employee Dishonesty Coverage Form A may not be written for public officials or political subdivisions; Theft, Disappearance and Destruction Coverage Form C, Section 1, limited to securities, may be written for any insured except a bank or trust company; Coverage Form C, Section 2, may be written for any insured except an armored motor vehicle company; Securities Deposited With Others Coverage Form J may be written for any insured.

COMBINATION CRIME-SINGLE LIMIT Plan 2

Plan 2 has been withdrawn, as coverage comparable to Blanket Crime insurance may now be obtained under the more flexible Plan 1.

STOREKEEPERS BROAD FORM Plan 3

Plan 3, Storekeepers Broad Form, requires the use of Coverage Forms A-E. It provides the coverage previously associated with a Broad Form Storekeepers form.

Plan 3 is intended for any insured with a single premises and employing not more than four persons. However, any insured eligible for a public official bond or public employee blanket bond is not eligible for this protection.

STOREKEEPERS BURGLARY AND ROBBERY Plan 4

Plan 4, Storekeepers Burglary and Robbery, involves the mandatory use of Coverage Forms D and E. Its coverage is comparable to that of a Storekeepers Burglary and Robbery form.

Plan 4 is not restricted with regard to eligibility. The coverage is confined to burglary and robbery, and there is a limit of $50 on money.

OFFICE BURGLARY AND ROBBERY Plan 5

Plan 5, Office Burglary and Robbery, requires the use of Coverage Forms D and H. It is the equivalent of an Office Burglary and Robbery form.

Plan 5 may be prescribed for any insured. The coverage, limited to burglary and robbery, applies to money, securities, and property other than money and securities associated with an office.

GUESTS PROPERTY-SAFE DEPOSIT BOX Plan 6

Plan 6, Guests Property--Safe Deposit Box, uses Coverage Form K. The coverage provided is the equivalent of a Hotel Safe Depository form.

Plan 6 is designed for any insured providing lodging facilities. It covers the insured's liability for loss of guests' property from safe deposit boxes. The protection is comparable to that previously provided by Hotel Safe Depository insurance.

GUESTS PROPERTY-PREMISES Plan 7

Plan 7, Guests Property--Premises, requires the use of Coverage Form L. It is comparable to Innkeepers Liability insurance.

Plan 7, as with Plan 6, is designed for any insured providing lodging facilities. Its coverage is broader in scope, providing legal liability protection for loss of guests' property from within the premises. It is comparable to a previously written Innkeepers Liability policy.

SAFE DEPOSITORY Plan 8

Plan 8, Safe Depository, employs Coverage Form M, Coverage Form N or both. The protection provided is similar to that of a Combination Safe Depository policy.

Plan 8 is prescribed for insureds other than financial institutions providing safe deposit box facilities. It may be written to cover the insured's safe depository liability for loss of customers' property, or to cover loss of such property against direct loss or damage without regard to the insured's liability.

EXCESS BANK BURGLARY AND ROBBERY Plan 9

Plan 9, Excess Bank Burglary and Robbery, utilizes Coverage Form D. It is the equivalent of a Bank Excess Burglary and Robbery form.

Plan 9 is designed for any institution authorized by federal or state government to conduct a banking or trust company business. It extends to all premises of the insured and covers money, securities and property other than money and securities against robbery and safe burglary.

BANK EXCESS SECURITIES Plan 10

Plan 10, Bank Excess Securities, requires the use of Coverage Form C. The protection it provides is similar to that of the previously used Bank Excess Securities form.

Plan 10 is intended for any institution authorized by federal or state government to conduct a banking or trust company business. It provides coverage for theft, disappearance and destruction of securities.

COMMERCIAL CRIME-GOVERNMENT ENTITIES Plan 11

Plan 11, Commercial Crime-Government Entities, utilizes Coverage Forms O, P and B to cover money, securities and property other than money and securities against public employee dishonesty.

Plan 11 is designed to insure any of the following: local government entity; public utility, fire district, bridge or transit authority; state university, college or school; school district, board of education or similar authority; publicly funded hospital.

COMMERCIAL CRIME COVERAGE FORMS

Coverage comparable to that of a previously used Crime Policy is arranged by use, in a Commercial Crime Coverage Part, of one or more of 17 Coverage Forms. Eleven Coverage Plans under the simplified Commercial Crime program correspond to the former Crime Policies. Each of the Coverage Plans utilizes certain Coverage Forms, as indicated in the foregoing analysis captioned "Commercial Crime Insurance Coverage Part." Each of the Coverage Forms contains necessary descriptions of coverage, including what is or is not covered, and exclusions, conditions and definitions that apply specifically to that coverage. It modifies, for the particular protection desired, the overall provisions of the Crime General Provisions Coverage Form, except with respect to Coverage Forms K through N. All of the Coverage Forms were developed by the Insurance Services Office except Employee Dishonesty Coverage Form A. Forgery or Alteration Coverage Form B. Public Employee Dishonesty Per Loss (Form O) and Public Employee Dishonesty Per Employee (Form P), which are under the jurisdiction of the Surety Association of America.

Eligibility for Commercial Crime Coverage Plans

GUIDELINES FOR USE

An overview of Commercial Lines Manual, Crime Division, eligibility rules establishes fundamental guidelines, however, for determining the types of insurance that are appropriate for risks and for knowing those risks that are not eligible for certain ones of the Coverage Plans. General eligibility guidelines for each Crime Coverage Plan follow.

COMBINATION CRIME

COMBINATION CRIME-SINGLE LIMIT

Plan 2 has been withdrawn, as coverage comparable to Blanket Crime insurance may now be obtained under the more flexible Plan 1.

STOREKEEPERS BROAD FORM

STOREKEEPERS BURGLARY AND ROBBERY

Plan 4 is not restricted with regard to eligibility. The coverage is confined to burglary and robbery, and there is a limit of $50 on money.

OFFICE BURGLARY AND ROBBERY

Plan 5 may be prescribed for any insured. The coverage, limited to burglary and robbery, applies to money, securities, and property other than money and securities associated with an office.

GUESTS PROPERTY-SAFE DEPOSIT BOX

GUESTS PROPERTY-PREMISES

SAFE DEPOSITORY

EXCESS BANK BURGLARY AND ROBBERY

BANK EXCESS SECURITIES

COMMERCIAL CRIME-GOVERNMENT ENTITIES

JOINT INSUREDS

EMPLOYEE DISHONESTY -- FORM A -- CR 00 01 AND CR 00 02

Coverage Form A provides the protection previously available under Employee Dishonesty coverage in a Blanket Crime policy, a 3-D policy, a Blanket Position bond, a Commercial Blanket bond or a Special Multi-Peril policy. It is, in fact, a "fidelity bond" and, as such, is a development of and under the jurisdiction of the Surety Association of America. It reimburses an insured employer for loss, up to a specified amount, sustained by the employer by reason of any dishonest act of an employee or employees that are covered.

Blanket coverage form CR 00 01: all employees are covered on a blanket basis.

Whether one or more employee is involved in the act, or series of acts, it still is only one occurrence. But if two employees just happen to commit acts of theft on the same day and aren't working together and don't know what the other is doing -- these are two separate occurrences.

If you never catch or identify the employee, the BLANKET policy covers. It covers your employees while they're temporarily outside of policy territory for up to 90 days. (Key: temporary and 90 days.)

Position or schedule coverage form CR 00 02: you must name the covered employees or positions and you must identify the employee who caused the loss.

Under this policy, if two or more employees are involved in collusion, each employee's act is considered a separate occurrence. There is no temporary overseas coverage in this policy.

Coverage provided (Both forms): coverage is for loss of and loss from damage to: "Money and Securities"; "Property other than Money or Securities". It doesn't cover for mistakes or stupidity -- the employee must have intended to harm the employer and benefit himself, someone else or another organization.

Exclusions (Both forms): Insured participation (i.e., you and the employee plan and execute the act; you let the employee break into the safe and both of you split the take); and inventory shortages.

Excluded employees (Both forms): any employee is excluded immediately upon discovery by you or any other officer or partner (not in collusion with the employee) of ANY dishonest act.

Example: An employee who is reprimanded for stealing a pencil would be excluded, even if no insurance had ever been provided. If you knowingly hire a person who has committed a dishonest act, that employee is not covered.

Limit of Insurance (Both forms): loss must exceed deductible; no annual aggregate; you must give us notice of ANY loss even if it is less than the deductible; blanket coverage limit is per occurrence; but schedule coverage limit is per person or position.

Rating: rates are governed by the Surety Association Rate manual. Information needed to rate: number of officers; number of employees who handle money; number of all other employees in the positions named on the chart in the classification of employees/locations; 1% of all other employees; number of retail locations; number of all other locations other than the home or head office.

Deductible credits: calculate premium for $10,000 coverage in the usual manner, then multiply by the factors for the specific deductible credit.

Experience or IRPM: See Company.

Basic rating formula: from the chart in the Surety Manual, find the premium for the limit and the number of ratable employees then multiply by the premium charge for each ratable location; if more than 25 ratable locations, multiply by location conversion factor.

Example:

· Each of next 25 -- .25

· Each over 50 -- .05

Note: For some classifications of insureds, only the first location is charged.

Multiply the gross premium by the insured's class rate modification factor, which is based on the nature of the Insured's operation. Result is net premium. There are no territory multipliers for employee dishonesty. Calculate and apply deductible credit.

Apply IRPM or experience modifications.

Endorsements used with this form (see endorsement section at the end of this article for additional information): FORGERY OR ALTERATION FORM B -- CR 00 03

Coverage Form B provides insurance similar to the Depositors Forgery coverage previously written under a Blanket Crime policy, a 3-D policy, a Depositors Forgery bond or a Special Multi-Peril policy. It indemnifies the insured and banks in which the insured carries a checking or savings account for loss by reason of forgery or alteration of checks, drafts, promissory notes and other described instruments and documents.

This Coverage Form, as in the case of Employee Dishonesty Coverage Form A, is under the jurisdiction of the Surety Association of America. The 12 Coverage Forms reviewed below are products of and under the jurisdiction of the Insurance Services Office.

COVERAGE PROVIDED

Checks drafts, promissory notes or similar written promises, orders or directions to pay that are drawn against your accounts or against someone acting as your agent (i.e., a thief steals checks and starts writing. You authorize your broker to invest your check in ABC and he cashes the check and loses it on the ponies).

Forgery and alteration are the covered causes of loss.

Check forgery from customers, suppliers and others. COVERAGE IS NOT AVAILABLE EXCEPT IN SPECIALTY MARKETS OR BY SPECIAL ENDORSEMENT FILED BY A STANDARD CARRIER. (You release a product to the customer but the customer's check bounces and the customer skips town.)

Also covered is when you refuse to pay a covered instrument on the basis it has been forged or altered. You are then sued by the person offering the document. If the insurance company agrees to defend you, they will REIMBURSE YOU for reasonable legal expenses. Legal expenses are IN ADDITION to the limit of insurance.

Limits and deductibles: per occurrence limit, no aggregate. You pay deductible first and company pays the rest up to the limit of insurance. (No deductible under legal expenses.)

Exclusions: employee dishonesty.

Conditions: Fax signatures okay.

Proof of loss: copy of forged or altered instrument or signed affidavit if instrument is unavailable.

Territory is worldwide.

aLL forgeries by ONE person is one occurrence.

PREMIUM DETERMINATION

Surety Association rates apply (SAA). Calculate the number of ratable employees according to the Employee dishonesty formula. Do not charge for locations.

Subtract deductible credit; then multiply by the employee dishonesty classification rating factor. Then multiply by a credit factor. No experience rating is available.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

· CR 10 12

· CR 10 13

· CR 10 14

THEFT, DISAPPEARANCE AND DESTRUCTION FORM C–CR 00 04

Coverage Form C covers only money and securities. (Coverage for "other property" is now provided in other Coverage Forms.) Form C applies inside the insured's premises or a banking premises against theft, disappearance or destruction. Provision is made for similar coverage outside the premises when money and securities are in the care and custody of a messenger.

With respect to covered causes of loss, the term "theft" was substituted for "wrongful abstraction" in Form C. It is simpler and better defines the intended coverage. It is newly defined in the form as meaning "any act of stealing," a broad concept.

The Theft, Disappearance and Destruction Coverage Form was developed from and provides coverage similar to the previously used: Blanket Crime Policy (Loss Inside and Loss Outside the Premises Coverages); Comprehensive Dishonesty, Disappearance and Destruction Policy (Loss Inside and Loss Outside the Premises Coverages); Money and Securities Broad Form.

Covered property loss inside and loss outside:

· "Money" and "Securities" INSIDE the "Premises" or a "Banking Premises."

· "Money" and "Securities" OUTSIDE the "Premises" while in the care and custody of a messenger; owned or legal liability as in the employee dishonesty policy.

Covered causes of loss (both loss inside and outside):

· Theft is any act of stealing;

· Disappearance is not defined anywhere.

Coverage examples for disappearance might include:

Stop at rest room and forget bag, go back to retrieve but the bag is gone.

Bag left in car, car is stolen, then car is recovered but bag isn't.

Destruction is covered but undefined, can include fire, chemicals, shredding, and animal damage.

Inside the premises coverage defined:

"Premises" -- INSIDE the buildings you occupy in conducting your business. (Your building, one you rent, the convention center you rented, the hotel suite you rented for interviewing purposes).

"Bank Premises" INSIDE any bank building. (If a bank is a tenant, only inside the area leased by the bank for banking purposes. What about the storeroom down the hall?) What is NOT the interior of a building: sidewalk, in a car, out by the front door, in an externally only accessible display, i.e., an outside ATM at a bank premises.

Coverage extensions: damage by theft or attempted theft to a locked safe, vault, cash box, cash register located in the premises; if you own the building or are liable for damages, loss from damage to the "premises" or exterior by theft or attempted theft is covered.

Outside the premises coverage defined: in the CARE and CUSTODY of a MESSENGER. CARE and CUSTODY is not defined so the courts will consider the broadest definition.

Example: a customer puts money outside the door, goes back inside to retrieve a cola and the bag is taken; or puts bag down and begins talking with someone who requests directions, steps away from the bag to point the way and the bag is picked up by the direction seeker's accomplice.

MESSENGER as defined means you, partners and "employees" as defined in the crime general provisions. Remember, while off premises, there is no coverage for a contract employee even if hired through an "Employment Contractor." Examples where coverage will not exist:

· A friend who helps carry the deposit bag into the bank because the messenger has carpal tunnel syndrome.

· The wife of an officer of a corporation if she is not also an officer or employee.

While in the care of an armored motor vehicle company is not defined (armored is not defined, but coverage is in excess of the contract with the armored car company or any insurance they carry).

Coverage under the Theft, Disappearance and Destruction policy is on a blanket basis.

EXCLUSIONS

· Accounting or arithmetical errors or omissions.

· Employee dishonesty. (Remember, a person is an employee up to 30 days after termination.)

· Surrendering of property in exchange or purchase.

· Fire damage to the premises. (However, if burglars burn down the place in the theft, since destruction isn't defined, fire destroying the money would be covered.)

· Vending machines, arcade machines -- unless the amount of money deposited is recorded on a continuous recording device.

· Transfer or surrender of the property by unauthorized instructions.

· Computer Fraud (covered under Form F).

· Threat to do bodily harm to any person (can be covered under Coverage G Extortion); threat to damage property (no coverage available except in specialty markets).

· Threat of bodily harm or property damage IS covered if the messenger didn't have knowledge of the threat at the time the conveyance began. Examples:

NOT COVERED: Phone call -- deliver a bag of money to XYZ by 10:00 P.M. or your wife dies and your building explodes.

COVERED: Hand over the bag or I'll blow you and your car away.

Other exclusions include:

· Vandalism to the "Premises" or its exterior or to containers of covered property. Examples:

COVERAGE FOR: Door kicked in, safe door drilled and both acts committed in the theft;

NO COVERAGE: "Die Racist Pig" graffiti carved into the board room table and the windows broken after the theft, then ransacking by the angry mob. (Real tough one to define.)

· Voluntary parting of title or possession of property. Examples:

NO COVERAGE: Person has the appropriate uniform and credentials and the bookkeeper gives the messenger the day's receipts.

NO COVERAGE: The messenger gives a person dressed as a police officer the bag of money at the "broken" night depository.

RATING

Deductibles: multiply rates per first $1,000 of coverage by factor and subtract from premium, but with deductibles over $1,000, charge only for limit in excess of the deductible.

Rating information needed for PREMISES coverage: from the ISO Commercial Lines Manual classifications pages -- the crime rate group for the highest exposure at the initial premises (premises with largest exposure).

EXPOSURE -- what actually is on premises (not limit of insurance), for premises coverage at each location is broken down into the following distinct categories:

MONEY EXPOSURE (countrywide rates);

SECURITIES EXPOSURE (including checks for RETAIL risks but NOT payroll checks issued by the insured. Securities as defined here are charged at a portion of the money rate);

PAYROLL CHECKS EXPOSURE. For money coverage, you will need to determine the safe, chest, cabinet and vault classification. Rate group or width of door and body wall of the safe are usually on label on safe door. The better the protection, the better the rate. Discounts: multiple premises -- multiply additional premises above the initial premises by a credit factor; premises safe or vault -- for each guard (up to 3), on premises while open for business you will receive a discount; for each watchperson (up to 3) on premises while not open for business -- if he/she makes rounds and signals to central station -- if he/she registers hourly on a watchperson's clock -- if watchperson doesn't signal there is a small discount.

Information needed for PROPERTY IN CUSTODY OF MESSENGER: from the ISO Commercial Lines Manual classifications pages -- the crime rate group for the messenger having the largest exposure (initial messenger).

The EXPOSURE -- what is the maximum property in custody of a messenger (not limit of insurance), for each messenger:

MONEY EXPOSURE (countrywide rates);

SECURITIES EXPOSURE (including checks for RETAIL risks but NOT payroll checks issued by the insured). (Securities as defined here are charged at a portion of the money rate);

PAYROLL CHECKS.

Discounts: multiple messengers -multiply all messenger's premium but initial messenger by credit factor; UL inspected messenger bag earns a discount; conveyed in locked messenger safe or chest earns a credit; messenger uses a conveyance provided for the exclusive use of the messenger during the entire trip earns a credit.

Endorsements used with this form - Note: see endorsement section at the end of this article for additional information:

CR 15 01	CR 15 12	CR 15 14	CR 15 18	CR 15 24	CR 15 27
CR 15 09	CR 15 13	CR 15 15	CR 15 22	CR 15 26	CR 15 28

ROBBERY AND SAFE BURGLARY FORM D–CR 00 05

Coverage Form D makes provision for coverage inside the premises and outside the premises of property other than money and securities, which can be covered by endorsement. Inside the Premises coverage may be written to cover both robbery and safe burglary or can be limited to either robbery or safe burglary. Outside the Premises coverage applies to robbery of property in the care and custody of a messenger.

The Robbery and Safe Burglary Coverage Form was developed from and provides coverage similar to the Mercantile Robbery Forms, the Mercantile Safe Burglary Forms and the (combination) Mercantile Robbery and Safe Burglary Form. There is no change of intent.

Aside from the removal of various provisions (that were in the previously used forms) to either the Common Policy Conditions or the Crime General Conditions Form, most changes are for clarification. Four new exclusions are notable examples. The "acts of employees, directors, trustees or representatives" exclusion clarifies that the acts of such people are not covered. A "fire" exclusion clarifies that the only covered fire damage is that to a safe or vault. Another exclusion makes clear that there is no coverage for "transfer or surrender of property." A "vandalism" exclusion affirms that vandalism damage is covered under Commercial Property Forms, not Form D. There is no longer an exclusion for manuscripts, books of account and records. A special $5,000 limit is now provided for such property. The title of this coverage form has been revised to specifically state the types of property that are being covered as follows: Robbery And Safe Burglary Coverage Form -- Property Other Than Money And Securities.

THREE BASIC COVERAGES

· Covers Robbery of a Custodian for Property other than Money and Securities located inside the premises (if the insured has special form contents with adequate limits, this coverage may not be necessary).

· Covers Safe Burglary of Property other than Money and Securities.

· Pays also for damage to the premises and a locked vault or safe resulting directly from the safe burglary or attempt (if the Insured has special form contents with adequate limits, this coverage may not be necessary).

· Covers Robbery of Property other than Money and Securities outside the premises in the care and custody of a messenger (special form contents limits property away from premises to $5,000, not on vehicles, not stock and not in custody of salesperson and only $1,000 in transit).

· Carrying Motor Truck Cargo coverage may also make this coverage unnecessary. However, if you have small items, jewelry or other valuable property that are carried on other than described vehicles, and/or if part of a shipping package has value to a robber, you may want to seriously consider this coverage. Review you company's cargo and off-premises coverage for gaps.

LIMITS AND DEDUCTIBLES

There are separate limits for each coverage, and each limit is an occurrence limit, and if the policy has separate deductibles, only the highest deductible applies to any one occurrence.

EXCLUSIONS

· Motor vehicles.

· Trailers or their equipment.

· Employee dishonesty.

· Fire except to safe or vault.

· Loss of or loss from damage to property transferred to another person or place outside the premises.

· Trick or device.

· Extortion loss.

· Vandalism.

CONDITIONS

There is $5,000 maximum coverage for precious metals, gems, furs, and articles containing such and manuscripts, drawings or records including the cost of reproduction.

DEFINITIONS

Custodian is you, an employee or partner having Care, Custody, and Control inside the premises. A custodian is not any person while acting as a watchperson or janitor; messenger is an "employee" as defined in the crime general conditions. Remember, any contract employee, whether hired through an employment contractor or not, is not an "employee" outside the premises.

Watchperson is defined as someone who is retained specifically to be a watchperson and has no other duties.

Janitor is not defined.

Robbery must be an obvious unlawful act and include threat or actual bodily harm to, or was witnessed by, the custodian.

There is COVERAGE for shoplifting actually seen by your clerk.

NO COVERAGE if the clerk saw the customer near the counter touching the article but didn't see the customer actually take it (no witness, no violence, no coverage).

NO COVERAGE if the robber impersonates an employee from another store and your clerk releases the goods (there is no coverage because the act was not obviously unlawful).

NO COVERAGE if your clerk falls asleep and is robbed without waking up. There is no coverage because he suffered no violence in the act of robbery and he did not witness the act.

The safe must be locked, on premises and have visible signs of forcible entry to be covered. If the safe is stolen and opened elsewhere there is coverage if there are visible signs of forcible entry.

Property in the custody of armored car companies is covered for property away from the premises on an excess basis over their own insurance or the contract with the Insured.

RATING

Covers robbery only, safe burglary only or both. Robbery of a custodian/safe burglary is calculated separately: Robbery of a custodian -- Form E rates per $1,000 times the exposure limit.

Safe burglary -- Form E rates per $1,000 times the exposure limit; then multiply each of the appropriate premiums by -- any applicable discount, any applicable endorsement multiplier.

Coverage form multiplier for robbery of a custodian: custodian only -- apply a discount; but custodian and at least one other employee -- apply a greater discount.

Safe burglary is rated on the class of the safe and the better the safe, the better the credit: multiply by territory multiplier then for multiple premises -- multiply all but the initial premises by credit factor.

Apply safe and vault alarm systems discounts.

For watchperson discounts (hired specifically to watch while premises is not open), apply a discount.

For messenger Coverage: the initial messenger has the highest exposure.

Then apply countrywide rates for Form D times amount of exposure.

Then multiply by any appropriate discount.

Then multiply by any endorsement factor; then apply a territory multiplier, and any applicable discounts.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 15 01	CR 15 09	CR 15 15	CR 15 20	CR 15 24	CR 15 27
CR 15 04	CR 15 14	CR 15 18	CR 15 22	CR 15 25	CR 15 28

PREMISES BURGLARY FORM E–CR 00 06

Coverage Form E has been broadened, with reference to its predecessors, to cover all property for loss inside the premises other than money and securities, except motor vehicles, trailers and semitrailers, and equipment and accessories attached to them. It is made clear that "automobile" property is not intended to be covered under a Crime policy. Covered causes of loss include actual or attempted robbery of a watchperson; actual or attempted burglary.

There are several other broadened coverage features. Coverage for "robbery" has been expanded by removing the reference "while the premises are not open for business."

A new "Special Limit of Insurance for Specified Property" establishes a $5,000 limit for items of extraordinary value (precious metals, stones or goods made from these materials). (Higher limits are available by endorsement.) The previous $50 limit for jewelry has been increased to $5,000. Coverage has been broadened as respects manuscripts and records, previously excluded. Furs are no longer excluded by removal from a showcase or show window. They are now subject to a $5,000 limit. Drawings are covered subject to a $5,000 limit. There is not a coinsurance provision. The concept was eliminated from simplified Commercial Crime policies.

The Premises Burglary Coverage Form was developed from and provides coverage similar to previously used Mercantile Open Stock Coverage Forms.

"Burglary" is defined as the taking of property from inside the "premises" by a person unlawfully entering or leaving the "premises" as evidenced by marks of forcible entry or exit. Example: Stealing a key and leaving no evidence of forcible entry is not covered.

"Premise" is defined as the interior of that portion of any building that you occupy in conducting your business. Therefore, property in the open, in vehicles or anywhere else is not covered. Burglary of business goods while you are at an indoor exhibition would be covered.

"Robbery" is defined as the taking of property from the care and custody of a person by one who has:

(1) Caused or threatened to cause that person bodily harm; or

(2) Committed an obviously unlawful act witnessed by that person.

There must be a threat of or actual bodily harm, or the act must be unlawful and must be witnessed by that person. Therefore, the watchperson who is cold cocked by the robber, even though he didn't see it coming, would be considered robbed. If the watchperson didn't see the robber and there was no threat, this isn't robbery.

"Watchperson" is defined as any person you retain specifically to have care and custody of property inside the "premises" and who has no other duties. Example: You are working late at your computer, writing your annual report, and the robber threatens you. Since you are not a watchperson, you are not considered robbed. If the robber leaves visible signs of forcible entry, you would have been burglarized.

This coverage is designed for when the office or business is closed. Businesses that have 24-hour operations or 3 full time shifts will receive little benefit from this coverage.

If you have special form contents and have not excluded theft, you do not need this coverage.

RATES

Charge by EXPOSURE, not limit, at each premises.

Get the rate group from the Classification Table (CLM Classification Table) and multiply by the class limit or amount of exposure (not in excess of the limit of insurance) at that premises.

Discounts are available for alarm systems with unexpired UL certificates.

Example: Grade AA Grade and below grade with central station, no keys = 50% discount.

Burglary resistant glass is a 10% discount.

Watchpersons discount -- 30% discount with keys and central station report, 15% for a watchperson with keys and clock only, 10% for watchperson only.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 15 01	CR 15 04	CR 15 08	CR 15 12	CR 15 18	CR 15 21	CR 15 27
CR 15 02	CR 15 06	CR 15 09	CR 15 13	CR 15 19	CR 15 23
CR 15 03	CR 15 07	CR 15 11	CR 15 14	CR 15 20	CR 15 25

COMPUTER FRAUD FORM F–CR 00 07

Coverage Form F covers money, securities, and property other than money and securities against computer fraud. "Computer fraud" means "theft of property following and directly related to the use of any computer to fraudulently cause a transfer of that property from inside the premises or banking premises to a person (other than a messenger) outside those premises or to a place outside those premises."

The Computer Fraud Coverage Form was developed from and provides coverage similar to four endorsements that extended policies to cover the risk. The protection is no longer available by endorsing a policy under ISO's simplified Crime Coverage program.

The "Special Limit of Insurance for Specified Property" has been increased to $5,000 per any one occurrence.

Covered property LOSS OF or LOSS FROM DAMAGE TO: money and securities; property other than money and securities both by the cause of loss -- "Computer Fraud":

"Computer Fraud" means THEFT of property FOLLOWING and DIRECTLY RELATED to the USE of any COMPUTER to fraudulently cause a transfer that property from INSIDE the PREMISES or BANKING PREMISES to a PERSON (other than a messenger) OUTSIDE the premises or to a PLACE outside the premises. Since the property, money or securities must go from inside to outside, this policy does not extend coverage to damage to the premises or to the computer itself. NOT COVERED: The thief vandalizes the printer and puts a virus on the hard drive.

Cause of loss examples:

· COVERAGE -- Thief gains access to your passwords and enters the premises and tells the computer to send himself a sizable check to his P.O. Box.

· COVERAGE -- This thief also gains access to your bank's computer and transfers funds to his account.

· COVERAGE -- Thief steals your ATM card and uses it at a bank machine inside the bank (not at the drive through -- no coverage there).

· COVERAGE -- By modem, the thief gains access to your insured's computer and orders it to pay off his delinquent account.

· COVERAGE -- Your employee receives a computer request to send XYZ a thousand television sets. Your employee believes the customer has the proper access codes, even if he wasn't following procedure.

· COVERAGE A thief, in person, produces a forged invoice for money owed by the insured. Employee uses his PC to debit the insured's account and print a check which will be MAILED to the thief.

· NO COVERAGE -- same example BUT the employee gives the thief the check ON the premises. There is no coverage for the fraudulent computer property; the transfer must go from inside the premises to outside the premises.

How a deductible works: $1,000 deductible, $20,000 limit & $20,000 claim -- policy pays $19,000.

Exclusions and limitations: no coverage from fraudulent transfer from an ATM located outside a bank premises; employee dishonesty; inventory shortage; profit and loss computation; limitation of $5,000 per occurrence for LOSS OF and LOSS FROM damage to manuscripts, drawings or records and the cost of reconstruction. (No coverage for damage to the computer and data for anything other than theft.)

Conditions and Definitions:

Report any loss to the police you believe is a violation of the law.

Messenger: as defined means you, partners and "employees" as defined in the crime general provisions. Remember an employee is not:

· A contract employee even if hired through an "Employment Contractor"

· A friend who helps carry the deposit bag into the bank because the messenger has carpal tunnel syndrome

· Or wife of an officer of a corporation if she is not also an officer or employee.

Occurrence means an act or series of acts involving one or more people or no people (can't identify the thief).

RATING

Countywide base rate x size multiplier (annual gross receipts = location number one premium). Charge .01 of location premium for each of first 100 additional premises.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 15 01

EXTORTION FORM G–CR 00 08

Coverage Form G covers loss of money, securities and property other than money and securities resulting directly from extortion. "Extortion" is defined as "the surrender of property away from the `premises' as a result of a threat communicated to you or an `employee', or to a relative or invitee of either, who is, or allegedly is, being held captive."

It is a condition of coverage that, before covered property is surrendered in response to extortion demands, a reasonable effort must have been made to report such demands to an associate, the FBI and local law enforcement authorities.

The Extortion Coverage Form was developed from and provides coverage similar to that provided by endorsements that have been optionally available for attachment to a Blanket Crime Policy, Comprehensive Dishonesty, Disappearance and Destruction Policy, or to Money and Securities Broad Form insurance.

EXTORTION defined: A threat (communicated to you) to do BODILY HARM to YOU, a RELATIVE or an INVITEE, either who is or is allegedly being held captive.

Surrender of MONEY or PROPERTY must take place AWAY from YOUR PREMISES.

Relatives and invitees are not defined, so the broadest possible interpretation applies.

Coverage examples:

· COVERAGE -- your insured's child is kidnapped and money is demanded to be delivered to a city park

· COVERAGE -- your insured's employee and key customer are kidnapped from the golf course and held for ransom which you must deliver to an abandoned farmhouse

· COVERAGE -- the chairman of the board is being held in New Hampshire and the kidnappers demand $1,000,000 and the corporate jet so they can escape to Iran

· NO COVERAGE -- while opening the office, you are captured and at gunpoint are forced to open the safe and give the kidnappers money (this is a Crime Form C, D or H coverage.)

· NO COVERAGE -- the kidnapper doesn't ask for money but threatens to, and then blows up, your insured's building because your insured won't apologize on television for firing him 60 DAYS ago (If the employee were terminated LESS THAN 30 DAYS ago, coverage would be available under employee dishonesty).

Limits: limits can be without insured participation or, insured can participate in the loss.

Example: Insured participation 40% -- limit is $100,000. Extortion demand is $120,000. Company contributes $72,000, the insured contributes $48,000. (Insurer pays no more than the percent of loss or limit of insurance whichever is less.)

Deductible: pay any loss in excess of deductible up to limit on policy.

EXCLUSIONS

Employee dishonesty (remember, an employee is still considered an employee for up to 30 days after termination from employment), and an employee who extorts money from an insured would be covered under employee dishonesty.

You must make a REASONABLE effort to notify (all) -- an associate, the FBI and local police before surrendering money or property to the extortionist.

CONDITIONS

Policy period -- threat must be during policy period.

Territory: CAPTURE or ALLEGED CAPTURE takes place WITHIN USA, Canada, Virgin Islands, Puerto Rico or Canal Zone; EXCLUDED: Overseas capture and capture in international waters or airspace.

Securities are valued as of the day of surrender; property other than money or securities valued at ACV at the time of surrender.

Occurrence can be an act or a series of acts committed by none (unidentified), one or more people.

RATING

NONPARTICIPATING: location one -- Rate per $1,000 of insurance x Guide size modifier (gross sales); location two or more -- use half of the location one premium.

PARTICIPATING: multiply premium by the percent of the company participation.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

· CR 15 16

· CR 15 17

PREMISES THEFT AND ROBBERY OUTSIDE PREMISES COVERAGE FORM: PROPERTY OTHER THAN MONEY AND SECURITIES FORM H–CR 00 09

Coverage Form H provides protection inside the premises that is basically the same as that offered by the simplified Premises Burglary Coverage Form E. The coverage it provides outside the premises is exactly the same as that available under the simplified Robbery and Safe Burglary Coverage Form D. (There is a choice of forms to suit the needs and budgets of commercial insurance buyers.)

Form H covers property other than money and securities inside the premises against loss by actual or attempted theft. It covers such property when in the care and custody of a messenger outside the premises against loss by actual or attempted robbery. The title of this coverage form has been revised to specifically state the types of property that are being covered as follows: Premises Theft And Robbery Outside The Premises Coverage Form -- Property Other Than Money And Securities.

The essential difference between the "inside" protection provided by this form and that under Form E is that it covers theft, and Form E covers burglary and robbery of a watchperson. "Theft" is an all-encompassing concept meaning "any act of stealing." Form E defines "burglary" as the taking of property from inside the premises "by a person unlawfully entering or leaving the `premises' as evidenced by marks of forcible entry." Form E defines "robbery" as the taking of property from the care and custody of a person by one who has "caused or threatened to cause that person bodily harm or committed an obviously unlawful act witnessed by that person."

A "watchperson" means "any person you retain specifically to have care and custody of property inside the premises and who has no other duties."

Form H was developed from and provides coverage similar to various endorsements for Mercantile Open Stock Theft, MOS Burglary and Theft, and Theft coverage only. Theft coverage is not available by endorsement under the simplified Crime Coverage program. A Coverage Form must be used.

INSIDE THE PREMISES COVERAGE

Covered property Other than money and securities, but not vehicles and trailers. Damage to premises in theft is also covered if you are the owner or liable for damages.

Covered cause of loss theft or attempted theft.

OUTSIDE THE PREMISES COVERAGE

Covered property Other than money or securities, but not vehicles and trailers, outside the "premises" in the custody of a "messenger."

Covered cause of loss Robbery, including robbery while in the care of an armored car company.

EXCLUSIONS Employee dishonesty; Changes in the condition of the risk within your control that increases the possibility of loss; Losses from giving or exchanging merchandise; Fire; Inventory losses; Surrender of property outside of the premises in extortion type situations where you knew about the extortion before the exchange (see Form G -- Extortion for coverages);

Vandalism; Voluntary parting of title.

PROPERTY SUBJECT TO LIMITATIONS -- $5,000 maximum, for precious metals & gems, can be increased by endorsement.

DEFINITIONS

"Messenger" means you, any of your partners or any "employee" while having care and custody of the property outside the "premises."

Note: Crime general provisions do NOT include the following as employees -- nonemployed spouses of officers, partners, or other employees, agents, leased employees, including leased employees hired through employment firms.

Coverage for robbery of an armored car employee is covered under Form H.

"Premises" means the interior of that portion of any building you occupy in conducting your business. Coverage would extend to the inside of an exhibit hall where you are selling your wares.

"Occurrence" includes one or more acts and the event can involve persons or nonpersons. (i.e., the person is masked or knocks you out before you can identify him or her.)

"Robbery" is defined as the taking of property from the care and custody of a person by one who has:

(1) Caused or threatened to cause that person bodily harm; or

(2) Committed an obviously unlawful act witnessed by that person.

"Theft" is any act of stealing.

"Watchperson" is defined as any person you retain specifically to have care and custody of property inside the "premises" and who has no other duties.

Example: You are working late at your computer, writing your annual report, and the robber threatens you. Since you are not a watchperson, you are not considered robbed. If the robber leaves visible signs of forcible entry, you would have been burglarized.

This coverage is especially useful for companies who operate 24-hour operations, for coverage for loss inside the premises is "theft": and not "burglary." "Burglary," as we have mentioned, requires visible signs of forcible entry, and businesses open 24 hours may not ever be locked. Good examples for businesses where this coverage is important are businesses like manufacturers and newspapers that run 3 shifts and have little money on the premises. For operations such as 24-hour supermarkets, convenience stores, and gas stations, Coverage Form C, Theft, Disappearance and Destruction of money and securities would have to be added to Form H to give money protection.

RATING -- For both the base policy and endorsements, this is similar to Form E -- Premises Burglary Coverage.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 15 01	CR 15 05	CR 15 08	CR 15 12	CR 15 18	CR 15 21	CR 15 27
CR 15 03	CR 15 06	CR 15 09	CR 15 13	CR 15 19	CR 15 23
CR 15 04	CR 15 07	CR 15 11	CR 15 14	CR 15 20	CR 15 25

LESSEES OF SAFE DEPOSIT BOXES FORM I–CR 00 10

Coverage Form I provides coverage for property that is inside: insured's safe deposit box in a vault in a depository premises; a depository premises during the course of deposit or removal from the insured's safe deposit box.

The coverage of the form is in two sections. One covers loss caused by theft, disappearance or destruction of securities. The other covers loss caused by actual or attempted burglary or robbery and vandalism of property other than money and securities. "Theft" is a broad concept meaning "any act of stealing."

"Securities," as defined in the Crime General Provisions Form, means "negotiable and nonnegotiable instruments or contracts representing either `money' or other property . . . but does not include money."

The Lessees of Safe Deposit Boxes Coverage Form includes a schedule that is used to identify the locations of the depositories at which coverage applies. The form is unique in this respect, as such data is usually associated with Crime Declarations pages.

COVERAGE PARTS

1. THEFT, DISAPPEARANCE OR DESTRUCTION OF SECURITIES

Covered Property -- "Securities" inside your safe deposit box in a vault in a "depository premises" or during the course of deposit or removal from your safe deposit box while in the "depository premises."

Covered Causes of loss -- "Theft," disappearance or destruction. "Theft" is any act of stealing, but disappearance or destruction is not defined. Fire, flood, earthquake, collapse of the building or other damage could apply.

2. BURGLARY OR ROBBERY OF PROPERTY OTHER THAN MONEY AND SECURITIES

Covered property -- "Property other than money and securities" inside your safe deposit box in a vault in a "depository premises" or during the course of deposit or removal from your safe deposit box while in the "depository premises."

Covered causes of loss -- Actual or attempted "burglary" or robbery, and vandalism.

EXCLUSIONS

Employee dishonesty;

Exchanges or purchases;

Fire (only to other than money and securities covered property);

Transfer or surrender of property;

Property held by the depository as collateral or trust for more than 30 days;

Voluntary parting.

DEFINITIONS

"Burglary" is defined as the taking of property from within a locked safe deposit box in a locked vault in a "depository premises" by a person unlawfully entering the box and vault as evidenced by marks of forcible entry upon the exterior of the box and vault. Burglary then cannot occur while the vault is open. Therefore, to have coverage for "property other than money and securities" while the vault is open for business, there must be robbery or vandalism.

"Depository premises" means the interior portion of any building at a location shown in the schedule that is occupied by the depository or its safe depository affiliate; in conducting a banking or safe deposit business. This does seem to indicate that if a company can legally say that they are operating a safe deposit business, then they could purchase this coverage. Do not confuse this form with Liability for Guests Property Safe Deposit Box Coverage -- Form K, for that form is intended for use by hoteliers and similar businesses.

"Securities" is defined in the Crime General Provisions Form as negotiable and nonnegotiable instruments or contracts representing either money or other property, includes tokens, tickets, revenue, other stamps (also unused stamps in a meter) and evidence of debt issued in conjunction with credit or charge cards which are not issued by you. (Insured can't be issuer of charge card.)

NOTE: Nowhere in this form is "money" covered.

"Robbery" is defined as the taking of property from the care and custody of a person by one who has:

(1) Caused or threatened to cause that person bodily harm; or

(2) Committed an obviously unlawful act witnessed by that person.

There must be a threat of or actual bodily harm, or the act must be unlawful and must be witnessed by that person. Therefore, the person who is cold cocked by the robber, even though he didn't see it coming, would be considered robbed. If the person didn't see the robber and there was no threat, this isn't robbery.

PREMIUM COMPUTATION

1. Theft, disappearance and destruction of securities:

Assign a limit of insurance to each depository and then apply the rates in countrywide rates to the total sum of insurance at all depositories.

Discounts are available when Form I is used in excess over a financial institution blanket bond.

2. Burglary or robbery of property other than money and securities:

Assign a specific limit of insurance to each premises and apply burglary and robbery rates per $1,000 coverage. Credits for protective devices (alarm systems AA, BB, CC apply), as well as bullet resisting enclosure credits. Bulky property kept in the vault, but not in a safe deposit box, may be separately insured, and rated.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

· CR 15 29

· CR 15 30

SECURITIES DEPOSITED WITH OTHERS FORM J–CR 00 11

Coverage Form J covers loss of securities while inside the custodian's premises, while being transported by the custodian, or while on deposit in a depository when caused by theft, disappearance or destruction. "Theft" was substituted for "wrongful abstraction" (employed in previously used comparable forms) as being simpler and more definitive of intent. It means "any act of stealing."

Form J was developed from and provides coverage similar to the previously used:

Securities Deposited With Bank or Trust Company Coverage--CR 00 19 with the Special Coverage policy.

Securities Deposited With Public Officials Coverage--CR 00 20 with the Special Coverage policy.

Securities Deposited With Stockbrokers Coverage--CR 00 21 with the Special Coverage policy.

Securities In Custody Of Correspondent And Depository Bank Coverage--CR 00 22 with the Bank Excess Burglary and Robbery policy.

Securities In Custody Of Federal Reserve Banks And Treasury Department Coverage--CR 00 22 with BEBR policy.

Securities Or Lessees Of Safe Deposit Boxes Coverage--CR 00 23 with the Special Coverage policy.

Covered Property -- "Securities" that are inside the "custodian's "premises” or being conveyed outside the "custodian's "premises" by the "custodian" or an "employee" of the "custodian" or, on deposit by the "custodian" for safekeeping in a "depository."

Causes of loss -- "Theft" (any act of stealing, disappearance and destruction). Disappearance and destruction are not defined, so fire, explosion, flood, chemical damage, earthquake or other perils may apply.

Exclusions -- Employee dishonesty (only your employees, not the employees of the custodian);

Exchanges or purchases;

Locations you occupy;

Property owned or held in trust by the custodian or depository for more than 30 days;

Transfer or surrender of property by extortion (see Form G -- Extortion coverage);

Voluntary parting of property.

DEFINITIONS

"Custodian" is defined as the custodian shown on the schedule.

"Depository" is defined as the depository shown on the schedule.

"Employee" of the custodian is defined in the crime general provisions form as a natural person in the custodian's service and 30 DAYS AFTER TERMINATION; whom the custodian compensates directly by wages, salary or commissions.

"Employment contractor" is when the custodian hires people from a temporary employment firm -- they are considered employees for on premises exposure, but not for property in their care outside the premises.

Not an employee: agent, broker, factor, commission merchant, independent contractor who is not employed by an employment contractor; directors/trustees except while performing acts coming within the usual duties of an employee -- (Director who is also vice president is an employee. Outside director is not.)

"Occurrence" can include one or more act whether or not the individual causing the act is done by an identifiable person.

"Premises" means the interior of that portion of the building at the location shown in the schedule that is occupied by the "custodian" or "depository."

PREMIUM COMPUTATION

Rating depends upon the limit needed for: securities deposited with a bank or trust company, or public officials, or stockbroker. Discounts apply when the policy is excess over a financial institution blanket bond.

Endorsements used with this form:

None

LIABILITY FOR GUESTS PROPERTY SAFE DEPOSIT BOX FORM K–CR 00 12

Purpose: This form forms the entire Crime Plan 6.

Coverage Form K was developed from and provides coverage similar to the previously used Hotel Safe Deposit Box Legal Liability Coverage Form (B746). It is notable that the Crime General Provisions Form is not used with it, as this simplified Coverage Form contains all exclusions, conditions and definitions that relate to it, except for the Common Policy Conditions.

Form K covers any property belonging to a guest of the insured while the property is in a safe deposit box in the premises to the extent of sums that the insured becomes legally obligated to pay as damages (within the limit specified in the Declarations) because of loss or destruction of, or damage to, covered property.

With regard to "coverage extension" payments by the insurer in defense of a suit, coverage has been broadened under the simplified form (as respects previously used forms) to include: Loss of earnings; pre-judgment interest, in addition to post-judgment interest; loss of wages or salary up to $100 per day because of required attendance at hearings or trials.

The "Defense, Investigation And Settlement" condition has been revised to indicate that the defense limitation applies separately to each occurrence and not on an aggregate basis.

The only eligible businesses for this form are businesses that provide lodging facilities.

Coverage provided legal liability only for any property belonging to your guests while the property is in a safe deposit box in the "premises." Covered perils are loss to, or destruction of or damage to covered property. The policy does not require that the safe deposit box be locked, nor does it define safe deposit box. Although fire is excluded, destruction or loss to are not defined and could include explosion, collapse, theft, burglary, robbery, earthquake, flood, etc.

Supplemental payments As this is a legal liability form, we'll defend (no limit on defense costs) any expenses you incur at our request, charges against you, pre and post judgment interest, and up to $100 a day for your lost wages while you are in court, premium on appeal and attachment bonds (only if we want to).

Exclusions Employee dishonesty, fire, liability you assume, governmental action, inherent vice, nuclear, liability you release others from, war.

Territory Only USA, U.S. Virgin Islands, Puerto Rico, Canal Zone, Canada.

"Premises" means the interior of that operation of any building at a location shown in the Declarations that you occupy in conducting your business.

RATING

Compute annual premium from countrywide rates, no discounts apply.

Endorsements used with this form:

None

LIABILITY FOR GUESTS PROPERTY PREMISES COVERAGE FORM L–CR 00 13

Purpose: This form comprises the entire Crime Plan 7.

Coverage Form L was developed from and provides coverage similar to the previously used Innkeepers Liability Policy. As with Form K, the Crime General Provisions Form is not used with it. It contains all exclusions, conditions and definitions that relate to it except for the Common Policy Conditions.

Form L covers any property of guests except samples or articles carried or held for sale or for delivery after sale; any vehicle, including its equipment and accessories, and any property contained in or on a vehicle. Insurance applies to covered property in the premises and in the insured's possession. It pays sums that the insured becomes legally obligated to pay as damages because of loss or destruction of, or damage to, covered property. "Coverage extensions" have been broadened in the same respects as described above for Form K.

The "Defense, Investigation And Settlement" condition has been revised to indicate that the defense limitation applies separately to each occurrence and not on an aggregate basis.

Covered Property Property belonging to your guests while it is in the "premises" or in your possession.

Covered Perils Loss or destruction of or damage to property.

Property Not Covered Samples, articles for sale, or held for sale or for delivery after sale, or vehicles and their accessories and any property in or on vehicles.

Therefore, this coverage is not appropriate to protect you from the acts of thieves or robbers who take sample displays from hotel convention exhibits, unless you add back the coverage with endorsement -- CR 30 06.

Exclusions

· Employee dishonesty;

· Fire (can be added by endorsement);

· Liability you assume;

· Governmental action;

· Food or liquid (spilling, leaking can be added by endorsement);

· Inherent vice, laundering or cleaning (can be added by endorsement);

· Nuclear;

· Liability you release others from;

· War.

"Occurrence" is defined as an act or series of related acts involving one or more persons; or act or event or a series for related acts or events not involving any person.

"Premises" means the interior of that portion of any building at a location shown in the Declarations that you occupy in conducting your business.

Coverage is available if a porter is robbed while carrying customer suitcases within or between your buildings.

Coverage is not available if the porter is robbed while removing customer suitcases from a vehicle.

PREMIUM COMPUTATION

Countrywide rates are based on a standard limit of $1,000 per guest, $25,000 per occurrence. No deductibles apply to this coverage, and no discounts are available.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 30 01	CR 30 04
CR 30 02	CR 30 05
CR 30 03	CR 30 06

SAFE DEPOSITORY FORMS M AND N GENERAL PROVISIONS

Purpose: Both forms are intended to cover loss of customer property while inside customer safe deposit boxes on your premises. Form M is for legal liability, Form N is for direct loss due to "robbery", "burglary", destruction and damage regardless of fault.

GENERAL EXCLUSIONS

Employee dishonesty, government action, nuclear, war.

GENERAL CONDITIONS

Joint insured First named insured will act for every other insured, and any officer or partner of any insured will be deemed to have knowledge of every insured.

Noncumulative limits Limits don't cumulate from year to year.

Other insurance This is excess coverage.

Ownership of Customer's Property Customers may own or hold property in any capacity, and it is not important whether the customers are liable to others for the property's loss or damage.

GENERAL DEFINITIONS

"Money" means currency, coins, bank notes in current use and having a face value, traveler’s checks, register checks and money orders held for sale to the public.

"Occurrence" means an act or series of related acts involving one or more people, and the people don't have to be identified or the act may not involve any people.

"Premises" means the interior of that portion of any building at a location shown in the Declarations that you occupy in conducting your business.

"Property other than money and securities" means stuff other than "money" or "securities" that has intrinsic value.

"Securities" are negotiable and nonnegotiable instruments, or contracts representing "money" or other property including tokens, tickets, revenue and other stamps in current use; and evidence of debt issued in connection with credit or charge cards which cards are not issued by the customer holding the evidence of debt. (This is similar wording to the Crime general provisions used with Forms A-L).

SAFE DEPOSITORY LIABILITY COVERAGE FORM M–CR 00 14

Coverage Form M was developed from and provides coverage similar to Liability of Depository (Coverage A) of the previously used Combination Safe Depository Form WC 3217B. It covers sums that the insured becomes legally obligated to pay as damages because of loss or destruction of, or damage to, customers' property while the property is:

· Inside the customers' safe deposit boxes in vaults in the premises;

· Stored in such vaults in the premises;

· Temporarily elsewhere in the premises while in the course of deposit in or removal from the boxes or vaults.

It contains the same broadened "coverage extensions" included in Forms K and L.

Form M is used with a special Safe Depository General Provisions Form rather than the Crime General Provisions Form. It contains general exclusions, conditions and definitions tailored to Safe Depository Coverage.

As this is a legal liability policy, you must first be negligent. Burglars blowing up the safe and disabling an extensive alarm system may not be adequate to prove negligence unless it is an inside job, and then employee dishonesty is excluded from this policy. Letting the wrong person have access to the safe deposit box would be cause for negligence.

COVERAGE

Damages What you are legally obligated to pay because of loss or destruction of, or damage to "customers' property" while the property is: inside the customer's safe deposit box in vaults in the "premises"; stored in such vaults in the "premises" or temporarily elsewhere in the "premises" while in the course of deposit or removal from the boxes or vaults.

Supplemental payments As this is a legal liability form, we'll defend (no limit on defense costs) any expenses you incur at our request, charges against you, pre and post judgment interest, and up to $100 a day for your lost wages while you are in court, premium on appeal and attachment bonds (but we don't have to furnish these bonds).

ADDITIONAL EXCLUSIONS

You assume liability.

DEFINITIONS

"Customer’s Property" means "money", "securities", and "property other than money and securities."

PREMIUM COMPUTATION

First, determine total number of rented boxes, multiply by annual rates in countrywide rates.

No discounts are available. Form M rates are based upon a per box limit and with 1,000 boxes at $25,000 per box maximum loss, the premium is only $50.

For Form N, the limit of insurance is per location. Obviously multiplying 1,000 boxes by $25,000 would be expensive, so setting a limit of $1,000,000 would cost $250.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

· CR 40 01

· CR 40 02

SAFE DEPOSITORY DIRECT LOSS FORM N–CR 00 15

Coverage Form N was developed from and provides coverage similar to Coverage B of the previously used Combination Safe Depository Form WC 3217B. It covers loss caused by robbery or burglary (actual or attempted), destruction and damage to customers' property while the property is: Inside the customers' safe deposit boxes in vaults in the premises; stored in such vaults in the premises; temporarily elsewhere in the premises while in the course of deposit or removal from the boxes or vaults.

As with Form M, this form is used in conjunction with a special Safe Depository General Provisions Form rather than the general use Crime General Provisions Form. It contains general exclusions, conditions and definitions specifically tailored to Safe Depository Coverage.

The Coverage Extension has been amended to state that the limit under the extension is part of the policy's limit of insurance.

COVERAGE

Covered property -- we will pay because of loss or destruction of, or to "customers' property" for covered cause of loss while the property is: inside the customer's safe deposit box in vaults in the "premises"; stored in such vaults in the "premises" or temporarily elsewhere in the "premises" while in the course of deposit or removal from the boxes or vaults.

Covered Cause of Loss Actual or attempted "robbery" or "burglary," destruction and damage.

EXCLUSIONS

Fire, inherent vice, and indirect loss.

Indirect loss includes loss of income, payment of damages for which you are legally liable (but we will pay damages for the direct loss to customer property from a covered loss), costs, or fees you incur in establishing either the existence or amount of loss.

In essence, business income losses as the result of your customer's loss, punitive damages you must pay, and your cost of hiring auditors, estimators, investigators, and private detectives to determine the amount of loss are not payable under this policy.

CONDITIONS

Territory USA, U.S. Virgin Islands, Puerto Rico, Canal Zone, Canada.

Valuation “Money” at face value (foreign money at exchange rate at date loss discovered); "securities" as of value on date loss discovered and then only for the value to replace plus the cost of any Lost Securities Bond that is required (but only for a limit equivalent to the bond value on the date of discovery or limit of this insurance); "property other than money and securities" for ACV valued as of the date the loss was discovered, or the cost to repair or replace (whichever we choose to pay).

DEFINITIONS

"Burglary" is the taking of property from: inside a locked safe deposit box in a locked vault by a person unlawfully entering the box and vault; or if not contained in a safe deposit box, from inside a locked vault by a person unlawfully entering the vault as is evidenced by marks of forcible entry upon its exterior.

"Customer's property" means "securities" and "property other than money and securities."

"Robbery" means the taking of property from the care and custody of a person by one who has caused or threatened to cause that person bodily harm; or committed an obviously unlawful act witnessed by that person.

By these definitions, we find that "money" is NOT covered property (but can be added by endorsement). We also see that robbery must have the elements of threat of or actual bodily harm or must be obviously unlawful and be witnessed by a person. A person who is cold cocked has been bodily harmed, but a person who is asleep or in the next room and does not see an obviously unlawful act, is not being robbed. The word destruction is not defined so the cause of the destruction is any peril not already excluded or limited.

PREMIUM COMPUTATION

For Form N, the limit of insurance is per location.

Discounts include multiple location, bullet resistant enclosures (.8, .9, .7 depending upon degree of protection), vault alarm system grades (A, B, C), guards and watchpersons.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

· CR 40 02

· CR 40 03

PUBLIC EMPLOYEE DISHONESTY PER LOSS FORM O–CR 00 16

Purpose: Coverage O covers money, securities and property other than money and securities against acts by public employees, identified or not, acting alone or in collusion with others. Coverage for faithful performance of duty of employees is available by endorsement. These forms are under the jurisdiction of the Surety Association of America.

COVERAGE

Covered property is "money", "securities", and "property other than money and securities."

Covered cause of loss is "employee dishonesty."

Extension of coverage to pay for loss by "employee" while temporarily outside of (USA, Canal Zone, U.S. Virgin Islands, Canada) for more than 90 days. NOTE: must be temporary. A person who is relocating to Europe for a 1-2-year tour of duty will not be covered for an additional 90 days.

ADDITIONAL EXCLUSIONS

· Employee canceled under prior insurance;

· Inventory shortages;

· Loss caused by any "employee" required by law to be individually bonded;

· Caused by treasurer or tax collector;

· Damages from the deprivation or violation of the civil rights by an "employee" or the tortuous conduct of an "employee" except conversion of property of other parties held by you in any capacity.

· Liability or personal injury losses are better handled by liability policies. Persons required by law to be bonded will have to be bonded separately as will treasurers or tax collectors.

CONDITIONS

Cancellation as to any employee -- immediately upon discovery by you or any official or employee authorized to manage, govern or control your employees of any dishonest act committed by that "employee" whether before or after becoming employed by you, or if we notify you and give 30 days that the employee is not covered. Thus, employees caught and disciplined for stealing, or persons hired who are known felons, are not covered for any act they commit after the date of discovery by any supervisory person.

Sole benefit The plan is for your sole benefit.

Indemnification We will indemnify (they pay first, and we reimburse) any of your officials who are required by law to give bonds for the faithful performance of their service against loss through dishonest acts of persons who serve under them, subject to the limit of insurance.

ADDITIONAL DEFINITIONS

"Employee dishonesty" Dishonest acts committed by "employees" whether identified or not, acting alone or in collusion with others that cause you to sustain loss and also financially benefit the employee or others as intended by the employee. Under Form O, no person has to be identified (much like Form An employee dishonesty).

"Occurrence" means all loss caused by one or more employees as the result of a single or series of acts. Thus, a series of embezzlement over a period of months by a group of five employees would be considered one act.

"Employees" as defined under the general provisions does not include, agents, factors, brokers, consignees, independent contractors, directors or trustees (except for acts they perform as employees), and those employed by an employment contractor that are working for you for any off premises act. Many of these noncovered employees may be added back by endorsement.

RATES

See Employee Dishonesty Form A PF&M 250.3-1 for basic information about rates.

Endorsements used with this form (see endorsement below for additional information):

CR 10 02	CR 10 16	CR 10 24	CR 10 44	CR 10 51
CR 10 03	CR 10 18	CR 10 26	CR 10 46	CR 10 53
CR 10 04	CR 10 19	CR 10 35	CR 10 47
CR 10 10	CR 10 22	CR 10 37	CR 10 48
CR 10 15	CR 10 23	CR 10 43	CR 10 49

PUBLIC EMPLOYEE DISHONESTY PER EMPLOYEE FORM P–CR 00 17

Purpose: Coverage P covers money, securities and property other than money and securities against acts by employees, identified or not, acting alone or in collusion with others. Coverage for faithful performance of duty of employees is available by endorsement. These forms are under the jurisdiction of the Surety Association of America. The minimum amount of coverage available under Form P is $2,500; the maximum, $100,000.

COVERAGE

Covered property is "money", "securities", and "property other than money and securities."

Covered cause of loss is "employee dishonesty."

Extension of coverage -- to pay for loss by "employee" while temporarily outside of (USA, Canal Zone, U.S. Virgin Islands, Canada) for more than 90 days. NOTE: must be temporary. A person who is relocating to Europe for a 1-2-year tour of duty will not be covered for an additional 90 days.

ADDITIONAL EXCLUSIONS

· Employee canceled under prior insurance;

· Inventory shortages;

· Loss caused by any "employee" required by law to be individually bonded;

· Loss caused by treasurer or tax collector;

· Damages from the deprivation or violation of the civil rights by an "employee" or the tortuous conduct of an "employee" except conversion of property of other parties held by you in any capacity.

· Liability or personal injury losses are better handled by liability policies. Persons required by law to be bonded will have to be bonded separately as will treasurers or tax collectors.

CONDITIONS

Sole benefit -- The plan is for your sole benefit.

Indemnification -- We will indemnify (they pay first, and we reimburse) any of your officials who are required by law to give bonds for the faithful performance of their service against loss through dishonest acts of persons who serve under them, subject to the limit of insurance.

ADDITIONAL DEFINITIONS

"Employee dishonesty" - Dishonest acts committed by "employees" whether identified or not, acting alone or in collusion with others that cause you to sustain loss and also financially benefit the employee or others as intended by the employee. Under Form O, no person has to be identified (much like Form An employee dishonesty).

"Occurrence" means all loss caused by one employee as the result of a single or series of acts. Thus, a series of embezzlement over a period of months by a group of five employees would be considered five separate acts and the limit of insurance would apply to each employee's embezzlement.

"Employees" as defined under the general provisions does not include agents, factors, brokers, consignees, independent contractors, directors or trustees (except for acts they perform as employees), and those employed by an employment contractor that are working for you for any off premises act. Many of these noncovered employees may be added back by endorsement.

RATES

See Employee Dishonesty Form A -- for basic information about rates.

Endorsements used with this form (see endorsement below for additional information):

CR 10 02	CR 10 16	CR 10 24	CR 10 44	CR 10 51
CR 10 03	CR 10 18	CR 10 26	CR 10 46	CR 10 53
CR 10 04	CR 10 19	CR 10 35	CR 10 47
CR 10 10	CR 10 22	CR 10 37	CR 10 48
CR 10 15	CR 10 23	CR 10 43	CR 10 49

ROBBERY AND SAFE BURGLARY MONEY AND SECURITIES FORM Q–CR 00 18

Purpose: Coverage Q covers money and securities inside the insured premises while in the care of a custodian as well as inside the insured premises or banking premises while in a safe or vault against robbery and safe burglary. Furthermore, property other than money and securities is covered outside the insured premises while in the care of a messenger against robbery.

In crime language, a "custodian" means the insured, any partners or any employee of the insured while having care and custody of the property inside the premises (excluding any person while acting as a watchperson or janitor).

This coverage is designed for a business such as a convenience store. The on-premises clerk can be robbed of money and there is coverage. Most convenience stores have safes that are closed virtually all the time, and money is fed through an access slot, so safe burglary in a robbery attempt would be covered. The shift manager taking the money to an open bank would be covered. There is no coverage for deposit to an outside ATM not connected to the building and, based upon the definition of "banking premises," there is a question whether deposit into a night depository is in fact a deposit within the interior of the bank building as defined in the definitions.

COVERAGE SECTION 1 INSIDE THE PREMISES

Robbery of a custodian Covers "money" and "securities" inside the "premises" in the care and custody of a "custodian" caused by actual or attempted "robbery." Also pays for damage in the robbery to the "premises" or its exterior if you own the property or are liable for damages.

Safe burglary covers "money" and "securities" in a safe or vault within the "premises" or "banking premises" caused by "safe burglary." Also pays for loss from damage in the burglary to the "premises" or to the locked safe or vault inside the "premises" if you own the property or are liable for damages.

COVERAGE SECTION 2 OUTSIDE THE PREMISES

"Robbery" of a "messenger" Covers "money" and "securities" outside the "premises" in the care and custody of a "messenger" for "robbery." While outside the premises, coverage is extended to "money" and "securities" in the custody of an armored motor vehicle company (above any insurance they have and what you can't recover under your contract with the armored car company).

EXCLUSIONS

Employee dishonesty, transfer or surrender of property (extortion -- see Form G), vandalism, and fire.

ADDITIONAL DEFINITIONS

"Banking Premises" Interior or that portion of any building occupied by a banking institution or similar depository. NOTE: this does not include an exterior ATM.

"Custodian" Means you and any of your partners or any "employee" while having care and custody of the property inside the "premises" excluding any person while acting as a "watchperson" or janitor. Employee does not include any independent contractor, agent or nonemployed spouse of any employee. However, custodian can include an employee who is subcontracted from an employment firm.

"Messenger" means you, any of your partners or any "employee" while having care and custody of the property outside the "premises." Employee does not include any independent contractor, agent or nonemployed spouse of any employee (owner's nonemployed spouse takes the money to the bank). "Employee" outside the premises also does NOT include an employee who is subcontracted from an employment firm.

"Occurrence" is an act or series of acts by one or more persons whether identified or not.

"Premises" means the interior of any portion of any building you occupy in conducting your business.

"Robbery" means the taking of property where there actually is or the threat of bodily harm OR the act is obviously unlawful and witnessed by the person. Robbery is not when the messenger leaves the deposit in the car and does not witness the person breaking into the car.

"Safe Burglary" means the taking of property from within a locked safe or vault by a person unlawfully entering the safe or vault as evidenced of forcible entry upon its exterior or a safe or vault from inside the "premises." Thus, forcible entry and visible signs are required at the bank or other depository and from goods taken from within the insured's on -premises safe. However, the whole safe may be taken from the "premises" of the insured. Thus, they can load the whole safe on the getaway car and the contents are covered. If, however, you leave the safe open on premises and there are no visible signs of forcible entry, then the goods aren't covered unless they steal the whole safe.

"Watchperson" means any person you retain specifically to have care and custody of the property inside the "premises" and who has no other duties.

PREMIUM COMPUTATION

This can be written to cover robbery only, safe burglary only or both. The premises having the largest exposure is the initial premises. Charge for exposure, not the limit of insurance (i.e., money exposure is $5,000, but limit is $10,000 charge for money based upon $5,000 for money). However, if the insurance application is not properly completed and there is a gap between the policy limit and the sum of money, securities, and payroll check exposure limits, the difference is added to the money exposure.

Money coverage carries the most expensive rate. Securities are 70% of the money rate and securities include checks for retail risks, but not payroll checks of the insured.

Payroll checks are rated on a per $1,000 exposure basis and are included in countrywide rates.

Securities in a banking premises or vault carry countrywide rates per $1,000 of exposure.

Robbery of a custodian can be modified if another employee accompanies the custodian.

The class of safe (A -- K) impact on the safe burglary rate.

There is a territory multiplier found on the state pages.

Endorsements used with this form (see endorsement section at the end of this article for additional information):

CR 15 01	CR 15 12	CR 15 15	CR 15 24	CR 15 28
CR 15 10	CR 15 13	CR 15 18	CR 15 26	CR 15 36
CR 15 11	CR 15 14	CR 15 22	CR 15 27	CR 16 09

KIDNAP/RANSOM EXTORTION COVERAGE

Purpose: This endorsement may be added to a Financial Institution Bond form or to commercial crime policies for other types of businesses. The endorsement deletes an exclusion in the financial institution bond form or commercial crime policy. Coverage is written for an aggregate loss amount often subject to a deductible which can be elected by the insured as a participation percentage or a deductible clause provided by the underwriter. The coverage may be written as Coverage G of the commercial crime program, as a rider to a financial institution bond or as a separate monoline policy usually written by Lloyd's and other special risk underwriters.

NEED FOR COVERAGE

Recently there have been numerous occurrences of hijacking of aircraft through threat of violence to pilots, crew members or passengers for the purpose of extortion, and the taking of hostages to extort money from well-to-do executives or officials of business corporations. This practice has become more frequent with respect to bank officials and their families through the use of threats to force an official of a bank to part with its funds for the purpose of protecting the life or safety of a member or members of the executive's family. The usual practice in this form of extortion is for the criminals to telephone the bank officer and claim to have his wife or children in their custody and threaten to harm or kill them unless a substantial amount of the bank's funds is turned over to the extortionists at a designated place and time. Subsequently, a claim for this extortion is turned in as a loss under the Financial Institution bond or crime insurance program in cases of business corporations.

Prior to the summer of 1973, when the Surety Association of America prepared riders for Financial Institution bonds deleting coverage for such Kidnap/Ransom losses, Fidelity bond insurers were divided in their treatment of these losses. Some underwriters were allowing coverage, others negotiated compromises, and a few denied liability outright. There is sufficient ambiguity in the bond to support both stands, and it is hoped that clarification by a specific Extortion exclusion rider and buy-back rider will solve the insurance problems.

COVERAGE

Shortly before the time when the commercial crime insurance program was being simplified, underwriters added this exclusion to their broad crime insurance programs and robbery and hold-up policies to express their intent that the insurer did not cover extortion losses where it was evident that the insured knew the threat of extortion existed. The coverage was added to the crime policy as Coverage G on the Commercial Crime form (CR 00 08). This covered only bodily injury extortion exposure (threat to harm the messenger or outside employee).

The Surety Association of America amended its Financial Institution Bond forms to delete coverage for such losses. A special extortion exclusion buy-back rider is offered to insureds that are banks or similar financial institution under the bonds.

In either case, the insured has a choice to totally exclude extortion kidnap/ransom losses by leaving the basic commercial crime or financial institution coverage stand without amending the exclusion, or by buying the Coverage G or rider for a specific amount of coverage subject to participation or a deductible. A third option is to buy even broader coverage in the specialty market.

Financial Institution Bonds. Under the financial institution bonds the policy excludes loss through the surrender of property away from an insured's office as a result of a threat: to do bodily harm to an insured or to any person, except loss of property in transit in the custody of a messenger provided that when the transit was initiated there was no knowledge by the insured of such a threat.

The policy also excludes damage to the premises or property of the insured because of such a threat.

The extortion rider (SR5935) provides that the exclusion is deleted and the following coverage insuring agreement is added back to the policy: Loss through the surrender of property away from an office of the insured as a result of a threat communicated to the insured to do bodily harm to: a director, trustee, employee or partner of the insured or to the proprietor, or a relative or invitee of any person enumerated above, who is, or allegedly is, being held captive; provided that prior to the surrender of such property the person receiving the threat has made a reasonable effort to report the extortionist's demand to an associate, to the FBI or to local law enforcement authorities.

A similar rider is provided to cover threats to property (SR6003).

Business Corporations. Coverage G under the commercial crime program, if added, covers the extortion exposure which is excluded under the basic crime forms. The insured in buying this coverage may elect to participate in the loss by a stipulated percentage specified in the schedule on Form G or not participate. Form G is also written subject to a deductible identical with deductibles found in other crime insurance forms.

The extortion coverage may be amended to exclude persons at designated premises (CR 15 16) or to include additional persons as insureds (CR 15 17) by naming the persons on the schedule along with the applicable limit of insurance, percentage of participation and deductible amount applying to each person.

Losses resulting from dishonest or criminal acts committed by insureds, employees, directors or trustees are excluded. In addition, if the surrender of property is not communicated or if an associate, the FBI or a local law enforcement authority is not notified, the loss is not covered. Loss is covered, furthermore, only if the captivity takes place within the U. S., the U. S. Virgin Islands, Puerto Rico, Canal Zone or Canada. (In order to get coverage in areas of the world where kidnap/ransom is a greater exposure or terrorist's activity is greater, the insured would have to go to Lloyd's or other specialty carriers.)

The Coverage G form further amends the basic crime policy by providing that lost securities are valued at not more than their value on the day they were surrendered and loss of property other than money or securities is valued at not more than its actual cash value at the time it was surrendered.

UNDERWRITING

Worldwide terrorist activities have been increasing substantially over the last few years. Kidnap/Ransom for the personal assets of wealthy executives and to extort large sums of money from banking institutions and leading business corporations have been ways for terrorists to obtain large sums of money for their terrorist activities. There is no doubt that these activities affect the lifestyle of the business executive and influence the corporation's investment decisions abroad.

More and more financial institutions and corporations that operate multinationally are taking steps to protect their businesses and employees against terrorist attacks. Companies are hiring experts to provide advice on the socio-political environments in which they operate, purchase kidnap insurance for their key executives, and improve the physical security of their offices. Some Lloyd's policies are tied in with specialized firms called in to negotiate with kidnappers when executives are seized.

The size of ransom demands is growing each year. Prior to the 1970's no terrorist group demanded as much as $1 million. Today, there are usually a number of kidnappings where demands run as high as $10 million.

There probably is no known figure on the number of banks and business corporations carrying kidnap/ransom insurance, as firms could lose their coverage if they admit beforehand to having the protection. However, the coverage is being purchased in ever increasing numbers. The coverage is usually written in the specialty market over a self-insured retention of $500,000 or $1 million.

There are a number of loss prevention steps being employed by business corporations to lessen the exposure. Hotel, airline, restaurant, etc., reservations are being made under assumed names and company identification is removed from cars, trucks and aircraft. The identification, addresses, and phone numbers of overseas managers are constantly being changed. Other precautions are being taken by corporate executives when travelling overseas.

Coverage is generally offered on a worldwide basis only through Lloyd's and some specialty insurers in the U. S. Premiums are based on the insured's participation percentage, the size of the deductible, overall limit of liability and the area of the world in which the manager resides or the corporation wishes to cover travelling executives. Such places as certain South American countries and the near East are high rated.

SPECIAL FORMS

The specialty market offers options to Kidnap/Ransom coverage usually not obtainable in the standard market. Among the options offered in the nonstandard market are:

Bomb Extortion Extension indemnifies the bank or other financial institution in respect to extortion monies paid, away from the bank's premises, by any person acting on behalf of the bank following a threat to kill or injure an insured person, or threat to detonate a malicious explosive device on the bank's premises.

This coverage would fill a gap left by a specific exclusion in the Extortion Exclusion rider issued by the Surety Association.

Personal Accident Extension provides that coverage would be afforded if an insured person away from the bank's premises is held forcibly and involuntarily by persons demanding ransom monies against his or her release, and during such time suffers bodily injury which results in death or disablement within 12 months of such injury. The policy would pay a specified benefit for death, dismemberment, loss of sight or total disability.

INDIVIDUAL POLICIES

There has been an individual Kidnap/Ransom insurance form available in the Lloyd's market for years, but only until recently has there been any sizable demand for the coverage. One leading Lloyd's correspondent in the U. S. has recently inserted ads in the newspaper of a wealthy Midwest suburban area soliciting interest. Another Lloyd's correspondent suggests that newspaper editors, physicians, athletes, owners of manufacturing plants and racehorse owners are good prospects for individual coverage.

ENDORSEMENTS

CR 10 01 Schedule change -- RATES: Depends upon what is changed.

CR 10 02 Exclude designated persons or classes of persons as employees -- RATES: Don't treat as ratable employees.

CR 10 03 Limit deductible to specified positions -- RATES: Compute deductible credit only for affected positions.

CR 10 04 Exclude trading loss. Trading account losses (commodities, etc.) -- RATES: No premium consideration.

CR 10 05 Exclude warehouse receipt losses. Excludes loss from false papers used to release goods from the warehouse to someone who is not entitled to receive the goods - RATES: No premium consideration.

CR 10 06 Exclude unauthorized advances, require annual audit. For associations and other non-profit businesses -- RATES: No premium consideration.

CR 10 07 Exclude loss of client's property -- RATES: No premium consideration.

CR 10 08 Exclude loss of client's property except while on the insured's premises RATES: No premium consideration.

CR 10 09 Add faithful performance of duty. For fraternals/associations -- for an employee who violates his duties as described in the by-laws. Only endorsement that doesn't require dishonesty -- just failure to perform -- RATES: Increase net premium by a factor of 1.25 before experience rating/IRPM.

CR 10 10 Add blanket excess limit of insurance for specified joint insured. Use when you need higher than normal limits for a joint venture RATES: Extensive formula separating employees into groups and calculating excess.

CR 10 11 REA borrowing corporations -- limit amount of insurance on collection agents. REA required endorsement -- RATES: Rate according to formula for endorsement CR 10 24.

CR 10 12 Credit, Debit or Charge Card Forgery -- Includes or limits coverage for credit cards issued to you or any employee. Separate limit applies to this coverage.

CR 10 14 Include personal accounts of specified persons. Suitable for the owners of the business who have a key employee managing personal accounts or business and personal accounts are at the same bank -- RATES: Treat each Account as an additional location. Compute net premium (exclusive of class rating modification factor) for limit of insurance and multiply result by .26 and add to forgery and alteration premium.

CR 10 15 Add scheduled excess limit of insurance for specified employees or positions

Some employees have much greater access to money and merchandise. Increase coverage for their exposure so you don't have to pay for high limits on the others -- RATES: Extensive formula separating employees into groups and rating excess.

CR 10 16 Employee dishonesty coverage form as excess insurance -- RATES: Compute gross premium for both primary and excess and subtract gross premium for coverage equal to primary limit.

CR 10 17 Include As Employees the Spouse and Children of Building Manager, Superintendent or Janitor -- RATES: as additional employees.

CR 10 18 Include the Chairman and Members of Specified Committees as Employees -- RATES: as additional employees.

CR 10 19 Include directors or trustees on committees as employees. Remember, directors must have employee type duties to be covered under the base policy -- RATES: Rate each as an additional ratable employee.

CR 10 20 Include partners as employees -- RATES: Treat each partner as a ratable employee.

CR 10 22 Include volunteer workers as employee -- RATES: Treat each volunteer as a ratable employee.

CR 10 23 Include Volunteer workers other than fund solicitors as Employees -- RATES: Treat each volunteer as a ratable employee.

CR 10 24 Include designated agents as employees covered for "employee dishonesty" only. A "you create" endorsement to add people who aren't employees like: independent contractors. Other "Agents" to consider include: Brokers, Agents, Manufacturer's reps, terminated employees for more than 30 days after termination, retired employees, payroll data processing firms you contract, officer spouses who are not also employees or directors -- RATES: Rate as other employees. If another company, combine experience rating data.

CR 10 25 Amend definition of employees to comply with labor -- management disclosure act of 1959. Include non-compensated officers, dues collectors, shop stewards, shop chairmen, and a director or trustee while acting as a member of any committee duly elected or appointed by resolution of your board of directors or trustees to perform SPECIFIC, as distinguished from general, directorial acts on your behalf. -- RATES: Treat each covered person as an additional ratable employee.

CR 10 26 Included Specified non-compensated officers as employees -- RATES: -- Include each officer as a ratable employee.

CR 10 27 Welfare and pension plan ERISA compliance (Blanket -- Coverage form A). Mandatory government endorsement for pension and other employee welfare plans. Consider purchasing a separate policy for this coverage if especially high limits are necessary rather than increase the entire employee dishonesty coverage to comply with ERISA law -- RATES: Charge as ratable employee if not already charged. Credits for deductibles under $1,000 do not apply.

CR 10 28 Welfare and pension plan ERISA compliance (Schedule -- Coverage form B) Same as CR 10 27 but for the position or schedule form -- RATES: Same as CR 10 27.

CR 10 29 Insured at Military Center -- adds personnel of the armed services or U.S. government who perform duties for you -- RATES: Include each government employee as a ratable employee.

CR 10 31 Limit amount of insurance for trading losses -- RATES: No premium consideration.

CR 10 32 Limit amount of insurance for warehouse receipts losses -- RATES: Subtract .50 from the insured's class rate modification factor.

CR 10 35 Notice of cancellation. Bank wants to be sure that coverage is maintained or general contractor wants notice of cancellation -- RATES: No premium consideration.

CR 10 36 Banks for cooperatives and federal intermediate credit banks -- RATES: No premium consideration.

CR 10 37 Add schedule excess limit of insurance for specified employees or positions for dishonest acts only -- RATES: Extensive formula.

CR 10 38 Exclude high-grading loss. Gold, silver, gems, etc. Limits coverage unless it is in a safe or in the possession of someone who has authority to put into the safe -- RATES: No premium consideration.

CR 10 39 Rural Electrification Administration. Prior written approval of claim settlement by REA of the U.S. plus other changes required by REA -- RATES: No premium consideration.

CR 10 40 Rural Electrification Administration Joint Insured -- RATES: No premium consideration.

CR 10 43 Joint insureds. Adds or deletes "named" insureds -- RATES: Don't include employees as ratable employees.

CR 10 44 Faithful performance of Duty Include as Covered Cause of Loss adds as a covered cause of loss failure of any "employee" to faithfully perform his or her duties as prescribed by law, when such failure has its direct and immediate result a loss of your covered property. Depository failure of any entity acting as a depository for your property or property for which you are responsible is excluded. This coverage could have applicability in situations where an employee fails to cover a particular building for insurance as required by law, and the building burns down.

CR 10 45 Exclude certain risks inherent insurance operations -- Exclude contractual or extra-contractual liability sustained by you in connection with the issuance of contracts or purported contracts of insurance, indemnity or suretyship. RATES: No premium consideration.

CR 10 46 Loss payable -- RATES: No premium consideration.

CR 10 47 Joint loss payable. Loss paid jointly to insured and loss payee -- RATES: No premium consideration.

CR 10 48 (School systems) Students handling property or funds in connection with sanctioned student activities include as employees for student activities such as school plays, band drives, senior prom, sports rallies. Student activities must be sanctioned by the school. Drives and other events for the school such as student protests, and parent fund raising drives that are not officially sanctioned are not covered.

CR 10 49 Obligee to indemnify We agree to indemnify (another person or entity) for losses covered by the form. Especially useful when there are overlapping forms of government or more than one branch of government has jurisdiction over a particular service and class of employee.

CR 10 51 Schedule change -- Excess limit of insurance for specified employees or positions -- RATES: Extensive formula.

CR 10 53 Coverage Form O per loss excess over coverage Form P per employee pays up to the policy limit per employee under Form P, then any losses in excess of that limit are paid on a per occurrence basis regardless of the number of persons involved.

CR 15 01 Exclude specific property -- RATES: Don't charge for excluded property.

CR 15 02 Include Robbery of a Janitor -- janitor is not defined, so coverage is considerably broadened -- RATES: 1.05 x the premium before any other multipliers.

CR 15 03 Include Vandalism -- RATES: multiply premium by 1.1.

CR 15 04 Special limit of insurance for specified property -- RATES: special rate per $1,000 coverage. Example: with no guards, the rate is $14 per $1,000.

CR 15 05 Include loss during fire in the premises -- adds back the peril of fire to on premises covered property.

CR 15 06 Limits coverage to office equipment -- reduces cost for those companies with businesses that do not have or want to insure target merchandise. Rates are considerably less -- RATES: use rate group 1 instead of the applicable class rate for the business.

CR 15 07 Include Automotive products in outside containers -- for auto service stations, garages, dealers, etc. Can include automotive equipment and gas and oil -- RATES: see countrywide rates for equipment and gas/oil.

CR 15 08 Limit Coverage to a specific portion of the premises (other than the initial premises) -- Limit area to warehouse, office, or other part as detailed in the endorsement declarations -- RATES: don't charge for the exposures in excess of the reduced limit at the premises.

CR 15 09 Protective devices or services Provisions. This is an "Underwriting" form to make sure devices are connected and in proper working order when premises is not open for business -- RATES: Various credits for protective devices, no rate consideration for this endorsement.

CR 15 12 Convert blanket coverage to scheduled coverage -- RATES: Rate each premises as an individual premises, give the multiple premises discount to all locations except the one with the greatest exposure.

CR 15 13 Exclude designated premises, messengers or armored motor vehicle companies- RATES: Don't charge for an excluded armored motor vehicle company.

CR 15 14 Reduced limit of insurance for designated premises, messengers, or armored motor vehicle coverage -- RATES: Don't charge for higher limits for limited armored motor vehicle coverage.

CR 15 15 Decreased limit of insurance while premises not open for business -- RATES: Multiply a credit factor to that portion of the premium that applies to the amount of the reduction of the insurance.

CR 15 16 Exclude persons at designated premises -- RATES: no premium credit available.

CR 15 17 Include personal extortion for named individuals. Covers you, key employees and anyone else identified by the insured. Covers the high-profile executive if his/her non-business property or money is involved in the extortion attempt. Threats made to an associate or relative will be considered communication to the insured. This is a not a separate limit of insurance. Can have insured participation. Most other conditions of base policy apply - RATES: Charge .1 of total base rate before size modifier for the initial premises.

CR 15 18 Change schedule coverage -- RATES: Mid-term change. Either pro rata or short rate.

CR 15 19 Limit Coverage to public entrances, hallways or storerooms -- designed for residential property such as apartments -- RATES: Charge the rate per $1,000 from the countrywide rates -- this is an additional charge.

CR 15 20 Include property of others -- RATES: include the actual Exposure in the premium charge.

CR 15 21 Theft of Outdoor Signs -- RATES: per $1,000 of the sign rate in the countrywide rates.

CR 15 22 Require record of checks -- RATES: No premium credit.

CR 15 23 Include grounds "premises" definition-- RATES: 1.05 x gross premium before application of any multiplier.

CR 15 24 Increase limit of insurance for specified periods. Peak season endorsement -- discovery period only for 1 year after end of endorsement period -- RATES: Pro rata increase.

CR 15 25 Include selling price or processing charge -- RATES: multiply premium by 1.33.

CR 15 26 Extend premises to entire plot of ground under your control. The entire plot of ground under your control -- RATES: Multiply premium for designated premises by 1.5.

CR 15 27 Include covered property in custody of designated agents. Add contract employees, spouses of corporate owners, other agents -- RATES: Rate as additional messenger, charging only for the insured's exposure.

CR 15 28 Include guest property accepted for safekeeping. Use for hotels, bed and breakfasts, campgrounds, etc. Limit of insurance for property of any one guest cannot exceed 10% of limit of insurance on Declarations Page -- RATES: No charge.

CR 15 29 Include securities held by a depository in trust eliminates the 30-day limitation only for securities held in trust, not securities held as collateral RATES: Charge an additional 25%.

CR 15 30 Include bulky property.

CR 15 36 Sublimits for Money and Securities set separate limits for each RATES: charge only for the limit.

CR 16 09 Protective Devices or Service Provision protective devices for which credit is given must be in working order at all time RATES: premium consideration given in credits.

CR 30 01 Include Fire Damage -- RATES: Multiply premium by 1.1.

CR 30 02 Increased Limit of Insurance per Guest -- increase limit from $1,000 by multiples of $1,000 -- RATES: charge 25% of standard rate for each $1,000 increase.

CR 30 03 Include Food or Liquid Damage -- RATES: Multiply premium by 1.1.

CR 30 04 Include Laundry or Cleaner Damage -- RATES: Multiply premium by 1.1.

CR 30 05 Include Property of Persons Occupying Leased Lodging Accommodations -- Coverage extends to leased lodgers but not if the lease agreement also provides for the use of the accommodations for professional or business purposes or activities related to your employment of such persons -- RATES: no premium charge.

CR 30 06 Include samples and Articles for Sale or Delivery -- RATES: Multiply by 1.1.

CR 40 01 Safe Deposit Box Transfer -- covers "customer's property" in safe deposit boxes while being transferred between your locations.

CR 40 02 Reduce Limit of Insurance for Specified Premises -- RATES: compute premium based upon the appropriate limit.

CR 40 03 Include money for full or partial limit of insurance -- RATES: for full limit, double the premium, for partial limit, double the premium only for the partial limit that applies to money.

COVERAGE COMPARISON OF ISO PRE-CRIME 2000 COMMERCIAL CRIME FORMS

The 2000 edition of the commercial crime program is now widely available. However, it may be helpful to have a reference to the program's predecessor forms. The following descriptions and limitations are generic since actual conditions depend upon the applicable policy.

Form Description	Losses Covered	Property Covered	Previous Counterpart
Employee Dishonesty Coverage Form A	Loss by reason or any dishonest act of covered employee(s)	All property of insured employer	Employee Dishonesty coverage in Blanket Crime policy, 3-D policy or SMP policy; Blanket Position Bond; Commercial Blanket Bond
Forgery or Alteration Coverage Form B	Loss by reason of forgery or alteration of checks, drafts, promissory notes and other described instruments & documents	Checks, etc., drawn by insured	Depositors Forgery coverage in Blanket Coverage Crime policy, 3-D policy or SMP policy; Depositors Forgery Bond
Theft, Disappearance & Destruction Coverage Form C	Any act of stealing, disappearance or destruction inside insured's premises or banking premises; outside when in care & custody of messenger	Money and securities	Loss Inside and Loss Outside the Premises coverages of Blanket Crime policy or 3-D policy; Money and Securities Broad Form
Robbery and Safe Burglary Property Other Than Money and Securities Coverage Form D	Inside premises, robbery or safe burglary, or both; outside premises, robbery or messenger	All property except money and securities	Mercantile Robbery, Mercantile Safe Burglary or the combination form
Premises Burglary Coverage Form E	Actual or attempted robbery of a watchperson: actual or attempted burglary	Property other than money and securities inside the premises; motor vehicles, their trailers and accessories also are not covered	Mercantile Open Stock coverage
Computer Fraud Coverage Form F	Theft by use of computer to fraudulently cause transfer of property outside from inside insured’s premises or banking premises	All property	Endorsements
Extortion Coverage Form G	Surrender of property away from premises as a result of threat to insured or employee regarding apparent holding captive a relative or other person	All property	Endorsements
Premises Theft and Robbery Outside the Premises Property Other Than Money and Securities Coverage Form H	Theft inside the premises, as distinguished from burglary and robbery under Form E: coverage outside is identical to that under Form D	All property except money and securities	Endorsements for Mercantile Open Stock coverage
Lessees of Safe Deposit Boxes Coverage Form I	Theft, disappearance or destruction of securities; burglary, robbery or vandalism of other property	Securities, from theft, disappearance and destruction; property other than money and securities, burglary, robbery and vandalism	Specialized forms
Securities Deposited With Others Coverage Form J	Loss of securities while inside the custodian's premises, being transported by the custodian, or while on deposit in a depository	Securities	Specialized forms for six depository arrangements
Liability for Guests Property - Safe Deposit Box Coverage Form K	Legal obligations of insured because of loss or destruction of, or damage to, covered property	All property belonging to guests while in safe deposit Boxes in premises	Hotel Safe Deposit Box Legal Liability coverage form
Liability for Guests Property Premises Coverage Form L	Legal liability of insured because of loss or destruction of, or damage to covered property	All property, except samples or articles for sale or delivery, vehicles and property in vehicles, while in the premises and in the insured’s possession.	Innkeepers Liability Insurance
Safe Depository Liability coverage Form M	Legal liability of insured because of loss or destruction or, or damage to, covered property	Customers’ property or all kinds while in safe deposit boxes in vaults in premises stored in such vaults, or temporarily elsewhere in premises while in course of deposit or removal	Liability of Depository coverage in Combination Safe Depository form
Safe Depository Direct Loss coverage Form N	Loss by robbery or burglary, destruction and damage to covered property	Customers’ property or all kinds while in safe deposit boxes in vaults in premises stored in such vaults, or temporarily elsewhere in premises while in course of deposit or removal	Coverage B of Combination Safe Depository form
Public Employee Dishonesty Per Loss Coverage Form O	Loss of money, securities and property other than money and securities against dishonest acts by employees	Money, securities and property other than money and securities	Fidelity Insurance
Public Employee Dishonesty - Per Employee Coverage For P	Loss of money, securities and property other than money and securities against dishonest employee acts	Money, securities and property other than money and securities	Fidelity Insurance
Robbery and Safe Burglary Money and Securities Coverage Form Q	Loss of money & securities inside the premises while in the care of a custodian or in a safe against robbery & safe burglary; money & securities outside the premises while in the care of a messenger against robbery	Money and Securities	Money and Securities Policy

COMPARISON OF ISO PRE-CRIME 2000 COMMERCIAL CRIME FORMS KNOWLEDGE TESTER QUIZ

QUESTIONS

1. Prior to the Crime 2000 program, how was Computer Fraud covered?

2. What type of property is covered under Forgery or Alteration Coverage Form B?

3. What previous form was replaced by Robbery and Safe Burglary Money and Securities Coverage Form Q?

4. What type of property is covered by Public Employee Dishonesty Per Loss Coverage Form O?

5. Loss of securities while inside the custodian’s premises, being transported by the custodian, or while on deposit in a depository is covered under which coverage form?

6. The Extortion Coverage Form G covers what type of losses?

ANSWERS

1. In the earlier edition Crime program, computer fraud coverage was provided via endorsements.

2. That form provides protection for checks and similar instruments drawn by the insured.

3. This replaced the Money and Securities Policy.

4. Money, securities and property other than money and securities.

5. Securities Deposited With Others Coverage Form J.

6. This form covers the surrender of property away from premises as a result of threat to the insured or employee regarding apparent holding captive a relative or other person.

CHANGES TO THE COMMERCIAL CRIME PROGRAM

STRUCTURAL CHANGES

The 2000 Commercial Crime Program represents a significant structural change over previous programs. Crime coverages can now be written in one of two ways:

As part of a commercial package policy:

· CR 00 20 Commercial Crime Coverage Form (Discovery Form)

· CR 00 21 Commercial Crime Coverage Form (Loss Sustained Form)

· CR 00 24 Government Crime Coverage Form (Discovery Form)

· CR 00 25 Government Crime Coverage Form (Loss Sustained Form)

As a separate policy:

· CR 00 22 Commercial Crime Policy (Discovery Form)

· CR 00 23 Commercial Crime Policy (Loss Sustained Form)

· CR 00 26 Government Crime Policy (Discovery Form)

· CR 00 27 Government Crime Policy (Loss Sustained Form)

Many of the crime coverages themselves have not changed but have been extracted from older forms and combined, repackaged and renumbered. For example, the new Outside the Premises coverage is composed of elements from Form C Theft Disappearance and Destruction, Form D Robbery and Safe Burglary Property Other Than Money and Securities and Form H Premises Theft and Robbery Outside the Premises. The intent and goal of combination is simplification. Outside the Premises coverage was designed to cover money, securities and other property in one form rather than in two or even three forms, as in the past. Basic coverages have been renumbered. Endorsements have also been renumbered and a number of new forms and form numbers have been introduced.

BASIC COVERAGES

The principal program change is reorganizing the basic coverages into new coverage and policy forms and including eight basic coverages (nine for government crime) into the principal forms themselves. These are the most frequently used coverages:

· Employee Theft per Loss (Used with both commercial crime and government crime). This is similar to Employee Dishonesty Coverage Form A Blanket Coverage. Coverage for specifically described employee benefits plans is automatically included.

· Employee Theft per Employee (Used with government crime only). Government crime has both theft per occurrence and theft per employee coverages and limits of insurance.

· Forgery or Alteration (Used with both commercial crime and government crime). This is similar to Coverage Form B Forgery or Alteration Coverage Form. There are no substantial changes to coverage or exclusions.

· Inside the Premises Theft of Money and Securities (Used with both commercial crime and government crime). This replaces Section 1 of Coverage Form C Theft, Disappearance and Destruction Coverage Form. There are no substantial changes to coverage or exclusions.

· Inside the Premises Robbery or Safe Burglary of Other Property (Used with both commercial crime and government crime). This replaces Section 1 of Coverage Form D Robbery and Safe Burglary Coverage Form Property Other Than Money and Securities. There are no substantial changes to coverage or exclusions.

· Outside the Premises (Used with both commercial crime and government crime). This replaces parts of many forms. This includes Section 2 of Coverage Form C Theft, Disappearance and Destruction Coverage Form, Coverage Form D Robbery and Safe Burglary Coverage Form Property Other Than Money and Securities and Coverage Form H Premises Theft and Robbery Outside the Premises Coverage Form Property Other than Money and Securities. There are no substantial changes to coverage or exclusions.

· Computer Fraud (Used with both commercial crime and government crime). This replaces elements of Coverage Form F Computer Fraud Coverage Form. The coverage territory is now worldwide.

· Funds Transfer Fraud (Used with both commercial crime and government crime). The 2002 revision to the crime 2000 coverages replaced the optional funds transfer fraud coverage endorsement. This coverage is still available but is now a component of the principal forms. No substantial difference in coverage results from this change.

· Money Orders and Counterfeit Paper Currency (Used with both commercial crime and government crime). This replaces elements of Coverage Form R Money Orders and Counterfeit Paper Currency Coverage Form. In the commercial crime version, coverage is broadened to include any currency as well as that of the United States and Canada. The government crime version contains no settlement provisions for other than United States currency.

Any of these coverages can be excluded by indicating "not covered" in the space provided on the declarations.

EXPANDED OR CHANGED EXCLUSIONS

· Acts committed by the insured now include Limited Liability Company (LLC) managers.

· Inventory shortages are still not covered but inventory records can be used to document employee theft losses.

· Motor vehicles and their accessories are not covered in any manner whatsoever.

· Trading losses are not covered under employee theft provisions. This coverage can be included by adding Form CR 25 16Add Trading Coverage to the policy.

· Falsification of warehouse receipts is not covered under employee theft. Coverage can be included by adding Form CR 25 17Add Warehouse Receipts Coverage.

CHANGES TO CONDITIONS

· Any employee found to have committed prior dishonest acts is excluded from coverage for any future act.

· Coverage for new or changed entities as a result of consolidation or merger is extended to 90 days from 60 days.

· Coverage for scheduled employee benefits plans subject to ERISA guidelines is now automatically included in the coverage form.

· The extended period to discover and report losses ends immediately on the date replacement coverage begins.

· Territory now includes all territories of the United States.

· Valuation on a replacement cost basis applies to all property.

DEFINITIONS

Newly defined or changed words include "counterfeit," "forgery," "employee," "employee benefit plans," "funds," "members," "managers" and "theft."

OPTIONAL COVERAGES

Thirteen optional coverages replace previous coverages of the same type in the previous programs.

· CR 04 01 Clients Property This is a new coverage form not previously available from ISO.

· CR 04 03 Extortion Commercial Entities. This form replaces elements of Coverage G Extortion Coverage Form.

· CR 04 04 Extortion Government Entities. This form replaces elements of Coverage G Extortion Coverage Form.

· CR 04 05 Inside the Premises Theft of Other Property Robbery or Safe Burglary of Other Property. This form replaces Section 1 of Coverage Form H Premises Theft and Robbery Outside the Premises Coverage Form Property Other Than Money and Securities.

· CR 04 06 Inside the Premises. This form replaces elements of Coverage Form E Premises Burglary Coverage Form.

· CR 04 07 Inside the Premises Robbery or Safe Burglary of Money and Securities. This form replaces Section 1 of Coverage Form Q Robbery and Safe Burglary Coverage Form Money and Securities.

· CR 04 08 Employee Theft Name or Position Schedule. This form is similar to the Employee Dishonesty Coverage Form B Schedule or Specific Form.

· CR 04 09 Lessees of Safe Deposit Boxes. This form replaces elements of Coverage Form I Lessees Of Safe Deposit Boxes Coverage Form.

· CR 04 10 Securities Deposited With Others. This form replaces Coverage Form J Securities Deposited With Others Coverage Form.

· CR 04 11 Guests' Property. This is a new coverage form not previously available from ISO. It contains elements of Coverage Form K Liability for Guests’ Property Safe Deposit Box Coverage Form and Coverage Form L Liability for Guests' Property Premises Coverage Form.

· CR 04 12 Safe Depository. This is a new coverage form not previously available from ISO. It contains elements of Coverage Form M Safe Depository Liability Coverage Form and Coverage Form N Safe Depository Direct Loss Coverage Form.

· CR 04 13 Destruction of Electronic Data or Computer Programs. This is a new coverage form not previously available from ISO introduced with the 2002 revision.

· CR 04 14 Unauthorized Reproduction of Computer Software by Employees. This is a new coverage form not previously available from ISO introduced with the 2002 revision.

COMMERCIAL CRIME COVERAGE FORMS COMPARISON: 2002 EDITION TO THE 2006 EDITION

CR 00 21 was revised in order to clarify a number of issues as well as to add various items that either expanded or restricted coverage. This is only a brief overview of the significant changes in the policy form.

ITEMS WITH EXTENSIVE CLARIFICATION

The latest form underwent major reorganization which may have created coverage restrictions.

A. Insuring Agreements

The lead-in language is expanded to explain in a single lengthy sentence exactly what is covered and when it is covered. It also contains references to two different conditions. The redefined term “occurrence” and the newly defined term “discover” are part of the insuring agreement.

D. Exclusions

Exclusion 1.a. Acts of Employees Learned of by You Prior to the Policy Period, is added. It clarifies that if the insured becomes aware of an employee’s dishonest acts prior to the current policy period, that employee is not covered in that or in subsequent policy periods. This is similar to the old Employee Cancelled under Prior Insurance Exclusion.

E. Conditions

Condition 1.a. Cancellation as to Any Employee, is moved from Conditions Applicable to All Insuring Agreements to 2.a. Conditions Applicable to Insuring Agreement A.1. The name is also changed to Termination as to Any Employee. There is no substantive change in the language of the condition.
Condition 1.a. Additional Premises or Employees, is added. This condition explicitly states that additional employees and additional premises acquired or gained during the policy period are automatically covered with no additional premium charge. However, the automatic coverage does NOT apply to those acquired through mergers, consolidations and acquisitions
Condition 1.k. Loss Covered Under This Insurance and Prior Insurance Issued by Us or Any Affiliate, is re-titled Loss Sustained during Prior Insurance Issued by Us or Any Affiliate. This condition now includes three examples to assist in explaining how it is meant to respond to losses discovered in the current policy period but actually sustained in previous policy terms.
Condition 1.l. Loss Sustained, is eliminated. Part of its wording was incorporated in the revised insuring agreement and part is contained in the new Condition 1.k. Loss Covered under this Insurance and prior insurance issued by Us or Any Affiliate.
Condition 1.m. Loss Sustained during Prior Insurance, is replaced with Condition 1.l. Loss Sustained during Prior Insurance Not Issued by Us or Any Affiliate. This condition was completely rewritten but the intent appears to be unchanged.

F. Definitions

Definitions for "Counterfeit Money" and "Discover" are added. The definition for Counterfeit was removed.
The definition for "Client" was eliminated as the term no longer appears in any insuring agreement.
The definition for "Occurrence" was lengthened without apparent change in intent.

ITEMS WITH MINOR CLARIFICATION

D. Exclusions

The nuclear hazard exclusion is rewritten to more clearly reflect that nuclear incidents are not covered.
The war exclusion is more expansive and matches the war exclusion in other property coverage forms.

E. Conditions

Consolidation–Merger or Acquisition is rewritten but without significant change.

ITEMS WITH INTENTIONAL RESTRICTIONS

A. Insuring Agreements

Insuring Agreement 3–Inside the Premises–Theft of Money and Securities covers only theft situations where the person committing the theft is physically inside the premises. The previous requirement was only that the money and securities be inside the premises.

B. Limit of Insurance

Wording is added to prevent stacking of limits. If more than one insuring agreement or coverage applies to the same loss, only the highest limit for any single insuring agreement or coverage shown on the declarations is available for payment.

C. Deductible

The limitation that only one deductible applies is eliminated.

D. Exclusions

Exclusion 1.d. is added. It eliminates coverage for any loss due to or resulting from any disclosure of confidential information.
Pollution Exclusion 1.i. is added. The definition of pollution in the exclusion is identical to the one used in commercial property coverage parts.
Exclusion 1.e. is now Exclusion 1.g. It previously excluded legal expenses and now also excludes other fees or costs incurred by the named insured.
Exclusion 3.f. introduces four additional ways in which transfer or surrender of property could take place and is not covered under Insuring Agreements 3., 4., and 5.

E. Conditions

Under the Duties in the Event of a Loss Condition, another duty is added. It requires the named insured to produce all pertinent records for examination by the insurance company.
Under the Joint Insured Condition, a statement is added. When payment is made to the first named insured as a settlement, the carrier is fully released with respect to any other insured, other than an employee benefit plan. This could be very significant.

F. Definitions

The definition for Other Property is restricted. It excludes coverage for computer programs and electronic data.

ITEMS WITH INTENTIONAL BROADENING

A. Insuring Agreements

Insuring Agreement 1. Employee Theft adds wording to the effect that forgery is treated as theft.
Insuring Agreement 2. Forgery or Alteration is broadened. It includes coverage for substitute checks as defined by the Check Clearing for the 21^st Century Act.
Insuring Agreement 8. Money Orders and Counterfeit Paper Currency is replaced. The new title is Money Orders and “Counterfeit Money.” This broadens counterfeit coverage to include additional types of money, including coins, traveler’s checks and currency.

B. Exclusions

Exclusion 4. only applies to Insuring Agreement A.6, Computer Fraud, and is modified to take Internet activities into consideration. Exclusions 4.a. Exchanges or Purchases and 4.d. Voluntary Parting of Title to or Possession of Property, are replaced by new Exclusion 4.a. Credit Card Transactions. This is because exchanges, purchases and voluntary parting of titles that occur while using the computer normally involve credit cards.

E. Conditions

Condition 1.n. Other Insurance is now Condition 1.m, Other Insurance, and includes substantial changes. It now follows the flow of other lines of insurance with respect to primary and excess coverage. The policy is primary when the other policies provide identical coverage and excess when other sources of coverage are different. When the crime coverage is excess, the other coverage can now satisfy the deductible requirement under the crime policy. This was the not the case in the past.
Condition 1.o. Ownership of Property Interests Coverage, is now Condition 1. n. Ownership Of Property Interests Covered. It is broadened to include all property of others, regardless whether the named insured is legally liable for the loss. In addition, there is no longer an exception for client’s property on client’s premises.
Condition 1.q. Recoveries, is now Condition 1.p, Recoveries. It returns additional recovered proceeds to the named insured. If recovery funds remain after payment of the named insured's excess covered loss, the carrier’s settlement costs and the named insured’s deductible, the named insured now receives payment for any loss amount not covered under the policy.
Condition 2.b. Territory Applicable to Insuring Agreement A.1, is broadened to limit coverage only to employees outside the coverage territory for 90 consecutive days instead of the previous 90 days.

DEFINITIONS

The definition for Employee is broadened to include members of board-appointed committees.

COMMERCIAL CRIME COVERAGE FORMS COMPARISON: 2002 EDITION TO THE 2007 EDITION

The Commercial Crime Coverage forms 08 07 edition completes the changes that began with the 05 06 edition. The CR 00 40–Kidnap/Ransom and Extortion Form and CR 00 41–Kidnap/Ransom and Extortion Policy were revised in the ’07 edition so they now conform to their peers.

In addition to the coverage changes, all declarations pages were revised and many endorsements contain minor clarifications.

CR DS 07–DECLARATIONS

The declarations was changed by eliminating the Include Foreign Countries Section. This makes the unendorsed policy applicable worldwide.

CR 00 40–KIDNAP/RANSOM AND EXTORTION COVERAGE PART

A. Insuring Agreements

The lead-in language is expanded to explain, in a single lengthy sentence, exactly what is covered and when it is covered. It also refers to two different conditions. The redefined term “occurrence” and the newly defined term “discover” are part of the insuring agreement.

C. Deductible

The provision stating that if two insuring agreements are involved only one deductible applies was removed.

E. Conditions

The following conditions were added:

2.a. Additional Premises or Employees. This condition states that additional employees and additional premises acquired during the policy period are automatically covered with no additional premium charge. However, no coverage is granted for situations involving mergers, consolidations and acquisitions.
2.d. Cooperation. This condition explains that the insured must work with the insurance company.

· 2.n. Surrender of Personal Assets. This condition recognizes that family members of a kidnapped person may make payments without consulting with the insurance company. This condition allows for reimbursement to the family. It states that when payment or expenses are made on behalf of an insured person who is not the named insured, those payments or expenses are considered property and expenses of the named insured. There is one qualifying stipulation. The reason for the (ransom) demand must be because of the relationship that insured person has to the named insured.

The following conditions were revised

· 2.c. Consolidation–Merger or Acquisition is amended by the addition of “acquisition”

· 2.f. Duties in the Event of Occurrence is amended to begin requiring that the FBI be contacted and that records be supplied to the insurance company for review

2.g. Extended Reporting Period is expanded to state that losses reported to the scheduled security firm during the extended reporting period are covered even if the insurance company had not been notified at the same time.
2.h. Joint Insured adds a sub condition that payment by the insurance company to the first named insured will satisfy its obligations to all insureds. The only exception is for employee benefit plans.
2.k. Other Insurance is rewritten for clarity.

2.l. Ownership of Property; Interests Covered removes the requirement that the insured be legally liable for property of others in order for that property to be covered.

The following conditions were removed

The Loss Covered Under More Than One Coverage of This Insurance condition wording has been incorporated into Section B, Limit of Insurance
Loss Sustained and Reported condition wording is now included in insuring agreement wording.
Non-Cumulation of Limit of Insurance condition is eliminated but the wording is part of the Insuring Agreement lead-in language, Section B. Limit of Insurance, and the definition of occurrence.

F. Definitions

The following definitions were added

Computer Program
Computer System
Electronic Data

The following definitions were revised

Employee is amended to eliminate coverage for guest student and temporary employees when caring for property off the premises.
Expenses is expanded to include the expenses that are incurred to determine the validity and degree of a threat. It also includes the court costs and attorney fees the named insured may incur if sued by the spouse or beneficiary of an insured person who dies because of kidnap, detention or hijack.
Occurrence is modified to state if a kidnap, extortion threat, detention, or hijack involved a series of acts and if those acts started prior to the effective date of this policy, the insurance company will not pay for that loss.
Property is expanded by the elimination of the words intrinsic value.

This is only a brief overview of the significant changes in the policy form.

CR 00 40 AND CR 00 41–Kidnap/Ransom And Extortion Form And Policy – this article should be reviewed to gain a more complete understanding of these changes.

COMMERCIAL CRIME COVERAGE ANALYSIS (05 06 EDITION)

INTRODUCTION

This analysis is based on the Insurance Services Office (ISO) 05 06 edition. Changes from the previous edition are in bold print.

Commercial crime coverage can be written on either a discovery form or a loss sustained form. It may be written as a monoline policy or as a coverage part in a commercial package policy. The forms are:

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)

This analysis starts with an evaluation of Form CR 00 21, Commercial Crime Coverage Form (Loss Sustained Form). It is followed by a comparison to the other three forms listed.

Like all ISO forms, defined words are offset by quotation marks in the policy or coverage form but are not in this analysis. The words you and your mean the named insured listed on the declarations. As discussed in the Common Policy conditions, the first named insured is the entity that receives premium statements, cancellations and similar notices. The words we and us refer to the insurance company providing the coverage.

A. INSURING AGREEMENTS

Eight separate insuring agreements are available in each of the commercial crime coverage forms. If any insuring agreement has “NOT COVERED” entered next to it on the declarations, no protection applies. Therefore, it is possible to issue a policy where only a single crime insuring agreement applies.

Coverage applies to losses sustained by the named insured under the following circumstances:

The loss must be the result of an occurrence.
The occurrence must take place DURING the policy period shown on the declarations.
The loss must be discovered by the named insured DURING the policy period or the extended discovery period.

All of the above are subject to:

Condition E.1.g: Extended Period To Discover Loss;
Condition E.1.k: Loss Sustained During Prior Insurance Issued By Us Or Any Affiliate;
Condition E.1.l: Loss Sustained During Prior Insurance Not Issued By Us Or Any Affiliate; and
Definitions of the terms discovered and occurrence in Section F of the coverage form.

The 05 06 change eliminated the Loss Sustained Condition and moved it into the insuring agreement. It also added a reference to important conditions that affect the losses covered. One final change was the addition of a definition for the term “discovered.”

Note: This change aids in the understanding the policy. Instead of having to read a condition in order to understand when a loss would be covered, the insuring agreement contains most of the pertinent information.

1. Employee Theft

Employee theft covers losses to money, securities and other property. It covers the unlawful taking of eligible insured property by employees. Coverage applies regardless of the number of employees involved in the loss. This is an important point, since the limit of insurance applies to each act and not to each employee. In this insuring agreement, theft includes forgery. (05 06 addition).

Example: Easy Pickings, Inc. carries $200,000 employee theft limit.

Scenario one: Ten employees at Easy Pickings, Inc. participate in siphoning cash from the accounts receivable. The total loss is $500,000. Easy Pickings, Inc. argues that each employee should be covered for $200,000 with a total possible loss payout of $2,000,000. The company argues in vain. The policy coverage pays the limit per occurrence, not per employee. Because the employees are all part of the same scheme, the policy limit of $200,000 applies.

Scenario two: An employee at Easy Pickings steals merchandise from the warehouse and sells it to friends. This employee’s actions were completely separate from the ten-person scheme so the $200,000 limit of insurance on the policy applies separately to this claim.

2. Forgery and Alteration

This insuring agreement applies only to the actions of outsiders. Coverage does not apply to forgery or alteration of checks done by the named insured or any employee, manager, director, trustee or representative. Coverage applies only to checks drawn on the named insured’s accounts or the accounts of any party while acting as an insured’s agent. Checks include drafts, promissory notes, and orders or directions to pay money. It also includes substitute checks as defined by the Check Clearing for the 21^st Century Act (05 06 addition). A check can allegedly have been drawn, meaning there may be some doubt whether the check was actually drawn, against any of the following:

An insured’s account
Another party’s account
An account that no longer exists

Example: A thief breaks into Plumber’s Palace and steals checks from the bottom of a stack he finds in the comptroller’s office. During the next few weeks, the thief writes checks against the insured’s account until the cashing of unauthorized checks is reported to the comptroller.

One of the unusual features of this coverage is that it provides defense coverage if the named insured is sued for refusing to pay on a check or an instrument believed to be forged or fraudulent. The insurance company must first give its written consent to the named insured to defend itself against such a suit. It then pays the reasonable legal expenses relating to defense of the suit. The defense coverage is unlimited and is in addition to the policy limit for forgery and alteration coverage.

3. Inside the Premises–Theft of Money and Securities

This insuring agreement contains three basic coverages:

It pays for the loss of money and securities from the insured premises or banking premises caused by either of the following:

Theft committed by a person actually present inside (05 06 change) the premises or a banking premises
Disappearance or destruction of money or securities.

This insuring agreement does not cover merchandise or stock. Premises are considered to be the interior of the building occupied by the named insured and from which business is conducted. Banking premises is also defined.

Example: Sharon owns a small card shop.

Scenario one: An armed robber enters her card shop and demands all her money. This loss would be covered.

Scenario two: Sharon receives a phone call and the caller informs her that he has a weapon pointed at her premises. He demands that she place money in a bag and put it outside her door. This loss would not be covered.

It covers damage to the interior of the premises and to the exterior of the building during an attempted or actual theft. In order for coverage to apply to damage to the exterior of the building, the named insured must either own the building or be legally liable for damage to its exterior.

It covers damage incurred during an attempted or actual theft to locked safes, vaults, cash registers, cash boxes and cash drawers inside the premises.

4. Inside the Premises–Robbery or Safe Burglary of Other Property

Other property means property other than money and securities having intrinsic value and not otherwise excluded. Intrinsic is defined by the American Heritage College Dictionary as “of or relating to the essential nature of a thing; inherent.” A chair has intrinsic value. An idea, in and of itself, has no intrinsic value unless it is applied and made into something.

Under this insuring agreement, coverage applies only to robbery of a custodian or to safe burglary. The act must take place within premises located in a described building. Robbery is a subset of theft that involves actual bodily harm or the threat of bodily harm, violence or intimidation or the unlawful taking of property witnessed by another person. A custodian may be the named insured, members, partners or employees but NOT watchpersons or janitors.

Losses from robberies either during normal business hours or after hours that do not involve watchpersons or janitors are covered. A person working late and turning on the alarm before leaving is not a watchperson, unless hired specifically to have custody of the property (with no other duties). A watchperson is the security guard hired to watch the premises during normal business hours.

Example: Eric is working late. He is asked to lock up when he leaves (therefore he has custody of the premises). However, he is not a watchperson or a janitor. He sees the cleaning staff opening desk drawers to dust inside. The next day, several people are missing valuable tools, software and other items. Eric believes they were stolen by the cleaning staff. However, because he was not threatened and did not actually witness an obvious act of stealing, there is no coverage under this insuring agreement.

Under this insuring agreement, damage to the premises from an attempted or actual act of robbery or safe burglary is covered as well as damage to a LOCKED safe or vault. If an open safe or vault is damaged during a robbery, it is not covered. However, a loss to property inside the safe or vault is covered.

5. Outside the Premises

Money and securities are covered for theft, disappearance and destruction while outside the premises and in the custody of a messenger or armored car company. Coverage includes theft, robbery or other instances of accidental loss.

Example: A suitcase full of cash bounces out of the back of a pickup truck, tumbles across a bridge, falls 120 feet into a river and is never recovered. This situation would be eligible for coverage.

Other property is covered outside the premises when it is in the custody of a messenger or an armored car company but only for robbery. Robbery must include at least the threat of bodily harm, violence or intimidation or the messenger must actually observe the commission of an unlawful act.

Example: A crate of rare vases that bounces out of a truck and falls to the river below never to be seen again is not covered but coverage applies if that same vehicle is car-jacked and the robber throws the crate into the river.

In either case, a messenger must be the named insured or a partner or employee of the named insured. Employees do not include independent contractors (other than an armored car company), temporary employees or any agent or broker.

Example: Pink Elephant Phine Liquors replaces its employee-operated truck fleet with one operated by independent truck drivers. When delivering a load of liquor to a Pink Elephant warehouse, the driver is robbed at gunpoint. There is no coverage for this claim because the independent driver was not a messenger as defined in the policy.

6. Computer Fraud

This insuring agreement covers money, securities and other property fraudulently transferred by computer from the insured premises or banking premises to a location other than the insured premises or the banking premises. It does not include transfer to a messenger. Coverage is worldwide. A fraudulent transfer of funds from an insured’s Swiss bank account to someone in the United States is covered in the same way as a person breaking into an office and using an insured's computer to transfer funds from the insured’s account to his or her Swiss bank account. Coverage also applies if someone remotely hacks into an insured’s computer and sends money to the thief’s personal bank account. Coverage applies to locations and premises outside the United States.

Example: Josie Proust, the top salesperson for Cyberfroot Distributors, was staying in a hotel in Beijing. She regularly conducted business from her room. While at a meeting with a local group of lychee and pomegranate farmers, someone broke into her room, stole some of her valuables and hacked into her laptop to transfer funds from her account. This insuring agreement covers this computer fraud loss.

7. Funds Transfer Fraud

This insuring agreement provides coverage when money or securities are lost because instructions were given to a financial institution to transfer such funds from the named insured’s account and those instructions are fraudulent. The fraudulent instructions may be written or electronic.

8. Money Orders and Counterfeit Money (05 06 change)

This insuring agreement only covers money orders and counterfeit money accepted by the named insured for services, money or merchandise. The items must have been accepted with an expectation that they were valid.

The money orders must have been issued by a post office express company or bank that will not pay for them when presented.

Note: Cashier’s checks and other negotiable instruments are NOT covered.

The 05 06 edition replaces the phrase counterfeit paper currency with the defined term counterfeit money. This is a significant increase in coverage because the defined term includes traveler’s checks, register checks and money orders in addition to currency, bank notes and coins.

B. LIMIT OF INSURANCE

The limit shown on the declarations is the most paid for all loss that results from an occurrence (05 06 change). If a loss is covered under more than one insuring agreement, the company pays ONLY the largest limit of insurance available and not the sum of each available limit (05 06 change).

In some cases, this could create a significant reduction in coverage.

Example: Acme Company sustains a loss that involves both employees and non-employees. It is found to be a single occurrence and coverage is available under Insuring Agreements 1, 3 and 7. The coverage limit is $300,000 under Insuring Agreement 1, $100,000 under Insuring Agreement 3 and $250,000 under Insuring Agreement 7. The total loss is $500,000. In the previous edition, Acme could have recovered under each of the insuring agreements and have been fully compensated. Under the current edition, the maximum recovery is $300,000, the highest limit available.

A situation like this could have claimants and claimant attorneys searching for ways to utilize the differing definitions of occurrence within the insuring agreements so a loss situation may qualify as a multiple occurrence.

C. DEDUCTIBLE

Each of the eight insuring agreements can have a different deductible. In most cases, smaller accounts do not require deductibles for most coverages. The insurance company does not pay any loss until the deductible amount stated on the declarations is satisfied.

In previous editions, the policy indicated that if different deductibles exist for a given loss, only the highest deductible was applied. In the 05 06 edition, this provision is removed.

Note: When the deductible provision is now read in conjunction with the limit of insurance, it may be implied that the applicable deductible is the one shown on the declarations and associated with the highest limit of insurance. However, it is not stated this way. With the removal of the deductible limitation language, confusion may arise about which or how many deductibles apply to a given loss. Due to this ambiguity, an insured could argue that the lowest (or even that NO) deductible, should be used. In such disputes, any ambiguity could be construed in favor of an insured’s interpretation.

Example: Continuing the Acme example above, the deductible for Insuring Agreement 1 is $10,000, the deductible for Insuring Agreement 3 is $1,000 and Insuring Agreement 7 has no deductible. The insured argues that no deductible should apply but the insurance company argues that the deductible that should apply is $10,000.

D. EXCLUSIONS

1. These exclusions apply to each of the eight insuring agreements, unless otherwise stated.

a. Acts Committed by You, Your Partners or Members

Any theft or dishonest act of the named insured, whether committed alone or with another individual or an employee, is excluded. The named insured cannot claim coverage for the dishonest act of an employee if the named insured is involved in the same misdeed. For the purposes of this exclusion, a member is an owner of a Limited Liability Corporation (LLC).

b. Acts of Employees Learned of by You Prior to the Policy Period (05 06 addition)

This exclusion applies to losses committed by employees with a history of committing a dishonest act. If the named insured, partners, members, managers, officers, directors or trustees, prior to the policy period, became aware that an individual committed theft or engaged in dishonest acts, coverage does not apply to any loss caused by that employee.

However, coverage does apply if the member, partner, manager, officer, director or trustee aware of the dishonest acts is in collusion with the employee.

Example: Trent has a troubled background and Rick; the vice president of operations is aware of that history. Rick uses Trent and his shady contacts to help him fence items they steal from their company’s warehouse. When the loss is discovered, the insurance company cannot deny coverage. This is because Rick is the only one at the company aware of Trent’s dishonest past.

c. Acts of Employees, Managers, Directors, Trustees or Representatives

This exclusion applies to all insuring agreements EXCEPT Insuring Agreement A.1, Employee Theft. In addition to excluding theft committed by employees, managers, directors, trustees or representatives, other dishonest acts, such as forgery, are also excluded. Coverage is denied whether or not the perpetrator is acting alone or in collusion. It is also denied whether not that perpetrator is providing services at that particular time.

d. Confidential Information (05 06 addition)

This new exclusion explains that the crime policy is not designed to cover losses due to identify theft. Any loss caused by or resulting from any disclosure or use of the named insured’s confidential information is not covered. This includes, but is not limited to, patents, trade secrets, processing methods or customer lists.

In addition, any loss caused by or resulting from any disclosure of confidential information of others, such as financial or personal information, is also not covered.

This is considered to be a clarifying exclusion, because the policy was never intended to cover such losses.

Example: Marguerite works in Acme College’s Record’s Department. Her boyfriend, Phillip, asks for some information about his roommate, Paul, and uses it to steal Paul's identity. Paul discovers the identity theft when he attempts to secure a student loan. The police track the release of information to Phillip and Marguerite, both of whom have left town. Paul demands that the school system compensate him for the monetary loss due to Marguerite’s actions. Acme College’s crime policy would not respond because of this exclusion.

e. Government Action

When the government seizes or destroys property there is no coverage for that property under this policy.

Example: The owner of Shot Docks Bass Boat Rentals files a claim for the loss of a boat. The boat is valued at $37,000 and the owner states that “some official persons” took it from her premises. The claims adjuster investigates and learns that the boat was confiscated under a federal controlled substances law. The claim is denied.

f. Indirect Loss

Indirect losses that are ineligible for coverage include:

· Loss of income as a result of not being able to use money, securities or other property. This means that coverage does not apply to loss of interest income on money that could have been invested. There is no coverage for loss of income on stock holdings that could have appreciated during an upturn in the market. Finally, loss of profit due to the loss of a chance to sell product stolen from an insured is not covered. Business income coverage available in commercial property forms pays for the loss of income on property other than money or securities.

· Legal liability claims. Coverage for property of others is available only by endorsement. However, some direct damage coverage is provided in specific insuring agreements.

· The cost of establishing the amount of a loss. Such costs can be substantial.

Examples:

- The expense of hiring auditors to examine books “cooked” by an employee

- The cost of independent investigators hired to ferret out the scope of a financial loss and who caused it.

- The cost of hiring forensic or other specialists to determine what missing inventory was stolen and what was simply part of an inventory shortage.

Coverage for these costs and expenses is available by attaching Form CR 25 40–Include Expenses Incurred To Establish Amount Of Covered Loss.

g. Legal Fees, Costs and Expenses (05 06 change)

There is no coverage for any legal fee, cost or expense incurred by the named insured. The only exception is explained under Insuring Agreement A.2.

h. Nuclear Hazard (05 06 change)

If nuclear reaction or radiation causes loss or damage, there is no coverage. Further, no coverage exists for radioactive contamination. This exclusion applies no matter how the loss occurs.

i. Pollution (05 06 addition)

There is no coverage for any loss or damage resulting from pollution and pollution is defined within the exclusion. The definition is identical to the one used in ISO property coverage forms.

j. War and Military Action (05 06 change)

Losses caused by or related to war or warlike action, including rebellion, insurrection, revolution and government power used to defend against such actions, are not covered (05 06 change).

This wording is similar to what is found in other ISO property coverage forms.

2. These exclusions apply to Insuring Agreement A.1: Employee Theft Coverage.

The Employee Cancelled Under Prior Insurance exclusion has been rewritten, broadened and is now Exclusion 1.b: Acts of Employees Learned by You Prior to the Policy Period (05 06 change).

a. Inventory Shortages

There is no coverage for shortages of money, securities or other property when only an inventory shortage provides proof of loss. Similarly, any loss that is proven only through a profit and loss calculation is not covered. However, such books, ledgers and inventory records may be used to help calculate the amount of a loss that can be substantiated in another manner.

b. Trading

Losses resulting from trading are excluded. Trading activities include stock-trading losses, commodity-trading losses, and merchandise-trading losses (where batches of product are exchanged).

Certain trading losses to a genuine, not a fictional, account may be covered by CR 25 16–Add Trading Coverage.

c. Warehouse Receipts

Warehouse receipts document storage and transfers of products between, usually, separate entities. A fraudulent transfer can occur when property is delivered to someone not authorized to receive it. A forged instrument is frequently used by an individual having a seemingly legitimate claim to the property but does not. Coverage does not apply to these situations or to errors in issuing, signing, canceling or failing to cancel any warehouse receipt.

CR 25 17–Add Warehouse Receipts Coverage can be attached to insure fraudulent transfer of warehouse receipts.

Warehouse Operators Legal Liability Coverage, an inland marine coverage, can also be purchased to cover fraudulent or other improper or negligent transfer of goods, other than by employee theft.

3. The following exclusions apply to Insuring Agreements A.3: Inside the Premises–Theft of Money and Securities, A.4–Inside the Premises–Robbery or Safe Burglary of Other Property, and A.5–Outside the Premises.

a. Accounting or Arithmetical Errors or Omissions

Loss that is caused merely by mathematical errors, accounting errors or omissions is excluded. There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

b. Exchanges or Purchases

There is no coverage for loss in any exchange or purchase of any property. There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

Example: A customer pays the marked price of $2,000 for a piece of furniture. It is determined later that the price should have been $20,000. Further investigation shows that the price tag was intentionally altered and the customer (who paid in cash) provided false contact information. Even though this appears to be criminal activity, coverage does not apply because this loss was the result of a purchase.

c. Fire

There is no coverage for damage (05/06 addition) or loss caused by fire except:

(1) Coverage applies for loss or damage to money and securities. This is very important because no other commercial property coverage forms protect against fire damage to money and securities.

(2) Damage to a safe or a vault. This is duplicate coverage with the property coverage forms and could be considered primary to the property form since it is specific in nature.

d. Money Operated Devices

Theft of money from vending machines or other money or coin-operated devices is not covered unless the money is continuously counted and recorded by the machine itself. There is no standard endorsement available to "buy back" this exclusion or to purchase broader coverage.

e. Motor Vehicles or Equipment and Accessories

Damage to any motor vehicle, its accessories or trailer is excluded. Coverage for theft of motor vehicles is available under commercial automobile comprehensive coverage, garage dealer coverage and garagekeepers’ liability coverage. It is also available for vehicle manufacturers through commercial property coverage forms. The term “motor vehicle” is not defined in this coverage form as it is in other ISO forms.

f. Transfer or Surrender of Property

Loss or damage to property given to someone outside the premises or banking premises because of unauthorized instructions is not covered. Coverage does not apply to property given up because of the threat of either bodily harm or property damage. There is also no coverage for property relinquished due to computer-generated threats to harm the named insured’s products or to release confidential information (05 06 addition). However, since this type of activity is considered to be a form of extortion, coverage is available by purchasing Optional Insuring Agreement CR 04 03–Extortion–Commercial Entities or by purchasing a Kidnap/Ransom and Extortion Policy.

This exclusion does not apply to Insuring Agreement A.5, Outside the Premises, if the property was in the custody of a messenger who had no knowledge of the threat at the time the trip began, or who knew about the threat but was the victim of an entirely different threat.

g. Vandalism

Vandalism losses to the building, premises, safes or cash drawers are not covered. Vandalism is properly insured under commercial property coverage forms. In certain situations, vandalism and theft are concurrent causes of loss. These are different losses that occur at the same time.

Example: Vandals break a business’s showroom windows and rip out fixtures and other building items. Before the building can be secured, others enter through the broken window and steal merchandise. The building losses should be covered by the property policy. Theft of merchandise by the burglars who climb through the broken windows is covered under Crime Insuring Agreement A.4, Inside the Premises–Robbery or Safe Burglary of Other Property.

h. Voluntary Parting with Title to or Possession of Property

There is no coverage when the named insured or someone working with the named insured is tricked into parting with title to or possession of any covered property. There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

4. The following exclusions apply to Insuring Agreement A. 6: Computer Fraud.

The Exchanges or Purchases exclusion is eliminated and replaced by the Credit Card Transactions exclusion (05 06 change).

a. Credit Card Transactions

Coverage does not apply if the loss is the result of use of any type of credit, debit, charge or other similar card.

b. Funds Transfer Fraud

There is no coverage if the loss is a result of a fraudulent instruction directing a financial institution to transfer, pay or deliver funds from the transfer account to an unauthorized party. Coverage for this exposure is available under Insuring Agreement A.7, Funds Transfer Fraud.

c. Inventory Shortages

There is no coverage for shortages of money, securities or other property when only an inventory shortage provides proof of loss. Similarly, any loss that is proven only through a profit and loss calculation is not covered. However, such books, ledgers and inventory records may be used to substantiate the amount of a loss that can be substantiated in another manner.

d. The Voluntary Parting with Title to or Possession of Property exclusion is eliminated. However, since credit cards are often used in such transactions, coverage is still barred via the Credit Card Transactions exclusion (05 06 change).

5. The following exclusion applies to Insuring Agreement A. 7: Funds Transfer Fraud.

Loss when a computer fraudulently transfers money, securities or other property is not covered. Coverage for this exposure is available under Insuring Agreement A.6, Computer Fraud.

E. CONDITIONS

1. Conditions Applicable to All Insuring Agreements

The Cancellation as to Any Employee exclusion is eliminated from this section and moved to Conditions that apply to Insurance Agreement A.1 only (05 06 change).

a. Additional Premises or Employees (05 06 addition)

When a named insured adds employees and/or premises, coverage automatically applies without an additional premium charge during that policy term. The only exception is when the new premises or employees are the result of a consolidation, merger or acquisition. Refer to the consolidation, merger or acquisition condition below for additional information.

b. Concealment, Misrepresentation or Fraud

Any fraudulent act committed by the insured voids coverage. Intentional concealment or misrepresentation of a material fact about the property covered, any claim, or the insured's interest in the covered property also voids coverage. Voiding coverage includes existing claims as well as future claims.

c. Consolidation–Merger or Acquisition (05 06 change)

When the named insured merges, consolidates or acquires another entity, the insurance company must be notified as soon as possible. This notice must be written and the insurance company must provide their consent for coverage. The insurance company may require additional premium.

Automatic coverage applies for 90 days for the premises, assets or liabilities of the other entity and its employees. There is no coverage after 90 days unless the insurance company adds it to the policy. The only losses covered are those that occur AFTER the date of consolidation, merger or acquisition.

d. Cooperation (05 06 addition)

The named insured must be cooperative and work with the insurance company. The terms and conditions in the policy establish that required cooperation.

e. Duties in the Event of Loss

· If illegal activity is involved or suspected, let both the insurance company and the police know about the loss as soon as possible. The police do not need to be notified if the loss involves employee theft or alteration or forgery.

· Submit to an examination under oath and sign a statement. This is required when requested by the insurance company.

· Provide any records considered pertinent to the loss to the insurance company so it can examine them as needed (05 06 addition).

· Provide a detailed, sworn proof of loss within 120 days after the date of loss. This is longer than in most policies, because of the extraordinarily long amount of time that may be needed to work through a complicated employee theft scheme or other fraud, and where trails of money or computer fraud are involved.

· Cooperate with the insurance company in the investigation and claim settlement.

f. Employee Benefit Plans

Insuring Agreement A.1, Employee Theft coverage applies to the employee benefit plans listed on the declarations. This is not employment practices legal liability coverage that covers such things as forgetting to enroll an employee during the open enrollment period. Employee benefit plans coverage applies to fraudulent or dishonest acts, such as theft of retirement funds by an employee.

· Only the plans listed on the declarations are covered under Insuring Agreement A.1, Employee Theft.

Example: The Jones Company Retirement Plan is listed on the declarations as covered:

Scenario one: During the policy period, the plan administrator changes but the plan name does not, coverage continues.

Scenario two: The insured starts a separate retirement plan called the 401k Jones Retirement Plan. Since this entity was not added to the declarations there is no coverage for it under this policy.

· For plans that are jointly insured with any other insured plan, the insured is responsible for making sure the limit of insurance is enough to cover the plans as if they were insured separately. This language is included because federal laws require some employee retirement and other benefit plans to carry a specific limit of fidelity coverage. This provision places the responsibility for selecting that limit on the insured and not on the insurance company.

· The insuring agreement A. 1. Is rewritten slightly for this item. The word theft is replaced by the phrase fraudulent or dishonest acts and the phrase money and securities is replaced by the word funds. The word fund is defined in the policy as money and securities.

· If the first named insured is not the same name as the covered employee benefit plan, any loss payment must be held by the insured for the benefit of the plan. In other words, the insured is not permitted to commingle loss payment for the employee benefit plan with any other loss payment.

· If the policy covers two or more employee benefit plans, losses arising out of one occurrence are shared by the funds in the same proportion as the required limit in each plan bears to the total limit required for all plans which share the loss. Any payment due is made directly to the plan or plans sustaining the loss (05 06 addition).

Example: A loss of $100,000 is suffered by three plans that share coverage under the same crime policy. Covered Plan A requires a limit of $500,000, Covered Plan B requires a limit of $200,000 and Covered Plan C requires a limit of $50,000. The policy limit is $1,000,000. The policy reimburses Plan A 500/750 of the loss, Plan B 200/750 of the loss and Plan C 50/750 of the loss.

· No deductible applies to employee benefit plan coverage

g. Extended Period to Discover Loss

Losses must occur prior to the cancellation date of coverage but may be discovered:

· Within one year from the date of cancellation. However, if another policy covering the same loss was purchased to replace the insurance under this policy, the extended period of discovery ends immediately.

Example: Peggy had no idea that employees were skimming money from the cash registers. Her crime policy expired on January 1, 2012 and was not renewed. She discovered the loss on June 10, 2012. The loss is covered if the employees began stealing the money from the cash registers before January 1, 2012.

· Within one year from the date of cancellation if the coverage applies to employee benefits plan. There is no exception.

h. Joint Insured

· The first named insured acts for all other insureds, unless excluded, deleted or, for some reason, is ineligible for coverage. In that case, the next named insured listed becomes the first named insured. The first named insured is responsible for premium payments and receives all notices issued by the insurance company, such as cancellation notices.

Example: The named insured reads John Wilson, Wilson, Inc., Wilson, LLC and Wilson, Johnson and Miles. As the first named insured, John Wilson is responsible for paying the premium. He does not pay and, because he is the first named insured, he receives the cancellation notice. He does not notify any of the other entities that the coverage is cancelled. Afterwards, when a loss occurs, the other named insureds have no recourse against the insurance company because the first named insured had been notified.

· Knowledge by one insured of anything affecting the insurance coverage is considered to be knowledge held by all insureds. This is an important point because not all insureds on the policy may be wholly owned by the first named insured. They may be partnerships or corporations involving significant outside ownership.

Example: Prior to the policy cancellation, John Wilson lets Wilson, Johnson and Miles hire Millie, one of his employees. John forgets to tell Wilson, Johnson and Miles that Millie has a criminal record. Since all named insureds are considered to know what each of the others knows, any employee theft losses involving Millie are excluded.

· An employee of one insured is an employee of all insureds.

· The extended period to discover loss condition applies separately to each insured.

Example: John Wilson does not purchase any replacement coverage so he has a one-year extended loss discovery period. Once the other named insureds realized the policy had been canceled, they bought additional coverage. Their extended period to discover loss ends on the effective date of the new coverage.

· The limit of insurance applies to all insureds. A separate limit does not apply to each insured.

Example: All three named insureds shared a single bookkeeper. When she didn’t return from her vacation, it was discovered that all accounts had been emptied. John Wilson sustains a $100,000 loss, Wilson, Johnson and Miles has a $75,000 loss and Wilson LLC has a $50,000 loss from this single occurrence. The insurance company will pay only a total of $100,000 (its stated policy limit).

· When the insurance company pays the first named insured for a loss, the claim is satisfied for all named insureds. The one exception is employee benefit plans, which must receive a separate settlement (05 06 addition).

Example: The insurance company pays John Wilson the $100,000 loss. He takes the payment and leaves town. The other two named insureds are left with no payment and no recourse except against John Wilson’s assets.

i. Legal Action Against Us

As with most policies, no insured can pursue legal action until that insured has complied with all the policy terms. An insured must wait up to 90 days after filing a proof of loss and any lawsuit must be filed within two years of the date the insured discovered the loss, not the date the loss was filed. If a state law or local statute requires different time periods, the policy is amended or conformed to comply with those requirements.

j. Liberalization

If the insurance company broadens coverage without making an additional premium charge during the policy period or within 45 days before the start of the policy period, the broadened coverage applies.

k. Loss Sustained During Prior Insurance Issued by Us or Any Affiliate

Note: The Loss Covered Under This Insurance and Prior Insurance Issued by Us or Any Affiliate condition is removed and replaced by wording in Section B, Limit of Insurance (05 06 change).

A person or persons may perform numerous dishonest acts over a period of years before being caught, but all such acts are considered one occurrence. If the insured maintains continuous coverage with the same insurer or group of insurance companies, coverage applies back to the inception date of the continuous coverage. However, the policy limits do not accumulate because of the multiple years. Instead, the highest limit available during the total period is available to settle the total loss over the years in which they occurred. Because of some confusion and court cases, such as Auto Lenders Acc Ace. Corp. v Gentilini Ford, Inc., 181 N.J. 245, 854 A.2d 378 2004, the condition now has three parts and includes three examples.

· If a loss is sustained in part during the current insurance and in part during prior policies and there was no break in coverage, the loss in the current policy period is settled first and the losses in the prior periods are then settled.

· If a loss is sustained entirely during a previous policy period, there was no break in coverage between the date of loss and the current policy, and the current policy covers the loss, the insurance company settles the loss under the most recent previous insurance first and then settles the remaining amounts during previous insurance.

· Any settlement is made as follows:

o The highest single limit of insurance available during any policy period when the loss occurred is available for the loss.

o No settlement is paid until the deductible that applies under the current policy is satisfied. That deductible is the only one applied to the entire loss settlement, regardless of the number of policy periods involved.

Note: While the language in this condition is lengthier than what existed in previous form editions, the intent is unchanged.

Examples:

An employee has been stealing from Below Ground Enterprises for three years. The insured discovers the loss this year and calculates the amount at $100,000.

Scenario one: The limit of insurance on the current policy is $100,000 but was only $25,000 three years ago. The loss payment is $100,000.

Scenario two: The limit was reduced two years ago from $100,000 to $25,000. The insured is still eligible for the $100,000 loss payment because the limit of insurance at the time of the occurrence was $100,000.

Example: Alice stole $50,000 two years ago, $20,000 last year and $30,000 this year (total theft of $100,000). Alice’s employer maintained a $50,000 coverage limit in each of these three years. These limits cannot be added together even though the dishonest acts took place during each of these years. Why, because this provision treats the series of thefts as a single occurrence. The maximum limit available for this one occurrence is $50,000.

l. Loss Sustained During Prior Insurance Not Issued by Us or Any Affiliate

This condition applies only if there was no lapse in coverage between the current coverage and the previous coverage. Even a one-day lapse in coverage nullifies this important benefit. If a loss sustained in a previous policy term is discovered after the end of that policy's discovery period, coverage applies under the current policy if both the old and new policy have the same coverage and one immediately replaces the other. The limit of insurance available is the lesser of the two policy limits.

Example: Number One, Inc. moved its coverage from STU Accident and Casualty Insurance Company to the ABC Indemnity Company. It had been with STU for five years. Number One discovered a loss that occurred during the STU policy but after the discovery period expired. ABC Indemnity covers the loss for either the limit of insurance under the STU policy or the limit under their policy, whichever is less.

The coverage available under this condition cannot be combined with the coverage available under Condition k. to increase the insurance limits. The limits under Condition k. are taken into consideration with the limits of the previous company and the lesser is the one chosen.

The important distinction is that if coverage stays with one company or group, the highest limit is used to settle claims. If coverage moves between companies, the lowest limit is used to settle claims. This creates a significant coverage gap if an insured changes insurance companies.

m. Other Insurance

This condition was rewritten with the 05 06 edition, apparently to clarify its intent.

· Primary Insurance

If other insurance is written under the same terms and conditions as this insurance, the policies will share any loss proportionally. If the other insurance is not written under the same terms and conditions, this coverage is excess. It pays only after the loss exceeds the limit of insurance under the other policy or the deductible under this insurance, whichever is higher. The ability of the insured to collect the other coverage does not enter into consideration.

Example: Hershel changes insurance carriers. Because of the terms of the cancellation and non-renewal conditions, the two package policies overlap by two days. A holdup occurs at his business on one of those overlapping days.

Scenario one: The two crime coverages are identical, each contributes equally.

Scenario two: One of the package policies has an automatic property extension endorsement that provides holdup coverage with a $2,500 limit. The policy with the extension is primary and the crime coverages are excess.

· Excess insurance

If this insurance is excess over other coverage, this coverage only pays after the limit and deductible of the other coverage is exhausted, whether it is collectible or not. If a deductible applies to this coverage, the deductible amount is reduced by the amount of the underlying coverage and the underlying deductible. This means the insured does not have to jump the hurdle of both the deductible and the underlying limits.

Example: Continuing the example above, each of the two crime coverages had a $2,500 deductible. Since the property extension had a $2,500 limit, the deductible was satisfied and the crime coverages paid the remaining loss, subject to the limit of insurance condition.

n. Ownership of Property; Interests Covered

Property covered includes owned property, leased property and property held for others.

Note: This is an important change! The prior edition’s exception that no coverage applies to property inside the client’s premises and the requirement that the insured be legally liable for the property of others to be eligible for coverage were removed (05 06 change).

o. Records

The insured must have records available that substantiate any loss reported.

p. Recoveries (05 06 change)

An important change in the 05 06 edition is that the hierarchy of the recovery is made explicit.

Recoveries minus recovery expenses are returned in the following manner:

· The insured is paid for the amount of loss in excess of the insurance settlement received.

· Next, the insurance company is compensated for its loss payment to the insured.

· Next, the insured is paid its deductible.

· If any recovery money is left, the insured is paid for losses that were not covered by this insurance.

Recoveries do not include reinsurance recoveries by the insurance company or the cost of original securities if duplicates have been issued.

q. Territory

The United States, its territories and possessions, Puerto Rico and Canada constitute the covered territory. Exceptions apply for Insuring Agreements A.1, A.2 and A.6 as outlined below.

r. Transfer of Your Rights of Recovery Against Others to Us

The insured cannot waive subrogation rights for any reason. In most property insurance policies, the insured can waive rights of subrogation in writing before the loss, but this option is not available in the crime policy.

s. Valuation–Settlement (05 06 change)

(1) The following establishes how losses are valued under this policy:

(a) Money is valued at its face value. If the money is foreign currency, it can be replaced for the face value of that country’s currency or the equivalent in U.S. dollars. The equivalent value will be based on the exchange rate or value published in the Wall Street Journal on the day the loss was discovered.

(b) Securities are valued at their price at the close of business on the day the loss was discovered. The insurance company has two options. Securities can be replaced in kind or with cash. If replaced, the insured must sign over all rights to the lost securities to the insurance company. The second option is that the insurance company will pay for the cost of a lost securities bond in order to have duplicates of the securities issued. The cost cannot exceed the market value of the securities as of the close of the business day on which the loss was discovered or the limit of insurance, whichever is less.

· The amount it would cost to replace the item was similar items

· The actual amount the named insured spent to repair the Items

· The limit of insurance on the declarations

The damage must be repaired or replaced promptly. If it is not, the insurance company pays only the actual cash value of the covered property.

(2) Property other than money can be paid for in either the currency of the country where the loss occurred or the equivalent in United States dollars. The equivalent value will be based on the exchange rate or value published in the Wall Street Journal on the day the loss was discovered.

(3) Any property the insurance company replaces or pays for becomes the property of the insurance company.

Note: The reference to policy limits was removed in this edition.

2. Conditions Applicable to Insuring Agreement A.1: Employee Theft

a. Termination as to Any Employee (moved here from Conditions Applying to All Insuring Agreements) (05 06 addition).

This insuring agreement can cease to apply to any employee. The time and the manner in which this is done depend on the circumstances.

· As soon as the named insured, partners, members, managers, officers, directors or trustees learn that an employee has committed a dishonest act, all coverage for that employee ends. It does not matter if the dishonest act happened before or after the employee joined the named insured’s business. The only exception is if one of the named groups of company representatives was in collusion with the employee and concealed the dishonest act of the employee in order to further his or her own dishonest plans.

Example: Sherry is watching a rerun of a reality crime show and is shocked to see the on-screen arrest of Jackie, who she had hired six months earlier and was considered trustworthy. Sherry decided not to share this information with her business partners. Two months later, Jackie disappears along with half of the company inventory. During examination it is discovered that Sherry had knowledge of Jackie’s past so coverage is denied.

· The insurance company can terminate coverage for an employee by mailing notice to the named insured at least 30 days before the date that cancellation takes effect.

b. Territory

Losses caused by employees located temporarily outside the United States, its territories and possessions or Canada are covered. However, it is limited to the employee being outside United States for only up to 90 consecutive days. This coverage does not apply to employees permanently relocating to another country.

3. Conditions Applicable to Insuring Agreement A.2: Forgery and Alteration

a. Deductible Amount

No deductible applies to legal expenses.

b. Electronic and Mechanical Signatures

Electronic, mechanical or other similar means of duplicating signatures are acceptable and considered the same as handwritten signatures. However, coverage does not apply for electronic signatures that do not produce a visible handwritten signature but that are used in electronic commerce to verify the sender and the sender’s intent.

c. Proof of Loss

The instrument involved with the loss, such as the check, must be attached to the proof of loss. If the instrument cannot be provided, an affidavit describing the cause and amount of loss must be provided in its place.

d. Territory

The territory condition does not apply to this insuring agreement since coverage applies anywhere in the world.

4. Conditions Applicable to Insuring Agreement A.4: Inside the Premises–Robbery or Safe Burglary of Other Property and Insuring Agreement A.5: Outside the Premises

a. Armored Motor Vehicle Companies

If a contract is in place that allows for recovery from the armored vehicle company directly or from its insurance company, this policy is excess over the recovery amount.

b. Special Limit of Insurance for Specified Property

The maximum amount available in any one occurrence for loss of precious metals, precious or semiprecious stones, pearls, furs or fur articles is $5,000. Fur includes expensive minks or inexpensive rabbit. This includes articles, whether complete or not, whose principal value is derived from the fur, precious metals or precious stones. This limit also applies to manuscripts, drawings or any kind of records, the cost of reconstructing them or reproducing any information in them.

5. Conditions Applicable to Insuring Agreement A.6: Computer Fraud

a. Special Limit of Insurance for Specified Property

The most paid in a single occurrence of damage or loss to manuscripts, drawings or records is $5000. This amount includes the cost of reconstruction or reproduction.

b. Territory

The policy territory is worldwide.

F. DEFINITIONS

These definitions apply to all crime insuring agreements.

1. Banking premises refers to the interior of a bank or a similar safe depository. Does it include the vestibule or entrance hall at the bank where the ATM machine is located? At a main branch, does it extend to the entire premises, including the securities division and the insurance agency? Banking premises do not include a stock brokerage or other financial institution, except a banking institution or similar safe depository. In the current era of financial services reform, more combination financial institutions may develop. The premises may house a bank branch in one area and other functions, such as insurance, stocks and bonds sales and administration, in other areas of the building. In that situation, would the entire financial institution be classified as a bank? The policy language is not clear. The interior of a bank may be best defined by the federal or state laws that apply to the banking institution where the covered loss occurs.

The definition of Client is removed in the 05 06 edition.

2. Counterfeit money is a money imitation designed to deceive and be accepted as real money (05 06 change).

3. Custodian means the named insured and any partner, member or employee having custody of property INSIDE the premises. It does not mean anyone acting as a watchperson or as a janitor. Watchperson is defined as someone hired to watch. An employee working late and responsible for locking up when leaving is not a watchperson. Janitor is not defined; therefore, a person hired to perform duties such as cleaning or light maintenance would be the common understanding of the term.

Example: Becky is a very conscientious administrative assistant. Once she came in on a Sunday night to clean up the company conference room so that it was ready for a Monday morning partners meeting. Even though she was performing janitorial type duties she was still considered a custodian, not a janitor, because her job function is that of an administrative assistant.

4. Discover or discovered (05 06 addition) refers to when the named insured has enough information to reasonably think that a covered loss has occurred or will happen soon. There is no requirement concerning having knowledge of specific details, such as the time or location of a loss.

It also means the time when the named insured receives notice of an actual or potential claim which involves an insured being held liable to another party for a loss that may be eligible under this insurance policy.

This definition’s paragraphs may cause confusion. Under the first paragraph, how does one determine when enough information exists to prompt a reasonable person to get an insurance company involved? The second paragraph refers to “notice” but does not define the word. The result is that interpreting the matter could lead to litigation.

5. Employee:

a. Employees ARE:

· Natural persons employed by the insured and for up to 30 days after termination of employment. This time period does not apply to any employee terminated due to his or her dishonest acts (05 06 addition). The person must be compensated directly by salary, wages or commissions and the insured must have the right to direct or control the activities of the person. The difference between employees and independent contractors can be vague and is somewhat fluid. Recent employment cases have scrutinized long-term independent contracts to determine whether individuals are truly independent or are de facto employees. Each situation is different and requires expert legal advice to determine whether these persons should be considered as employees or not.

Example: Kent fires employee Bob. On Bob’s last day at work, Kent collects his keys and other items as Bob removes his personal items. However, Bob made and kept a duplicate key. Two weeks after being fired, he uses this key to steal merchandise from Kent’s warehouse. Bob is an employee under the definition and Insuring Agreement A.1 Employee Theft provides coverage for his actions.

· Temporary employees are employees if they are hired to meet seasonal or short-term workloads or to substitute for permanent employees on leave. Insurance coverage does not apply when temporary employees have custody of property OUTSIDE the insured premises. They would not be covered as a messenger or even when operating the outside cash register during a sidewalk sale.

· Leased employees are employees. There must be a written agreement between the insured and a labor-leasing firm for the leased employee to perform duties related to the insured’s business. A leased employee is not a temporary employee as described above.

· Trustees and officers of the employee benefit plan, as well as the plan employees, are employees. Third-party administrators or other independent contractors hired to administer covered employee benefit plan(s) are not employees. Directors or trustees of the named insured plans are considered employees while handling funds and other property that belong to the plan. A plan director may have administrative duties relating only to the plan but have nothing else to do with the insured’s business.

· A former employee, director, partner, member, manager, representative or trustee used as a consultant is an employee.

· Guest students or interns pursuing studies or duties are employees, unless they have care and custody of the insured’s property outside the covered premises.

· Employees of merged or consolidated entities are employees, provided the merger or consolidation occurred before the effective date of the current policy (05 06 addition).

· Managers, directors or trustees are employees when performing duties usual to those of an employee or when serving on a committee at the request of the board of directors or board of trustees. A director is not an employee when sitting in board meetings or doing director tasks (05 06 change).

b. Employees ARE NOT agents, brokers, factors, commission merchants, consignees, independent contractors or other similar parties and others not specifically mentioned as employees (05 06 change).

6. Employee benefit plan means any welfare or pension plan subject to the Employee Retirement Income Security Act of 1974 (ERISA). Insurable plans include defined benefit pension, target benefit, profit sharing, 401(k), Keogh, Simplified Employee Pension (SEP) Plans, group health, life, disability, unemployment and cafeteria (Section 125) plans and prepaid legal services. Government plans such as Social Security are not included.

Note: This definition is much more restrictive compared to the same term used in liability coverage forms.

7. Forgery is the signing of someone else’s name with the intent to deceive. However, forgery does not apply when the insured or an employee signs something, using his or her own signature, for which he or she has no signature authority.

8. Fraudulent instruction means any of three different things:

· An electronic, telegraphic, cable, teletype, telefacsimile or telephone instruction supposedly transmitted by the insured but actually transmitted by someone else without the insured’s knowledge.

· A written instruction issued by the insured which is forged or altered by someone without the insured’s knowledge or consent.

· An electronic, telegraphic, cable, teletype, fax, telephone or written instruction initially received by the insured, supposedly transmitted by an employee, but sent by someone else without the insured’s or the employee’s knowledge or consent.

9. Funds are money and securities and are usually associated with an employee benefit plan.

10. Manager is a person who is a director of a limited liability company. Manager is not the typical employee with supervisory responsibilities. That person would be considered an employee.

11. Member is an owner of a limited liability company. A member may also be a manager.

12. Messenger is the named insured, the named insured’s relatives, partners, members or any employee having care and custody of the property outside the premises. If the named insured is either an individual or a partnership, a relative is considered a messenger when having custody of property outside the premises. If the business is a corporation, it does not have relatives.

13. Money is currency, coin or bank notes in current use with a face value. Money also means traveler’s checks, register checks and money orders held for sale. Register checks are no longer used in the banking industry but the term remains. Cashier’s checks are NOT considered money.

14. Occurrence

This definition is significantly expanded in the 05 06 edition. The coverage intent is the same but wording has been added to clarify the intent due to ambiguities cited in Auto Lenders Acceptance Corporation v. Gentilini Ford, Inc. 181 N.J. 245, 854 A 2.d 378 2004. The major change is that the emphasis is on the individual committing the act instead of the act itself. The defined occurrence must take place during the policy period or in the period defined in Condition E.1.k or Condition E.1.l.

Under Insuring Agreement A.1, Employee Theft, an act or acts committed by an employee acting alone or with other persons is an occurrence. The act or acts can be by an individual, the combined total of several related or unrelated acts or a series of related or unrelated acts.

Examples:

Five employees work together to skim money at different times and by different means from their company’s accounts. This is treated as a single occurrence.

Five employees who do not know of each other’s plans or what they are doing skim money at different times and by different means from their company’s accounts. This is treated as five different occurrences.

Under Insuring Agreement A.2, Forgery or Alteration, forgery of one or more instruments committed by a person acting alone or with other persons is an occurrence. The act or acts can be by an individual, the combined total of several related or unrelated acts or a series of related or unrelated acts.

Under all other insuring agreements, an act or acts committed by a single person or with other persons is an occurrence. The act or acts can be by an individual, the combined total of several related or unrelated acts or a series of related or unrelated acts. This also includes an act or acts not committed by ANY person.

Example: A theft ring is never identified but evidence shows it has been at work in the insured’s plant for five months and has stolen hundreds of different products. This constitutes one occurrence.

15. Other property must have intrinsic or inherent value, cannot be money or securities and must not be property otherwise excluded. It does not include computer programs, electronic data or specifically excluded property (05 06 addition).

16. Premises are the interior PORTION of the building occupied by the insured and used to conduct its business. What portion of the building is occupied when the insured is a tenant in a mall with an interior corridor or the insured operates with a pushcart or kiosk in the mall? What about the storage locker located in a separate part of the mall? The lease would be the starting point to determine the meaning of premises in these situations.

17. Robbery is the unlawful taking of covered property from someone having custody of it and where actual bodily harm or threat of bodily harm is involved. It can also be an obviously unlawful act witnessed by the person having custody of the covered property.

Example: A customer in a store is observed shoplifting at the end of the aisle and security is called. Until and unless that customer threatens or harms an employee, a robbery has not taken place.

Example: An employee is taking a package of product from one store to another. When the employee is stopped at a stop sign, a pedestrian reaches into the vehicle and steals the package. This is a robbery because the employee witnessed it being removed.

18. Safe burglary requires evidence of forcible entry into or the removal of the entire safe or vault from the premises.

19. Securities include negotiable and nonnegotiable instruments that represent money or property. Some securities may represent commodities, such as grain or coal. Securities also include tokens, tickets, revenue and other stamps, including stamps in a postage meter. Securities can also be evidence of debt related to credit or charge cards but only if the evidence of debt is against a card not issued to the insured.

20. Theft is the unlawful taking of any covered property. The theft must result in deprivation or loss of the insured. If the item stolen has no value, there is no theft according to this definition.

Example: Manny’s Book Publishing set aside 3000 books. The plan was to take the books to a recycling center. Phyllis, an inventory clerk, took the books placed them in her van and sold them on Ebay. Phyllis action is not considered theft under this definition because Manny suffered no deprivation.

21. Transfer account is an account maintained by the named insured at a financial institution from which funds may be transferred, paid or delivered by means of electronic, telegraphic, cable, teletype, telephone or fax instructions. This is done through an electronic funds transfer system or by written instructions that permit certain types of electronic transfers to be completed.

22. Watchperson is a person retained specifically to have care and custody of property INSIDE the premises and having no other duties. If the insured hires a watchperson who also patrols the grounds, this person does not meet the definitions of watchperson for the purposes of this insurance.

CR 00 20–COMMERCIAL CRIME COVERAGE FORM (DISCOVERY FORM)

This analysis addresses only the parts of the discovery coverage form that are different than the loss sustained coverage form. This includes the following sections:

A. Insuring Agreements
E. Conditions (Extended Period To Discover Loss)
E. Conditions (Loss Sustained During Prior Insurance Issued By Us Or Any Affiliate)
E. Conditions (Loss Sustained During Prior Insurance Not Issued By Us Or Any Affiliate)
E. Conditions (Policy Bridge–Discovery Replacing Loss Sustained)

Note: It is clear that the HOW, WHAT, WHO, and WHERE aspects of coverage are unchanged. All differences center on the “simple” question of WHEN.

A. Insuring Agreement

This is the major change in this form. Instead of the occurrence taking place during the policy period the occurrence can take place at any time.

Example: Martin discovers that his trusted employee, John, stole equipment from him. The date of the discovery is 12/5/2012. John stole the equipment on 8/3/2010. The current policy period is 10/1/2012 to 10/1/2013.

Scenario one: Martin is covered by CR 00 20. The loss is covered in the current policy period.

Scenario two: Martin is covered by CR 00 21. The loss is not covered in the current policy period unless there has been no break in coverage.

E. Conditions (Extended Period To Discover Loss)

A 60-day period in which to discover loss replaces the one-year provided in the CR 00 210. All other aspects of this condition are identical.

Example: Paula’s commercial crime policy period is 10/1/2012-10/1/2013. She eliminates coverage for crime at the 10/1/2013 termination. Gerald and Nancy had been stealing from her to three years. She discovers this on 6/1/2014.

Scenario one: Paula was covered by CR 00 20. The loss is covered because it was discovered within one year of the policy termination.

Scenario two: Paula was covered by CR 00 21. The loss is not covered because it was discovered more than 60 days after policy termination.

E. Conditions (Loss Sustained During Prior Insurance Issued By Us or Any Affiliate)

E. Conditions (Loss Sustained During Prior Insurance Not Issued By Us or Any Affiliate)

Neither of these conditions are part of the CR 00 21 because there’s no limitation within the CR 00 21 that the occurrence must take place during the policy period. These conditions are used in the CR 0020 because of that limitation.

E. Conditions (Policy Bridge–Discovery Replacing Loss Sustained)

This condition applies only to CR 00 20.

This condition applies only if the discovery-based policy is replacing a loss sustained policy. Furthermore, this condition applies only if the policy being replaced has an extended period of time of cancellation in which to discover a loss. This restriction applies only if the extended period of time did not terminate was the issuance of this policy.

If a loss is discovered within the prior policy’s extended reporting period this policy will pay only in excess of that policy’s limit of insurance plus deductible. However, it will not exceed the difference between that policy’s limit plus deductible and this policy’s limit of insurance.

Example: Marjorie’s discovery-based policy is effective 1/1/2012-1/1/2013. Her prior policy was loss sustained; an extended reporting period of one year; effective 1/1/2011—1/1/2012. She discovers a loss on 3/2/2012

Scenario one: The current limit of insurance is $100,000. The prior limit of insurance was $100,000. Under this scenario Marjorie would be paid entirely under the prior policy limit.

Scenario two: The current limit of insurance is $100,000. The prior limit of insurance was $50,000. Under this scenario Marjorie would collect $50,000 under the prior policy limit and 50,000 under the current limit.

Scenario three: The current limit of insurance is $50,000. The prior limit of insurance was under $100,000. Under this scenario marcher would be paid entirely from the prior limit of insurance.

CR 00 23–COMMERCIAL CRIME COVERAGE FORM (LOSS SUSTAINED POLICY)

This is a monoline policy. The wording of the form is identical to the CR 00 21 except that six conditions from the IL 00 17–Common Conditions are incorporated within the conditions section of the CR 00 21 which results in more conditions and different condition letters but no change in the actual content.

When this policy is issued neither the IL 00 03–Common Policy declarations nor the IL 00 17–Common Conditions are attached. Instead only the CR 00 23 and the CR DS 02–Crime Policy Declarations are needed for a complete policy.

CR 00 22–COMMERCIAL CRIME COVERAGE FORM (DISCOVERY POLICY)

This is a monoline policy. The wording of the form is identical to the CR 0020 except that six conditions from the
IL 00 17–Common Conditions are incorporated within the conditions section of the CR 00 20 which results in more conditions and different condition letters but no change in the actual content.

When this policy is issued neither the IL 00 03–Common Policy declarations nor the IL 00 17–Common Conditions are attached. Instead only the CR 00 22 and the CR DS 02–Crime Policy Declarations are needed for a complete policy.

COMMERCIAL CRIME COVERAGES AVAILABLE ENDORSEMENTS AND THEIR USES (05 06 EDITION)

INTRODUCTION

This list identifies endorsements available to modify the Insurance Services Office (ISO) Commercial Crime Coverage Forms. It is arranged by form number and title and briefly explains the use of each endorsement. It does not include any state specific endorsements, changes or amendments. New endorsements introduced or changed in the 05 06 edition or later are in bold print, as are withdrawn forms.

Note: This section lists but does not otherwise address any of the various ISO Terrorism Endorsements.

A list of forms that can be used with the Commercial Crime Coverage Forms may be useful.

FORM NUMBERING

The ten-digit numbering sequence of ISO forms and endorsements has a very specific meaning.

The first two entries are alphabetical characters that indicate the line of insurance involved. For example, CR denotes Commercial Crime.
The next two digits designate the specific insurance category. Additional detail and information on these categories is in the next section below.
The next two digits are the form or endorsement number within the insurance category.
The last four digits are the edition date of the form or endorsement expressed in month and year format. These digits are not used in this analysis.

Endorsements are grouped in categories according to their purpose as follows:

CR 00	Coverage Forms and Policies
CR 04	Optional Crime and Fidelity Insuring Agreements
CR 07	Terrorism Endorsements
CR 20	Common Crime and Fidelity Endorsements
CR 25	Fidelity Amendatory Endorsements
CR 35	Crime Amendatory Endorsements
CR 45	Kidnap and Ransom Endorsements

COVERAGE FORMS (CR 00)

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)

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)

CR 00 28–Employee Theft and Forgery Policy (Discovery Form)

CR 00 30–Government Employee Theft and Forgery Policy (Discovery Form) (10 10 add)

CR 00 31–Government Employee Theft and Forgery Policy (Loss Sustained Form) (10 10 add)

CR 00 40–Kidnap/Ransom and Extortion Coverage Form

CR 00 41–Kidnap/Ransom and Extortion Policy

OPTIONAL CRIME AND FIDELITY INSURING AGREEMENTS (CR 04)

CR 04 01–Clients’ Property

CR 04 02–Funds Transfer Fraud (Withdrawn)

This optional insuring agreement is now part of the commercial crime coverage form or policy.

CR 04 03–Extortion-Commercial Entities (08 07 change)

CR 04 04–Extortion–Government Entities (08 07 Change)

CR 04 05–Inside the Premises–Theft of Other Property (08 07 change)

CR 04 06–Inside the Premises–Robbery of a Watchperson or Burglary of Other Property (08 07 change)

CR 04 07–Inside the Premises–Robbery of a Custodian or Safe Burglary of Money and Securities (08 07 change)

CR 04 08–Employee Theft–Name or Position Schedule (08 07 change)

CR 04 09–Lessees of Safe Deposit Boxes (08 07 change)

CR 04 10–Securities Deposited With Others (08 07 change)

CR 04 11–Guests’ Property (08 07 change)

CR 04 12–Safe Depository (08 07 change)

CR 04 13–Destruction of Electronic Data or Computer Programs

CR 04 14–Unauthorized Reproduction of Computer Software by Employees

CR 04 15–Identity Fraud Expense (10 10 new)

CR 04 16– Telephone Toll Fraud (10 10 new)

TERRORISM ENDORSEMENTS (CR 07)

CR 07 30–Exclusion of Terrorism

CR 07 31–Exclusion of Terrorism Involving Nuclear, Biological or Chemical Terrorism

CR 07 50–Amendment – Delete Provision Regarding Certain Acts of Terrorism (Applicable to Crime/Fidelity Only)

CR 07 51–Replace Terrorism Provisions (Applicable to Crime/Fidelity Only)

CR 07 52–Conditional Exclusion of Terrorism (Relating to Disposition of Federal Terrorism Risk Insurance Act)

CR 07 53– Conditional Exclusion of Terrorism Involving Nuclear, Biological Or Chemical Terrorism

COMMON CRIME AND FIDELITY ENDORSEMENTS (CR 20 SERIES):

CR 20 01–Policy Change (Discovery Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This is a miscellaneous or general coverage change endorsement used with the Discovery form. Applicable changes are noted on the form.

CR 20 02–Policy Change (Loss Sustained Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This is a miscellaneous or general coverage change endorsement used with the Loss Sustained form. Applicable changes are noted on the form.

CR 20 03–Policy Bridge–Discovery Replacing Loss Sustained (Withdrawn)

Previously used with Commercial and Government Crime and Employee Theft and Forgery

Note: This form was withdrawn with the 05 06 edition because its wording was incorporated into the commercial crime policy or the coverage form.

CR 20 04–Change Extended Period to Discover Loss (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This change endorsement adds extra days to the 60-day time period in which to discover the loss policy condition. The number of days entered in the schedule is added to the 60 automatically provided in the discovery basis coverage forms and policies. The change does not affect the one-year discovery period for employee benefit plan(s).

CR 20 05–Include Retroactive Date (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement restricts coverage to actions that occur after the retroactive date entered on the schedule.

CR 20 06–Include Retroactive Date for Specified Joint Insured (Withdrawn)

Note: This form was withdrawn with the 05 06 forms revision and replaced by form CR 20 05.

CR 20 07–Include Retroactive Date for an Entity Acquired Through Consolidation or Merger (Withdrawn)

Note: This form was withdrawn with the 05 06 forms revision and replaced by form CR 20 05.

CR 20 08–Convert to an Aggregate Limit of Insurance (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement adds an aggregate to the policy. The aggregate amount is to be scheduled on the endorsement. The maximum loss payable in a year is the aggregate limit shown on the endorsement. This is a very restrictive endorsement and should be used judiciously.

CR 20 09–Amend Territorial Limits (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement changes the territory definition in the form by either adding or removing territories.

CR 20 10–Concurrent Insurance (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

When multiple carriers exist, this endorsement is used to schedule the names of the other carriers and the limits of insurance available. The insurance under this policy pays only its portion of the loss as that limit bears to the total amount of insurance.

Example: Company A insures for a $10,000 limit, Company B for a $10,000 limit and Company C (this insurer) for a $20,000 limit. Company C has 50% of the total limits for indemnity in any loss. In the case of a $5,000 claim, Company C pays $2,500 even if Company A and/or B do not respond.

CR 20 11–Coindemnity (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement is used when two or more companies provide coverage for the same insured. The difference between it and the CR 20 10–Concurrent Insurance endorsement outlined above is that a lead or controlling insurance company is selected. This controlling company collects premiums and sends notices of cancellation for the benefit of all the companies. However, the other companies listed on the schedule can cancel their own coverage by notifying both the named insured and the controlling company. Each company pays its portion of the loss as its policy limit bears to the total amount of insurance.

CR 20 12–Binding Arbitration (10 10 change)

In the event of a dispute about the amount of loss that cannot be resolved through any other means, this endorsement permits either party to resolve the issue by demanding binding arbitration.

CR 20 13–Non-Binding Arbitration (10 10 change)

In the event of a loss amount dispute that cannot be resolved through any other means, this endorsement permits either party to demand arbitration in an attempt to resolve the issue.

Note: Parties are NOT bound by any resulting decision.

CR 20 14–Loss Payable (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This is a standard loss payable clause stipulating loss payment involving certain property to be made to a designated outside party.

CR 20 15–Joint Loss Payable (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This is a standard loss payable clause stipulating loss payment involving certain described property to be made to the named insured AND to a designated outside party rather than solely to the named insured.

CR 20 16–Provide Notice of Cancellation to Another Entity (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement lists other entities to receive a notice of policy cancellation. Their names and the required number of days’ notice are shown on the endorsement’s schedule. However, if the insurance company fails to provide notice to any listed entity, the cancellation effective date is not delayed. In other words, cancellation still applies if an insurer sends a 10-day notice when the endorsement stated it would provide 90 days. As a result, this endorsement does not guarantee that an insurance company will fulfill the obligation to provide the specified number of days of notice of cancellation.

CR 20 17–Provide Required Notice of Cancellation to Another Entity (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

Unlike CR 20 16–Provide Notice of Cancellation to Another Entity Form, this endorsement requires that the insurance company notify the named entity of cancellation for the notice period shown on the schedule. If the insurance company does not provide the promised notice, the policy remains in force (unless the affected entity consents to an earlier date).

CR 20 18–Include Joint Venture or Partnership as Insured(s) (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This is a restrictive endorsement. The goal is to limit payment to the percentage ownership the named insured has in the named joint venture or partnership. However, the use of the word “you” throughout the endorsement makes it difficult to identify the entity referred to in the form.

CR 20 19–Obligee (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement adds an obligee (one to whom another is bound by a contract or legal agreement) to be protected against losses insured under the policy. A listed obligee must be notified of any policy cancellation and also has the right to request cancellation. The obligee has the same obligations as the named insured concerning knowledge of current and prior dishonest acts by employees. If the obligee is aware of such previous acts, policy coverage does not apply to loss involving that dishonest employee.

CR 20 20–Calculation of Premium (10 10 change)

(Use with CR 00 22, CR 00 23, CR 00 26, CR 00 27, CR 00 28, CR 00 29, CR 00 41)

On continuous policies, or policies with a term longer than one year, this endorsement specifies that on renewal, continuation or the anniversary date, the policy can be re-rated and the premiums recalculated using the rules and rates in effect at that time.

CR 20 21–Exclusion of Certain Computer-Related Losses (10 10 Change)

(Use with CR 00 22, CR 00 23, CR 00 26, CR 00 27, CR 00 28, CR 00 29, CR 00 41)

This endorsement is used to add the Year 2000 (Y2K) type exclusion to crime policies. When the crime coverages are part of a package policy, they are presumed to have the Y2K endorsement included in other policy conditions.

CR 20 22–Include Designated Person Required to Have Knowledge of Loss (Discovery Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

Under the coverage forms and policies, the named insured or “you” must discover or have knowledge of a loss. This form changes the “you” to “designated person” and then lists six different types of persons considered to be designated persons.

CR 20 23– Include Designated Person Required to Have Knowledge of Loss (Sustained Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

CR 20 24–Provide Limited Coverage for Loss Occurring Before Retroactive Date (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement permits different entities to have different retroactive dates and varies in one important aspect from form CR 20 05–Include Retroactive Date. The CR 20 24 provides coverage if an occurrence takes place partly before and partly after the retroactive date while the CR 20 05 requires the occurrence to be entirely after the retroactive date.

CR 20 25–Loss Reporting Threshold (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

The duty to report a loss is revised to apply only once the amount of the loss exceeds a certain percentage of the policy deductible. The percentage is to be shown on the Declarations (but the sample Declarations does not include an area for entering this information).

CR 20 26–Provide Automatic Coverage for Acquired Entities (08 07 new)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

Automatic coverage applies for all mergers when the named insured acquires more than 50% of the voting rights of another entity.

CR 20 27–Provide Varying Deductibles (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement provides flexibility in the size of deductible for specific named insureds and insuring agreements.

CR 20 28–Add Protective Devices or Services (08 07 new)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This replaces CR 35 09–Add Protective Devices. This is a list of devices that must be maintained by the named insured. If they are not functioning, coverage ceases unless the failure is beyond the named insured’s control.

CR 20 29–Changes in Control of the Insured – Notice to the Company (08 07 new)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This restrictive endorsement requires the named insured to notify the company of significant ownership changes. If notification is not provided, coverage ceases.

FIDELITY AMENDATORY ENDORSEMENTS (CR 25 SERIES)

CR 25 01–Exclude Designated Persons or Classes of Persons as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement is used to exclude specific individuals or classes of persons appearing on the schedule.

CR 25 02–Include Designated Agents as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

Agents are excluded as employees for all coverages in the unendorsed policy. This endorsement includes agents designated on the schedule as employees for theft losses.

Example: Milky, Inc. schedules Carbonate, Inc., a manufacturer’s representative, to its crime coverage for theft coverages using CR 25 02–Include Designated Agents as Employees. Since Carbonate Inc.'s form of business is that of a company, all officers and employees of the company are considered one employee for occurrence purposes.

CR 25 03–Include Partners as Employees (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement adds partners as employees for theft coverage but the coverage is limited. Any loss caused by the insured partner-employee must be more than the sum of:

· Any amounts the named insured owes the partner;

· The value of the partner's interest on the day the loss is discovered; and

· The applicable deductible.

In other words, it is not stealing if the partner takes what he or she is entitled to from the partnership. However, if the partner steals property belonging to other partners and the value of that property exceeds the deductible, the loss is paid.

CR 25 04–Include Members of a Limited Liability Company as Employees (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement adds members of a Limited Liability Company (LLC) as employees for theft coverage but the coverage is limited. Any loss caused by the insured member-employee must be more than the sum of:

Any amounts the named insured owes the member;
The value of the member’s interest on the day the loss is discovered; and
The applicable deductible.

In other words, it is not stealing if the member takes what he or she is entitled to from the LLC. However, if the member steals property belonging to other members and the value of that property exceeds the deductible, the loss is paid.

CR 25 05–Include Leased Workers as Employees

Note: Withdrawn with the 07 02 form revision.

CR 25 06–Include Chairpersons and Members of Specified Committees as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

If a committee is listed on this endorsement, the chairperson and all members of that committee are considered employees under the crime coverage when performing the work of the committee.

CR 25 07–Include Specified Directors or Trustees on Committees as Employees

Note: Withdrawn with the 07 02 form revision.

CR 25 08–Include Specified Non-Compensated Officers as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement allows the chairman emeritus, honorary officers of city boards and others in similar or related capacities to be named on the schedule and covered as employees on the policy.

CR 25 09–Include Volunteer Workers as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

When this endorsement is added to the policy, volunteers are covered on a blanket basis and treated as employees.

CR 25 10–Include Volunteer Workers Other Than Fund Solicitors as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement includes and treats all volunteers, except for fund solicitors, as employees and covers them on a blanket basis.

CR 25 11–Include the Spouse and Children of Building Manager, Superintendent or Janitor as Employees

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement includes as employees the spouse and any child of the janitor or superintendent over the age of 18. Because coverage is provided on a blanket basis, no schedule is required. The spouse and children are considered as a unit for all terms of the policy except for the Termination of Any Employee Condition. This means that a child may be terminated from coverage due to dishonest acts while the spouse and other children remain as employees under this endorsement.

CR 25 12–Include Treasurers or Tax Collectors as Employees (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement replaces the tax and tax collectors exclusion in the policy. If a treasurer or tax collector is listed in the schedule, he or she is covered as an employee. This endorsement is name specific. This means that if a treasurer is replaced for any reason, there is no coverage for the new treasurer until listed on the endorsement.

CR 25 13–Include Students as Employees (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement includes students enrolled in a school of this government’s jurisdiction that handle funds and property in connection with sanctioned school activities as covered employees. For example, this would apply to children collecting money for the band trip to the Rose Bowl. The endorsement does not apply to, and is not available for, similar private institutions, such as schools.

CR 25 14–Include Officers and Employees of Federal Reserve Bank Acting as EFTS Agent as Employees (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29) This endorsement adds officers and employees of a Federal Reserve Bank as employees only when acting as the named insured’s agent for electronic funds transfers (EFT). These parties are employees only when performing services on behalf of the named insured or having care or custody of the named insured's covered property.

CR 25 15–Amend Definition of Employee to Comply with Labor-Management Reporting and Disclosure Act of 1959 (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement expands the definition of employee to include non-compensated officers, non-compensated dues collectors, shop stewards and shop chairpersons.

CR 25 16–Add Trading Coverage (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies only to the employee theft insuring agreement and adds trading coverage using a genuine account to the policy. A separate limit of insurance applies to this coverage and is listed on the schedule of insurance. This limit of insurance is not in addition to the limit shown on the declarations.

Example: The crime policy for Fred’s Financial Consulting has a primary Insuring Agreement Limit of Insurance of $60,000 and a separate $25,000 limit for trading. If an employee is involved in both a trading loss and a theft loss, the most paid is $25,000 for the trading loss and up to another $35,000 for the theft loss.

CR 25 17–Add Warehouse Receipts Coverage (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies only to the employee theft insuring agreement. It removes the exclusion that applies to warehouse receipts but only up to the sublimit scheduled on the endorsement.

CR 25 18–Add Faithful Performance of Duty Coverage (10 10 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement. This is blanket coverage and expands coverage to include loss due to the failure of an employee performing his or her job faithfully.

CR 25 19–Add Faithful Performance of Duty Coverage for Government Employees

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

CR 25 20–Add Credit, Debit or Charge Card Forgery (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the Forgery and Alteration insuring agreement. Forgery coverage can either be extended to include credit, debit or charge card forgery or apply only to credit, debit or charge card forgery.

CR 25 21–Add Warehouse Receipts Forgery (08 07 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the Forgery and Alteration insuring agreement. Forgery coverage can either be extended to include warehouse receipts forgery or apply only to warehouse receipts forgery.

CR 25 22–Include Personal Accounts of Specified Persons (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only Forgery and Alteration coverage. A separate limit of insurance applies to each named person. This endorsement is especially useful for sole proprietors having individual accounts, as well as business accounts on which employees may have the ability to write checks. Other parties, such as executives are exposed to losses because their staff members and others familiar with their handwriting might steal their checkbooks and write checks for cash or to themselves.

CR 25 23–Exclude Certain Risks Inherent in Insurance Operations (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It excludes losses associated with the issuance of insurance, indemnity or surety contracts.

CR 25 24–Exclude High-Grading Loss (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It excludes precious metals, stones and ores, or materials containing them, unless received by an authorized employee and deposited in a safe or vault for safekeeping.

CR 25 25–Exclude Unauthorized Advances, Require Annual Audit (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement and is designed primarily for clubs and similar organizations. It excludes losses caused by employees making unauthorized advances of funds for dues or other assessments for any member. This endorsement is unusual because it requires an annual audit of the named insured's books and records as a condition of the coverage provided.

CR 25 26–Rural Utilities Service Borrowing Corporations-Limit Amount of Insurance on Collection Agents (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It provides a sublimit of insurance for an employee acting as a collection agent.

CR 25 27–Rural Utilities Service Joint Insured

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement provides that notice sent to the first named insured is treated as notice given to all insureds. It also provides that any loss payments for all insureds are paid only to the first named insured. Finally, it provides that any knowledge on the part of one insured constitutes knowledge by all insureds, with the exception of a borrowing corporation from the Rural Utilities Service.

CR 25 28–Rural Utilities Services Regulations

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement is used when providing coverage to rural utility companies in order to comply with federal regulations.

CR 25 29–Insured at Military Center (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement provides coverage to a member of the armed services or a department of government that performs duties for a commercial or not-for-profit insured that is not a government entity. It requires a form of binding settlement administered by either a military or government board of officers. If the insurance company disagrees with the result of such a binding settlement, it can request arbitration but must do so within 30 days or it loses that right.

CR 25 30–Banks for Cooperatives and Federal Intermediate Credit Banks (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It meets specific federal requirements and pays specifically named Banks for Cooperatives or Federal Intermediate Credit Banks for the named insured’s losses caused by employee theft. The named insured cannot be a financial institution. Coverage applies and is not voided because of any complicity (involvement as an accomplice) of the named insured in the loss. The discovery period is extended to two years and a separate notice of cancellation applies.

CR 25 31–Add Blanket Excess Limit of Insurance for Specified Joint Insured (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. If one or more of the joint insureds on a policy need higher limits of coverage, this endorsement can be added. The joint insured(s) that need higher limits are listed along with the desired excess amount of insurance.

CR 25 32–Provide Employee Theft Coverage Excess Over a Statutory Bond Requirement (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement applies to only the employee theft insuring agreement. It covers bonded employees, treasurers and tax collectors for losses that exceed the statutory limits required of them by law. If a certain employee has required bond limits that are exceeded by a loss amount, this coverage pays the additional amount subject to either the policy limit or the loss amount (whichever is less).

CR 25 33–Employee Theft-Per Loss Excess over Employee Theft-Per Employee (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement applies to the employee theft insuring agreement. This endorsement explains how the per-loss limit on the policy will apply if the employee theft – per employee limit is not sufficient to satisfy the loss.

CR 25 34–Add Schedule Excess Limit of Insurance for Specified Employees or Positions (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to the employee theft insuring agreement. When attached to the policy, it provides excess coverage, up to a specific limit of insurance, for listed individuals and/or positions. As a result, the blanket policy limit applies to all employees and the limits for the named and listed employees or positions are in addition to the blanket policy limit for all employees. Only the highest limit for a person holding two or more positions covered by the endorsement is paid. In order for this coverage to apply, a covered employee must be identified as the thief.

CR 25 35–Add Schedule Excess Limit of Insurance for Specified Employees or Positions for Employee Theft Only (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

Used by Fraternal Orders and Labor Unions in place of CR 25 34 described above. Only theft by an employee is covered.

CR 25 36–Change Schedule (Discovery Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

Under a discovery form, this endorsement changes a name or position schedule agreement for the employee theft insuring agreement. It includes an explanation of how losses impacted by the changes in this endorsement will be handled from a discovery standpoint.

CR 25 37–Change Schedule (Loss Sustained Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement changes a name or position schedule agreement for the employee theft insuring agreement for the loss sustained form only. It includes an explanation of how losses impacted by the changes in this endorsement will be handled from a loss sustained standpoint.

CR 25 38–Change Schedule Excess Limit of Insurance for Specified Employees or Positions (Discovery Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement changes a name or names in a position excess schedule agreement for the employee theft insuring agreement for the discovery form only. The important part of this endorsement is the explanation of how losses impacted by the changes in this endorsement will be handled from a discovery standpoint.

CR 25 39–Change Schedule Excess Limit of Insurance for Specified Employees or Positions (Loss Sustained Form) (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement changes a name or names in a position excess schedule agreement for the employee theft insuring agreement for the loss sustained form only. The important part of this endorsement is the explanation of how losses impacted by the changes in this endorsement will be handled from a loss sustained standpoint.

CR 25 40–Include Expenses Incurred to Establish Amount of Covered Loss (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to either or both the employee theft and computer fraud insuring agreements. Coverage applies to the cost to hire the services of an accountant to determine the amount of a loss. This endorsement pays the lesser of the limit of insurance entered on the schedule or the percent of the loss entered on the schedule. Any amount paid reduces the limit of insurance available to pay for the entire loss.

Example: The employee dishonesty limit of insurance is $750,000. The Costs, Fee or other Expenses limit is $30,000 or 15% or the actual loss. The employee dishonesty loss is $500,000. The insured is paid the lesser of $75,000 ($500,000 X .15), $30,000, or the actual expenses.

CR 25 41–Include Designated Persons or Classes of Persons as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. When this endorsement is added to the policy, certain individuals or classes of persons can be added as employees. An insured is permitted to include some leased employees while not including others.

CR 25 42–Include Computer Software Contractors as Employees (10 10 change)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. Employees of the listed computer software contractor are included as an employees of an insured using the services of that contractor. All employees of a given computer software contractor are treated as one employee. The limit of insurance on the schedule is a sublimit.

CR 25 43–Add Faithful Performance of Duty Coverage for Specified Government Employees or Positions (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, CR 00 31)

This endorsement applies to only the Employee Theft–Name or Position Schedule insuring agreement. This is blanket coverage for all employees or positions listed. It expands coverage to include loss due to the failure of an employee performing his or her job faithfully.

CR 25 44–ERISA Inflation Guard (10 10 new)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement automatically increases the employee theft limit of insurance for ERISA up to the minimum amount of coverage required under ERISA. Only applies when, at the time of policy issuance, the limit was equal to or greater than the ERISA minimum requirement.

CRIME AMENDATORY ENDORSEMENTS (CR 35 SERIES)

CR 35 01–Exclude Specified Property (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

When this restrictive endorsement is added to the policy, specific property, such as securities, liquor, cigarettes, vending machines, watches and other target commodities and merchandise are excluded from the selected insuring agreement.

CR 35 02–Include Robbery of a Janitor (08 07 Withdrawn)

Note: This form was withdrawn with the 08 07 form revision because the coverage is provided in CR 04 06–Inside the Premises – Robbery of a Watchperson or Burglary of Other Property.

CR 35 03–Include Vandalism (08 07 Withdrawn)

Note: This form was withdrawn with the 08 07 form revision because it was considered unnecessary.

CR 35 04–Increase Limit for Specified Property Subject to Special Limit of Insurance (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

Furs, jewelry and similar goods are covered for a sublimit of only $5,000. This endorsement is used to increase the sublimit for each described or type of property to the limit indicated in the schedule but only for the insuring agreements selected.

CR 35 05–Include Loss During Fire Inside the Premises (08 07 Withdrawn)

Note: This form was withdrawn with the 08 07 form revision because the coverage is part of the CR 04 05–Inside the Premises – Theft of Other Property endorsement.

CR 35 06–Limit Coverage to Office Equipment (08 07 Withdrawn)

Note: This form was withdrawn with the 08 07 form revision because it was not used.

CR 35 07–Include Automotive Products in Outside Containers (11 09 Withdrawn)

Note: This form was withdrawn with the 11 09 change. Consider using CR 35 23 or CR 35 26.

CR 35 08–Limit Coverage to Specified Portion of Premises (11 09 Withdrawn)

Note: This form was withdrawn with the 11 09 change. Consider using CR 35 23 or CR 35 26.

CR 35 09–Add Protective Devices (08 07 Withdrawn)

Note: This form was withdrawn with the 08 07 form revision. CR 20 28–Add Protective Devices of Services can be used in its place.

CR 35 10–Forcible Entry into Premises Requirement (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement can be used with Inside the CR 04 06–Premises–Robbery or Safe Burglary of Other Property and/or CR 04 07–Inside the Premises–Robbery or Safe Burglary of Money and Securities insuring agreements. Forcible entry into the premises is required for safe burglary to be covered. This means that actions by a thief who hides inside, burglarizes the safe and then exits by the front door without leaving any marks are not covered.

CR 35 11–Include Outside Showcases or Show Windows as Premises (11 09 Withdrawn)

This form was withdrawn with the 11 09 change. Consider using CR 35 23 or CR 35 26.

CR 35 12–Convert to Schedule Coverage (11 09 Withdrawn)

This form was withdrawn with the 11 09 change due to lack of use.

CR 35 13–Exclude Designated Premises (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement is used to remove designated premises from the selected insuring agreement(s).

CR 35 14–Reduce Limit of Insurance for Designated Premises (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement is used to reduce the limit of insurance at designated premises for the selected insuring agreement(s).

CR 35 15–Decrease Limit of Insurance While Premises Not Open for Business (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

Some businesses have no money on their premises when they are closed and facilities, such as arenas or stadiums, may be closed for extended periods. In cases like these, limits can be decreased when the business or facility is not open for business. The reduced limit must be shown on the schedule in the space next to the location involved for the selected insuring agreement(s).

CR 35 16–Exclude from Extortion Coverage Persons or Property at Designated Premises (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement applies to only the Extortion insuring agreement. Any location listed is excluded from coverage for threats against people who work there and also for property situated there.

CR 35 17–Include Personal Extortion for Named Individuals (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement applies to only the Extortion insuring agreement. This is an expansion of coverage. Any person listed in this schedule is considered an insured person. The form is typically used to extend insured status to a retired chairperson, former board member, former elected official or another person who would not fall into the categories described in the unendorsed insuring agreement.

CR 35 18–Change Schedule Coverage (11 09 Withdrawn)

This form was withdrawn with the 11 09 change due to lack of use.

CR 35 19–Limit Coverage to Fixtures, Fittings or Appliances or Property in Public Entrances, Hallways or Storerooms (11 09 Withdrawn)

This form was withdrawn with the 11 09 change due to lack of use.

CR 35 20–Add Property of Others (1010 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement can be an expansion of coverage or a limitation. Specific classes of persons must be selected and then an indication made as to whether property of others coverage in the selected insuring agreement includes those persons or is limited to only those persons. The limit of insurance shown is the maximum payable and is a sublimit of the limit of insurance on the declarations.

CR 35 21–Include Theft of Outdoor Signs (11 09 Withdrawn)

This form was withdrawn with the 11 09 change. Consider using CR 35 23 or CR 35 26.

CR 35 22–Require Record of Checks (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement requires that photocopies of each check be made or a complete description of the check maker, payee, bank, check date indicated and amount of the check recorded.

CR 35 23–Extend Definition of Premises to Include Portion of Grounds Enclosed by Fence or Wall (11 09 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement extends coverage to the grounds on which the premises is situated but only the portion that s entirely enclosed by a fence or wall. This endorsement does not address or provide for any openings or gates in the fence or wall.

CR 35 24–Increase Limit of Insurance for Specified Periods (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement increases the limits for various insuring agreements at designated premises for specified periods during the year. It acts in a manner similar to the peak season endorsement in commercial property coverage forms. A covered loss must be discovered before the end of the specified period in order for the increased limits to apply.

CR 35 25–Include Selling Price or Processing Charge (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement changes the valuation terms for goods in the process of being manufactured. The value becomes the cost of the goods plus labor and other costs incurred and included as part of the goods when the loss occurs. Finished goods are valued at their selling price without discounts or any other expenses not incurred. This applies only to the selected insuring agreements.

CR 35 26–Extend Premises to Entire Plot of Ground under Your Control (11 09 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement extends coverage from just a defined premises to the entire plot of ground under the control of the named insured. There is no requirement that the plot of ground be enclosed with walls or fences. This applies only for the selected insuring agreements.

CR 35 27–Include Covered Property in Custody of Designated Agents (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement extends the definition of premises to include an agent’s premises and also extends the definition of messenger to include employees and officers of the agent. The agent must be listed along with its address and a description of what the agent actually does for the named insured. A sublimit is provided. This applies only for the selected insuring agreements.

CR 35 28–Include Guests’ Property Accepted for Safekeeping (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement is appropriate for businesses such as hotels, inns and lodges. It is a very poorly written endorsement and does not explain what coverage is actually provided. A maximum of 10% of the limit of insurance applies per guest. The CR 04 11–Guests’ Property may be more appropriate.

CR 35 29–Include Securities Held by a Depository in Trust (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands coverage provided by CR 04 09–Lessees of Safe Deposit Boxes insuring agreement. It includes specifically listed and described safe deposit boxes held in trust and under dual control with the depository or as a co-fiduciary with the depository.

CR 35 30–Include Bulky Property (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands coverage provided by CR 04 09–Lessees of Safe Deposit Boxes for specifically described property listed on the schedule that are in the vault but not in the safe deposit box. Items that might fit under this endorsement would be devices, manuscripts, paintings and other large or bulky items.

CR 35 31–Provide Sublimits for Money, Securities or Checks (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement provides separate sublimits for money, securities and checks, other than retail checks. The limit of insurance on the endorsement is part of the limit shown on the declarations and not in addition to it.

CR 35 32–Limit Coverage for Money and Securities Outside the Premises to Robbery Only (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This restrictive endorsement applies to only the Outside the Premises insuring agreement and limits coverage for losses to only those involving robbery or attempted robbery.

CR 35 33–Increase Limit of Insurance per Guest (10 10 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement can be used to increase the per guest and per occurrence limits in the CR 04 11–Guests’ Property insuring agreement.

CR 35 34–Include Damage from Food or Liquid (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, CR 00 27)

This endorsement expands coverage under the CR 04 11–Guests’ Property to include coverage for the damage caused by food or drink spills, leaks or upset.

CR 35 35–Include Property in Custody of Laundry or Cleaner (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands CR 04 11–Guests’ Property to covers damage to guest property while in the care and custody of the named insured for laundering or cleaning. It does not extend coverage to the dry-cleaning establishment that received the customer’s clothes from the named insured.

CR 35 36–Include Property of Guests Occupying Leased Lodging Accommodations (08 07 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands CR 04 11–Guests’ Property to covered leased accommodations. Some hotels and other temporary lodging facilities occasionally provide extended lease arrangements for rooms and suites. This endorsement provides coverage for damage to property of such guests as long as the lease does not involve any business use. This form does not apply to any guest who is an employee of the named insured.

CR 35 37–Include Samples or Articles Carried or Held for Sale or Delivery

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands CR 04 11–Guests’ Property to include coverage for samples or property held for sale by guests.

CR 35 38–Include Money for Full or Partial Limit of Insurance

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands CR 04 12–Safe Depository to include money coverage for Robbery of Customers Property – Premises Damage. The limit shown in the schedule is a sublimit.

CR 35 39–Reduce Limit of Insurance for Specified Premises (Withdrawn)

Note: This form was withdrawn with the 08 07 form revision because the change can be made in the schedule of CR 04 12–Safe Depository.

CR 35 40–Safe Deposit Box Transfer

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23)

This endorsement expands CR 04 12–Safe Depository to include coverage while safety deposit boxes are being transferred from one specified location to another. Coverage is limited to time period scheduled on the endorsement.

KIDNAP/RANSOM AND EXTORTION ENDORSEMENTS (CR 45 SERIES)

CR 45 01–Policy Change (08 07 change)

(Use with CR 00 40, CR 00 41)

This endorsement can be used to make a number of different changes to the policy or coverage form.

CR 45 02–Death and Dismemberment (08 07 change)

(Use with CR 00 40, CR 00 41)

This added coverage pays a scheduled amount to the insured person for his or her loss of any limb, hand or foot, sight in both eyes, mutilation or permanent total disability that results from a kidnapping, extortion threat, detention or hijacking. If the person dies, the life benefit is paid to that person’s estate.

CR 45 03–Products Recall Expenses (08 07 change)

(Use with CR 00 40, CR 00 41)

This endorsement adds coverage for specified products recall expenses that are a direct result of an extortion threat to violate the insured’s products or goods. A limit of insurance can be entered on the endorsement.

CR 45 04–Business Income and Extra Expense (08 07 change)

(Use with CR 00 40, CR 00 41)

Loss of business income and extra expenses incurred as a direct result of a covered incident are provided in this endorsement. The amount paid is the lesser of the amount of loss sustained in each 24-hour period immediately following the incident or the limit entered in the schedule. The definition of business income includes payroll in addition to continuing normal operating expenses.

CR 45 05–Amend Territory Condition to Suspend Coverage for Foreign Business Operations (Withdrawn)

Note: This form was withdrawn with the 08 07 forms revision.

GOVERNMENT CRIME COVERAGE FORMS (05 06 EDITION)

BACKGROUND

The coverage provided in the government crime coverage part is similar to the commercial crime coverage part. This analysis addresses only their differences.

The applicable forms reviewed are:

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)

This analysis compares CR 00 25–Government Crime Coverage Form (Loss Sustained Form) to CR 00 21–Commercial Crime Coverage Form (Loss Sustained Form).

DECLARATIONS

The declarations make two options available under employee theft coverage. The insured can purchase coverage on either a per-loss basis or a per-employee basis.

A. INSURING AGREEMENTS

The only coverage difference is the addition of employee theft-per employee coverage.

Insuring Agreement 1, Employee Theft, is renamed Employee Theft–Per Loss Coverage. This coverage is identical to that provided in the commercial crime coverage form.
Insuring Agreement 2, Employee Theft–Per Employee Coverage, is unique to the government crime coverage form. Instead of providing coverage and limits per loss, it provides coverage and limits per employee or position. Specific employees or positions can be insured separately by using form CR 04 08–Employee Theft–Name Schedule or Position Schedule.

B. and C. LIMITS AND DEDUCTIBLES

The Limits and Deductible sections are identical in both forms.

D. EXCLUSIONS

Under exclusion 1. the following subparagraphs are amended. If

The Acts Committed by You, Your Partners or Your Members exclusion is removed and replaced by the Acts Committed by You exclusion because government entities do not have partners or members. All references to partners and members in the exclusion are eliminated.
The Acts of Employees, Managers, Directors, Trustees or Representatives exclusion is removed and replaced by the Acts of Officials, Employees or Representatives exclusion. All references to managers, members, partners, trustees, officers and directors in the exclusion are eliminated because they are not relevant to government entities. The terms officials and representatives are added.

Under exclusion two which applies only to insuring agreements A.1. and A.2. There are two exclusions are added and one is deleted.

The two new exclusions are:

Bonded Employees

No coverage applies to any loss caused by any employee required by law to be bonded.

Note: The exclusion applies whether the employee is actually bonded or not.

Treasurers or Tax Collectors

No coverage applies to any loss caused by a treasurer or tax collector even if the position is not identified as that of a treasurer or a tax collector.

The deleted exclusion is for warehouse receipts.

E. CONDITIONS

Consolidation–Merger or Acquisition

This condition is deleted. This common commercial practice is not a government practice. Also, the reference to mergers and acquisitions in the additional premises or employees condition is eliminated.

Employee Benefits Plans

This condition is revised to be more streamlined and direct because of the differences between commercial and government operations. The commercial version must address multiple benefits plans, joint ventures and multiple named insureds. The government version deals with only one plan and one named insured, so additional and unrelated conditions are deleted. The basic elements of the condition are the same in both cases. This means any payment made is for the benefit of the plan and no deductible applies to any plan losses.

Extended period to discover loss

The employee benefit plan exception is not included.

Joint Insured

This condition is amended to delete “partner” and “member.” In addition, the term “officer” is replaced by the term “official.” Also, the employee benefit plan exception is not included.

Territory

This condition is revised to eliminate Canada from the coverage territory.

Valuation–Settlement

This condition is amended by deleting all reference to countries other than the United States and the valuation of money in those countries.

Indemnification

This condition is added as a condition that applies to insuring agreements A.1 and A.2. Under these insuring agreements, public officials required BY LAW to have individual faithful performance bonds on employees for theft coverage are indemnified, subject to the policy limit.

Special Limit of Insurance for Specified Properties

This condition that applies to insuring agreements A.5 and A.6 is revised by deleting precious metals, stones, furs and similar property from the $5,000 coverage limitation.

DEFINITIONS

The following definitions are not included in the government crime coverage form:

o Employee Benefit Plan

o Manager

o Member

All reference to directors, trustees, partners, members or managers is removed from any policy definition since these terms do not apply to government agencies and entities.
The definition of “occurrence” is identical except for the addition of a section for Insuring Agreement A.2, Employee Theft–Per Employee. The slight change in this definition is very significant. Under Insuring Agreement A.1., an occurrence includes the actions of all employees acting in collusion. Under Insuring Agreement A. 2., an occurrence includes the actions of each employee acting in collusion.

Example: Mary, Paula and John work for a Bureau of Motor Vehicles branch. They decide to keep and evenly split the proceeds of every tenth transaction. Mary becomes ill and leaves. When Paula and John approach her replacement with their scheme, she reports everything to her supervisors. The total loss is determined to be $300,000. If the definition of occurrence is the actions of all employees, there is one occurrence but if the definition of occurrence is the action of each employee, there are three occurrences. This means that if the limit of insurance is $100,000 under Insuring Agreement A.1., the most that can be recovered is $100,000. However, if Insuring Agreement A.2. had been purchased instead, the most that can be recovered is $100,000 per employee or $300,000 for the three employees acting in collusion.

CR 00 40 AND CR 00 41–KIDNAP/RANSOM AND EXTORTION FORM AND POLICY (08 07 EDITION)

NEED

Two different methods are available to arrange kidnap, ransom and extortion coverage. One is through a separate coverage form or policy and the other is through an endorsement attached to the Commercial or Government Crime Coverage forms or policies. This section reviews only the Kidnap/Ransom and Extortion Form and Policy.

Because of their similar formats, this analysis uses references to CR 00 21–Commercial Crime Coverage Form as an aid to understanding.

This analysis is based on the Insurance Services Office (ISO) 08 07 edition. Changes from the previous edition appear in bold print.

ELIGIBILITY

Any commercial entity, other than a financial institution, is eligible for coverage. Most state and local governmental units and entities are also eligible.

POLICY MAKEUP

The Kidnap/Ransom and Extortion Policy consists of two basic parts:

CR DS 07–Kidnap/Ransom and Extortion Declarations;
CR 00 41–Kidnap/Ransom and Extortion Policy

The Kidnap/Ransom and Extortion Coverage Form as part of a package policy consists of four basic forms:

IL DS 00–Common Policy Declarations

IL 00 17–Common Policy Conditions Form. This form contains conditions common to all commercial lines of insurance. It is mandatory on most monoline or multi-line policies.
CR DS 06–Kidnap/Ransom and Extortion Declarations
CR 00 40–Kidnap/Ransom and Extortion Coverage Form

DECLARATIONS

The declarations consist of four different insuring agreements and conditions that apply only to Kidnap/Ransom and Extortion Coverage.

Insuring Agreements, Limits of Insurance and Deductibles

All four insuring agreements are listed. Coverage applies only when a limit of insurance and deductible is entered in the column next to the insuring agreement. The words NOT COVERED should be placed next to any insuring agreement that is NOT selected.

Persons or Classes of Persons Excluded From Coverage:

If certain classes or specific individuals are to be excluded, they must appear in this area.

Name and Address of Security Firm

The security firm to be used to negotiate with kidnappers and attempt to gain the release of any insured kidnapped party, including its full name and address, is listed in this section

Endorsements

This is a list of all endorsements included at policy inception.

Cancellation of Prior Insurance Issued By Us

The previous policy numbers are listed in this section and are automatically cancelled once this coverage takes effect.

The policy declarations are similar to the coverage form declarations except that all common policy declarations information is moved to the Kidnap/Ransom and Extortion Policy declarations.

A. Insuring Agreements

There are four insuring agreements. Coverage is provided only for the ones for which a limit of insurance has been entered on the declarations. The coverage provided is for any sustained loss plus expenses (as defined by this form) due to an occurrence. The occurrence must take place or be taking place during the policy period and be reported to the insurance company either during the policy or the extended reporting period. (08 07 change)

1. Kidnap/Ransom and Extortion–Direct Loss

This insuring agreement provides two coverages:

If the named insured pays a ransom as a direct result of kidnap or alleged kidnap of an insured person, coverage applies for the money, monetary instruments, securities, services or other tangible property used to pay the ransom.
If an extortion threat is communicated to the named insured, coverage applies for the money, monetary instruments, securities, services or other tangible property used to pay for the extortion threat. The communication must threaten one or more of the following:

Bodily harm to a covered person
Damage to the covered premises or property
Harm to the named insured’s computer system by launching a denial of service attack (08 07 addition)
Placement of a virus or other malicious instruction into the named insured’s computer system. The virus must be designed to damage, destroy or corrupt the data stored inside the system;
Damage to the named insured’s product through contamination, pollution or in other ways that renders those products or goods substandard
Release of the named insureds proprietary information. Proprietary information includes formulas, patents, data, processes or other confidential information unique to the named insured’s business. This coverage only applies if the proprietary information has always been concealed and the named insured has made conscious efforts to keep it concealed.

Example: Baxter and his family have produced world famous pickles for over 25 years and the recipe is a secret. Baxter receives a note stating that unless $100,000 in negotiable securities is delivered to a secure location, the pickle recipe will be posted on the Internet. A copy of the recipe is included in the note. Coverage applies because of the proprietary nature of the information.

Release weaknesses within the source code of the named insured’s computer system. (08 07 addition)

2. Kidnap/Ransom and Extortion–Expenses Incurred

This insuring agreement covers the named insured’s expenses that result directly from a kidnap, alleged kidnap or extortion threat if eligible under the Kidnap/Ransom and Extortion–Direct Loss insuring agreement.

Note: In prior editions, the fees and costs of the security firm shown in the declarations were paid in addition to the limits of insurance. This was removed in the 08 07 edition and moved under B. Limit of Insurance. There’s no change in coverage.

Example: Baxter decides he must protect the secret pickle recipe and hires a private investigator to deliver the demanded securities. The expense of the private investigator is covered.

3. Detention or Hijack

This insuring agreement covers the named insured’s expenses resulting directly from the detention or hijack of an insured person.

Example: Phillip is driving a rental car and is parked outside a New Orleans bank when a robbery occurs. The gunman jumps into Phillip’s car and forces him to drive away. The incident ends after three days with the gunman dead, the car destroyed and Phillip in the hospital. Subject to the limit of insurance, the form handles the rental, lost car, Phillips hospitalization, his counseling costs, lost salary and miscellaneous expenses paid to assist Phillip’s family.

4. In-Transit Delivery of Property

This insuring agreement covers loss of the named insured’s property in the care and custody of a messenger, if it involves theft, disappearance, confiscation or destruction of the property while being delivered to comply with a kidnap/ransom request. The messenger can be anyone designated by the named insured to take the property from the insured’s premises and does not necessarily have to be an insured person. The property can be in the form of money, monetary instruments, securities, services or other tangible property.

Example: Baxter hires a private investigator to deliver the securities to the extortionist who threatened to publicize the family’s secret pickle recipe. As the delivery takes place, the police move in and apprehend the perpetrator. During the scuffle, the briefcase flies open and the contents are blown away. The securities are covered, up to the limit of insurance.

B. Limit of Insurance

Limits of insurance are shown on the declarations for each covered insuring agreement. Fees and costs for the security firm shown on the declarations are payable in addition to the limit of insurance shown for the Kidnap/Ransom and Extortion–Expenses Incurred and the Detention or Hijack insuring agreements. This means that if a security firm is employed in advance and is shown on the declarations, its fees and services are covered outside the limits stated in the policy. However, the expenses are part of the limits of insurance if a security firm is employed at the time the incident occurs and is not listed on the declarations.

Example: The limit for insuring Agreement 1 is $500,000, Insuring Agreement 2. is $10,000, Insuring Agreement 3 is $10,000 and Insuring Agreement 4 is $50,000. When a kidnapping occurs, ABC becomes involved and incurs $50,000 in expenses. Because ABC is listed their $50,000 is covered in full even though the limit of insurance for Insuring Agreement is only $10,000.

C. Deductible

A deductible is shown on the declarations for the Kidnap/Ransom and Extortion–Direct Loss and for the In-Transit Delivery of Property insuring agreements. No deductible is shown for the Kidnap/Ransom and Extortion–Expenses Incurred or the Detention or Hijack insuring agreements. (In the 08 07 version the provision that if two insuring agreements are involved only one deductible applies is removed)

D. Exclusions

1. The first group of exclusions applies to all four insuring agreements.

a. Acts Committed By You or Any Insured Person

There is no coverage if the kidnap/ransom or extortion threat results from a dishonest, fraudulent or criminal act committed by the named insured or by any insured person.

b. Surrender of Property

Coverage does not apply for loss or expenses resulting from the surrender of property inside the insured premises, unless the property is brought to the premises as a response to the ransom or extortion demands. This distinguishes this coverage from standard robbery coverage.

Example: A man enters a jewelry store and demands that the clerk give him all the jewelry in the store or he will detonate the bomb attached to his waist. Since the jewelry is on the premises, this is considered a robbery. Coverage for this situation could apply under a Jewelers Block policy but is not covered under this policy.

2. The next group of exclusions applies only to the Detention or Hijack insuring agreement.

a. Political or Military Activity

There is no coverage if expenses result from an insured person taking part in any political activity or in the operations of any security or military force.

b. Travel Documents

Coverage does not apply to expenses that result from an insured person not properly obtaining or maintaining necessary travel documents, such as passports, visas, permits or similar documentation.

c. Violation of Laws of Foreign Countries

There is no coverage if expenses result from an insured person being detained in a foreign country due to actual or alleged violation of that country’s laws. Coverage does apply if the detention results from deliberately false, fraudulent or malicious allegations made solely to achieve political, propaganda and/or coercive effect on the named insured or an insured person.

Example: Harry’s company is active in a South American country. The company was very popular during the prior administration but is now considered an enemy. As Harry prepares to leave the country, marijuana is found in his luggage and the government detains him. Harry is adamant that he is innocent and there is no evidence that Harry has ever been involved with any illicit drugs. Coverage applies for the expenses required to free Harry.

E. Conditions

1. Confidentiality Agreement

The named insured and each insured person must make every reasonable effort to not divulge the existence of this insurance. This condition is probably in effect so that the named insured will not become a target kidnap or extortion.

2. Other Conditions

a. Additional Premises or Employees (08 07 addition)

b. Concealment, Misrepresentation or Fraud

Any fraudulent act committed by the named insured voids coverage. Intentional concealment or misrepresentation of a material fact voids coverage but only if that fact concerns any of the following five areas as relates to the insurance coverage provided by this policy:

· The insurance itself

· Insured persons

· Covered property

· The named insured’s interest in the covered property

· A claim that is brought under this insurance

c. Consolidation–Merger or Acquisition (08 07 change)

Coverage applies for 90 days for newly acquired entities, premises, assets or liabilities of another entity and its employees. The coverage is automatic but the insurance company must receive written notice of the acquisition. There is no coverage after 90 days unless the insurance company adds it to the policy. Additional premium may be required. The only losses covered are those that occur AFTER the date of consolidation, merger or acquisition.

d. Cooperation (08 07 addition)

The named insured must work with the insurance company as required in the various terms and conditions of the policy.

e. Due Diligence

The named insured and each insured person is required to exercise due diligence by acting reasonably to avoid or reduce any covered loss.

f. Duties in the Event of an Occurrence

· Determine that the kidnap, extortion threat, detention or hijack has actually occurred.

· If there is a kidnap or extortion threat, the named insured must attempt to immediately notify the security firm shown on the declarations. The named insured must also notify an associate, local law enforcement authorities and the Federal Bureau of Investigation. Only the security firm notification uses the word immediately. However, a reasonable attempt must have been made to notify all of the above for any property is surrendered as payment for ransom demand or extortion threat. (08 07 addition)

· Approve ransom demand or extortion threat payments.

· Notify the insurance company as soon as possible.

· If the insurance company requests, the named insured must submit to examination under oath and provide a signed statement of all responses.

· Provide records that pertain to this loss occurrence for the insurance company so that they can examine them. (08 07 addition) This was previously a separate condition called Records.

· Give a detailed, sworn proof of loss within 120 days. This is a longer time period than in most policies because it can take an extraordinarily long time to work through a kidnap/ransom or extortion demand.

· Cooperate with the insurance company in the investigation and claim settlement.

g. Extended Reporting Period

Losses must be sustained before the policy expiration date and be reported to the insurance company or the scheduled security firm during the policy period or within 30 days following its policy cancellation. There is no additional extended loss discovery period. (08 07 addition)

Note: The prior edition required that actions causing a loss must be committed prior to the policy expiration. The current edition states the loss must be sustained before the policy expires. This could be a significant difference in time.

h. Joint Insured

· The first named insured acts for all other insureds, unless excluded, deleted or not covered in some way. In that case, the next named insured listed becomes the first named insured. The first named insured is responsible for premium payments and receives all notices issued by the insurance company, such as cancellation notices.

· Knowledge by one insured, partner, member, official or officer of anything affecting the insurance coverage is considered to be knowledge by all insureds. This is an important point because not all insureds on the policy may be wholly owned by the first named insured. They may be partnerships or corporations involving significant outside ownership.

· When the insurance is canceled for a particular insured, coverage under this insurance is extended for 30-day discovery, for that particular insured, following the date of cancellation.

Note: This time period matches the extended reporting period for the entire policy.

Example: Celebrity Ink is a popular magazine. One of their reporters has become more adventuresome in performing his assignments. The insurance company determines the risk is too big for the premium offered. They notify Celebrity Ink that this reporter must be removed immediately from the policy. No one was aware that, at the time of their action, the reporter had been kidnapped and was being held in anticipation of a ransom demand. The ransom demand was received 15 days after the cancellation so coverage would continue to apply.

· The limit of insurance is up for loss limit not pay per insured limit. This means that if multiple insureds are kidnapped by single insured is kidnapped one that continues to apply.

· When the insurance company pays the first named insured for a loss, the claim is satisfied for all named insureds. (08 07 addition)

i. Legal Action Against Us

As with most policies, no named insured can pursue legal action until that named insured has complied with all the policy terms. A named insured must wait up to 90 days after filing a proof of loss and any lawsuit must be filed within two years of the date the named insured discovered the loss, not the date the loss was filed. If a state law or local statute requires different time periods, the policy is amended or conformed to comply with those requirements.

j Liberalization

If the insurance company broadens coverage during the policy period and there is no additional premium charge associated with the property the broadened coverage applies to this policy. If such a change is made within 45 days prior to the start of the policy it also applies to this policy.

The Loss Covered Under More Than One Coverage of This Insurance Condition is replaced by wording in Section B, Limit of Insurance (08 07 change).

The Loss Sustained and Reported Condition is removed. The wording is included in the insuring agreement wording. (08 07 change)

The Non-Cumulation of Limit of Insurance Condition is eliminated because the wording has been revised to cover only those losses actually sustained and reported in the policy year. (08 07 change)

k. Other Insurance

This condition is totally rewritten with the 08 07 edition but is not really changed. It is much clearer than in the previous edition.

Primary Insurance

If other insurance is written under the same terms and conditions as this insurance, the coverages will share any loss proportionally. If the other insurance is not written under the same terms and conditions, this coverage is excess. It pays only after the loss exceeds the limit of insurance under the other policy or the deductible under this insurance, whichever is higher. The ability of the named insured to collect the other coverage does not enter into consideration.

Excess insurance

If this insurance is excess over other coverage, this coverage only pays after the limit and deductible of the other coverage is exhausted, whether it is collectible or not. If a deductible applies to this coverage, the deductible amount is reduced by the amount of the underlying coverage and the underlying deductible. This means the named insured does not have to jump the hurdle of both the deductible and the underlying limits.

l. Ownership of Property; Interests Covered

Property covered includes owned and leased property along with property held for others. This insurance is for the named insured. Any loss to property of others must be presented by the named insured.

The records condition is eliminated. It has been moved to the Duties in the Event of an Occurrence as item (6).

m. Recoveries

· Recoveries made by the insurance company, minus recovery expenses, are returned to the named insured until the amount of its loss above the amount covered by this insurance is paid. Any remaining recovery amount is paid to the insurance company until it is completely reimbursed for the loss settlement it made. Any additional recovery amounts available go to the named insured to reimburse its deductible. If any money remains after the first three items are paid, the named insured is paid for losses sustained not covered by this insurance.

· Recoveries do not include reinsurance recoveries by the insurance company or the cost of original securities if duplicates have been issued.

n. Surrender of Personal Assets (08 07 addition)

When payment or expenses are made on behalf of an insured person who is not the named insured, those payments or expenses are considered property and expenses of the named insured. There is one condition though; the reason for the demand must be because of the relationship that insured person has to the named insured.

Example: Penelope is kidnapped while in Mexico. Her family is notified and they immediately pay the ransom. Penelope was in Mexico to a business for her employer World Tours, Inc. The ransom paid by Penelope’s family is considered a ransom paid by World Tours, Inc. and therefore compensable by World Tour’s Kidnap and Ransom policy.

o. Territory

The occurrence can take place anywhere in the world unless a territory modification is shown on the Declarations.

p. Transfer of Your Rights of Recovery Against Others to Us

The named insured cannot waive subrogation rights for any reason. In most property insurance policies, the named insured can waive rights of subrogation in writing before the loss, but this option is not available. The named insured is also responsible in securing those rights and not impairing them in any way.

q. Valuation–Settlement (08 07 change)

(1) The value of the loss is determined as follows:

(a) Money is valued at its face value. If the money is foreign currency, it can be replaced for the face value of that country’s currency or the equivalent in U.S. dollars at the exchange rate or value published in the Wall Street Journal on the day the item was surrendered.

(b) Securities are valued at their market value price at the close of business on the day the item was surrendered. Securities can be replaced or paid for in cash for the insurance company. The insurance company also has the option to not replace or pay cash for the securities but instead purchase a Lost Securities bond and request duplicates of the securities be issued. The maximum the insurance company will pay for the lost securities bond is the market value of the securities as of the date of loss of the limit of insurance whichever is less.

(c) Other property is valued at replacement cost. There’s no deduction for depreciation. This valuation though is limited. The entrance company will pay no more than the cost to replace the property with similar items that are of the same quality and use the same purpose. This is further limited by the amount the named insured actually spends to replace the property. This is then subject to the limit of insurance. The damage must be repaired or replaced promptly. Replacement cost will not be paid unless or until the property is replaced and subject to it being replaced within a reasonable time frame. If the property is not replaced the loss is paid on an actual cash value basis.

(2) Property other than money can be paid for in either the currency of the country where the loss occurred or the equivalent in United States dollars, at the exchange rate published in the Wall Street Journal on the date the particular item or items were surrendered.

(3) Any property the insurance company replaces or pays for becomes the property of the insurance company.

F. Definitions

1. Computer Program is any set of instructions designed to electronically direct the computer operations. This includes the instructions for any devices attached to the computer and those that assist it in processing, storing, sending or receiving electronic data. (08 07 addition)

2. Computer System refers to computers, communication networks, terminals and systems that use electronic data. (08 07 addition)

3. Detention is the holding of an insured person under duress. One of the following must apply to the person holding the insured person:

a. Acting as an agent of any government or government entity, or with its tacit approval

b. Acting or purporting to act on behalf of any insurgent party, organization or group.

Note: Detention does not include kidnapping.

4. Electronic Data is very expansive and includes most information and data used by or stored in a computer or on media that is used with a computer. (08 07 addition)

5. Employee is

a. Any natural person:

(1). In the named insured’s service, compensated by salary, wages or commissions that the named insured has the right to direct and control while that person is performing services for the named insured.

Note: This applies only to active employees. There is no 30-day extension of coverage after termination of service as provided for in standard crime coverage forms;

(2). Furnished temporarily to the named insured to substitute for a permanent employee on leave, or to meet seasonal or short-term workload conditions. They are not employees while outside the premises and have care and custody of property. (08 07 addition)

(3). Leased to the named insured under a written agreement with a labor-leasing firm. This does not include those employees defined in (2) above

(4) Who is a former official, employee, director, partner, member, manager, trustee, or other and has been retained as a consultant and is performing services for the named insured

(5). Who is a guest student or intern pursuing studies or performing duties? They are not employees while outside the premises and have care and custody of property. (08 07 addition)

(6) Employees that were merged into or consolidated with the named insured prior to the inception date of the policy.

b. It is not person who is an independent contractor, agent or similar type individuals.

6. Expenses:

a. All of the following are considered expenses:

(1) Fees and costs of the security firm listed on the declarations hired to negotiate or secure the release of an insured person. It also includes the expenses to determine the validity and severity of a threat (08 07 addition)

(2) Fees and costs of independent negotiators

(3) Fees and costs of independent public relations consultants and/or interpreters

(4) Costs of hiring security guards to protect an insured person or insured property but only when recommended by the security firm shown on the declarations

(5) Travel and accommodation costs incurred by the named insured or an insured person

(6) Salary, commission and other financial benefits the named insured pays to an insured person. The amount is limited to the level of pay in effect at the time the insured person was kidnapped, detained or hijacked. This payment ends on the earliest of the following dates:

o 30 days after the insured person’s release, if he or she has not yet returned to work

o Discovery of the death of the insured person

o 120 days after the last credible evidence following an abduction that the insured person is still alive

o Five years after the insured person is abducted

(7) Hospitalization and medical service fees and costs, including psychiatric care and cosmetic or plastic surgery. Only costs incurred within 24 months of an insured person’s release are covered.

(8) Fees and costs of independent forensic analysts

(9) Interest costs for loans taken by the named insured from a financial institution to pay a ransom demand or extortion threat

(10) Personal financial losses of an insured person because of that person’s inability to attend to his or her personal financial matters due to kidnap, detention or hijack

(11) Reward money paid by the named insured for information that leads to the arrest and conviction of parties responsible for losses incurred under any covered insuring agreement

(12) Named insured’s courts costs and attorney fees incurred to defend itself is, after a covered event-related death, the insured person’s spouse or beneficiary sues the named insured. (08 07 addition)

(13) Any other reasonable expenses incurred by the named insured with the insurance company’s written consent.

b. The following are not considered expenses:

(1) Costs incurred by the named insured to recall or destroy any products or goods as a result of an extortion threat to contaminate, pollute or render substandard any of those products or goods

(2) Loss of earnings and all other costs incurred by the named insured due to business interruption.

7. Guest is any person visiting the named insured’s premises or the residence of a director, trustee, partner, member, manager or employee for business or social purposes. If the named insured is a sole proprietorship, the residence of the proprietor is covered. Coverage also applies when the guest travels in a motor vehicle, aircraft or watercraft with any insured person.

8 Hijack is the holding of an insured person under duress. This must occur while insured person is traveling in a motor vehicle, aircraft or watercraft. It does not include kidnap.

9. Informant is a person who provides information not otherwise obtainable, solely in return for a reward offered by the named insured. An informant cannot be an insured person.

10. Insured person is any of the following:

a. A director, trustee, partner, member, manager, official, employee or proprietor of any named insured, unless the person is specifically excluded on the declarations;

b. A relative, guest or resident in the household of an insured person described in a. above

c. A messenger

11. Kidnap is the abduction of an insured person for the purpose of demanding money or other consideration in exchange for the release of that person. The abduction must be involuntarily.

12. Manager is the same as in the Commercial Crime Policy, meaning a person serving in the capacity of a director of a limited liability company.

13. Member is the same as in the Commercial Crime Policy, meaning an owner of a limited liability company represented by its membership interest. A member may also serve as a manager.

14. Messenger is a natural person designated by the named insured to take care and custody of property outside the insured’s premises.

15. Occurrence is an act or series of related acts or events involving one or more persons. If a kidnap, extortion threat, detention, or hijack involved a series of acts and those acts started prior to the effective date of this policy, the insurance company will not pay for that loss. (08 07 addition)

This is an unusual place to add this wording since it has no bearing on the definition of occurrence. In addition, this statement does not define what type of acts must occur. Is the time needed to plot and plan the event included or just the physical actions?

16. Premises is any building occupied by the named insured to conduct business. It also includes the residences of all insured persons.

17. Property is money, monetary instruments, securities, services or other tangible property. (08 07 change). The prior edition required tangible property to have intrinsic value. This limitation was eliminated.

18. Relative includes a spouse, child, stepchild, legally adopted child, foster child, spouse of a married child, grandchild, brother, sister, parent, adoptive parent, stepparent, grandparent, brother-in-law, sister-in-law, parent-in-law and grandparent-in-law.

CR 00 28 AND CR 00 29–EMPLOYEE THEFT AND FORGERY POLICIES (05 06 EDITION)

The Employee Theft and Forgery policy is not an alteration of the Commercial Crime Coverage Form or Policy. In fact, it is actually a restricted version of it. Many parts of the Commercial Crime Policy do not appear in this policy. Because it is only available as a monoline policy, a separate coverage form is not available. This policy is best described as a "Fidelity Only," Policy.

Two different policy forms are available:

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

This discussion compares Form CR 00 29–Employee Theft and Forgery Policy (Loss Sustained Form) to Form
CR 00 23–Commercial Crime Policy (Loss Sustained Form).

CR DS 05–EMPLOYEE THEFT AND FORGERY POLICY DECLARATIONS

The declarations have space for only two insuring agreements:

Employee Theft
Forgery and Alteration

INSURING AGREEMENTS

The following insuring agreements available in the Commercial Crime Policy are not available in the Employee Theft and Forgery Policy:

Inside the Premises–Theft of Money and Securities
Inside the Premises–Robbery or Safe Burglary of Other Property
Outside the Premises
Computer Fraud
Funds Transfer Fraud
Money Order and Counterfeit Money

The only coverage’s available in this policy are the Employee Theft and the Forgery and Alteration insuring agreements. The language in these insuring agreements is identical to the language for the same insuring agreements in the Commercial Crime Policy or Coverage Form.

LIMITS AND DEDUCTIBLES

The Limits and Deductible sections are identical in both policies.

EXCLUSIONS

1. Exclusions in the Commercial Crime Coverage Policy not found in the Employee Theft and Forgery Policy include:

Government Action
Nuclear Hazard
Pollution
War and Military Action
Exclusion 3. because Insuring Agreements A.3, A.4 and A.5 do not apply.
Exclusion 4. because Insuring Agreement A.6 does not apply.
Exclusion 5. because Insuring Agreement A.7 does not apply.

2. Acts of Employees, Managers, Directors, Trustees or Representatives is slightly rewritten to state that it applies only to Forgery and Alteration coverage.

CONDITIONS

All conditions in the Commercial Crime Policy or Coverage Form listed under E.4, Conditions Applicable to Insuring Agreements A.4 and A.5 and under E.5, Conditions Applicable to Insuring Agreement A.6 do not apply to the Employee Theft and Forgery Policy. This is because the insuring agreements to which these conditions apply are not part of this policy.

DEFINITIONS

The following terms defined in the Commercial Crime Policy or Coverage Form are not defined in the Employee Theft and Forgery Policy. This is because the coverages to which they apply are not part of that policy.

Banking Premises
Counterfeit money
Custodian
Fraudulent Instruction
Messenger
Robbery
Safe Burglary
Transfer Account
Watchperson

The definition of occurrence is modified to eliminate item c, since it relates to insuring agreements other than Insuring Agreements 1 and 2 and does not apply to the Employee Theft and Forgery Policy.

CR 00 30 AND CR 00 31–GOVERNMENT EMPLOYEE THEFT AND FORGERY POLICIES (10 01 EDITION)

The Government Employee Theft and Forgery policy is not an alteration of the Government Crime Coverage Form or Policy. In fact, it is actually a restricted version of it. Many parts of the Government Crime Policy do not appear in this policy. Because it is only available as a monoline policy, a separate coverage form is not available. This policy is best described as a "Fidelity Only" Policy.

Two different policy forms are available:

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

This discussion compares Form CR 00 31–Government Employee Theft and Forgery Policy (Loss Sustained Form) to Form CR 00 27–Government Crime Policy (Loss Sustained Form).

CR DS 08–GOVERNMENT EMPLOYEE THEFT AND FORGERY POLICY DECLARATIONS

The declarations has space for only three insuring agreements:

Employee Theft – Per Loss Coverage
Employee Theft – Per Employee Coverage
Forgery and Alteration

INSURING AGREEMENTS

The following insuring agreements available in the Government Crime Policy are not available in the Government Employee Theft and Forgery Policy:

Inside the Premises–Theft of Money and Securities
Inside the Premises–Robbery or Safe Burglary of Other Property
Outside the Premises
Computer Fraud
Funds Transfer Fraud
Money Order and Counterfeit Money

The only coverages available in this policy are the Government Employee Theft and the Forgery and Alteration insuring agreements. The language in these insuring agreements is identical to the language for the same insuring agreements in the Government Crime Policy or Coverage Form.

LIMITS AND DEDUCTIBLES

The Limits and Deductible sections are identical in both policies.

EXCLUSIONS

1. Exclusions in the Government Crime Coverage Policy not found in the Government Employee Theft and Forgery Policy include:

Government Action
Nuclear Hazard
Pollution
War and Military Action
Exclusion 3. because Insuring Agreements A. 4 through A.6 do not apply.
Exclusion 4. because Insuring Agreement A.7 does not apply.
Exclusion 5. because Insuring Agreement A.8 does not apply.

2. Acts of Officials, Employees or Representatives is slightly rewritten to state that it applies only to Forgery and Alteration coverage.

CONDITIONS

All conditions in the Government Crime Policy or Coverage Form listed under E.4, Conditions Applicable to Insuring Agreements A.5 and A.6 and under E.5, Conditions Applicable to Insuring Agreement A.7 do not apply to the Government Employee Theft and Forgery Policy. This is because the insuring agreements to which these conditions apply are not part of this policy.

DEFINITIONS

The following terms defined in the Government Crime Policy or Coverage Form are not defined in the Government Employee Theft and Forgery Policy. This is because the coverages to which they apply are not part of that policy.

Banking Premises
Counterfeit money
Custodian
Fraudulent Instruction
Messenger
Robbery
Safe Burglary
Transfer Account
Watchperson

The definition of occurrence is modified to eliminate item c, since it relates to insuring agreements other than Insuring Agreements 1. 2. and 3. and does not apply to the Government Employee Theft and Forgery Policy.

COMPARE: CR 00 21–COMMERCIAL CRIME COVERAGE FORM (LOSS SUSTAINED FORM): 08 13 EDITION TO THE 05 06 EDITION

INTRODUCTION

The 08 13 edition of the Insurance Services Office (ISO) CR 00 21–Commercial Crime Coverage Form (Loss Sustained Form) has several significant changes and a number of minor ones. This summary only highlights them.

CR 00 21–COMMERCIAL CRIME COVERAGE FORM (LOSS SUSTAINED FORM)

CHANGES TO A. INSURING AGREEMENTS

3. Inside the Premises–Theft of Money and Securities

The words “financial institution” replace the word “banking” in the 05 06 edition.

6. Computer and Funds Transfer Fraud

This is a combination of the separate coverages the 05 06 edition provided for Computer Fraud and Funds Transfer Fraud. It also adds new terms required because of changes in technology.

Coverage is much broader and more detailed. Coverage is added for when employees cause the fraudulent transfer but only if they make entries based on fraudulent instructions from their computer systems contractor.

7. Money Orders and Counterfeit Money

The words “financial institution” replace the word “banking” in the 05 06 edition.

CHANGES TO D. EXCLUSIONS

1. b. Acts Committed by Your Employees Learned of by You Prior to the Policy Period

The words “Committed by Your” replace the word “of” in the 05 06 edition.

1. c. Acts Committed by Your Employees, Managers, Directors, Trustees, or Representatives

The words “Committed by Your” replace the word “of” in the 05 06 edition.

1. d. Confidential or Personal Information

The 08 13 edition adds the words “or Personal” to the title but this is not the only change. This exclusion in the 08 13 edition is much more restrictive than in previous editions:

Under item (1):

This exclusion in the previous edition excluded only “unauthorized” release of this information. The 08 13 edition requires only that personal and confidential information be disclosed. It no longer has the word “unauthorized.”
This exclusion in the previous edition excluded only disclosure of the named insured’s confidential information such as patents, trade secrets, etc. The 08 13 edition also excludes disclosure of this same confidential information that belongs to others.
This exclusion in the previous edition excluded only disclosure of confidential information. The 08 13 edition excludes disclosure of personal and confidential information.
The 08 13 edition adds financial, health, credit card information, and other types of nonpublic information as examples of excluded personal and confidential information disclosure.

Under Item (2):

This exclusion in the previous edition excluded only “unauthorized” release of this information. The 08 13 edition requires only that personal and confidential information be disclosed. It no longer has the word “unauthorized.”

This exclusion in the previous edition stated that the confidential information of another was required to be held by the named insured. The 08 13 edition eliminates that requirement. This means that using the information is excluded whether or not the named insured holds it.
This exclusion in the previous edition applied to only the use and disclosure of confidential information. The 08 13 edition applies to the use of confidential and personal information. Item (1) now covers disclosure and adds the term confidential information.
The previous edition applied to only financial, personal, credit card, and other non-public information. The
08 13 edition adds patents, trade secrets, processing methods, and customer lists.

1. e. Data Security Breach

This is a new exclusion the 08 13 edition adds. It works with the Confidential and Personal Information exclusion because it excludes any cost or expense that involves access to or disclosure of confidential or personal information.

3. f. Transfer or Surrender of Property

The changes in wording are minor but the impact could be significant. Substituting the word “any” for the word “your” in an exclusion makes it much broader and eliminates coverage the named insured might have had in the previous edition.

1. (b) (iii) adds the word “any” before “computer system” in place of the word “your” in the 05 06 edition.
1. b. (iv) adds the words “any” and “the” before “computer system” in two different areas in place of the word “your” in the 05 06 edition.
1. b. (iv) adds the word “electronic” before data.
1. b. (vi) adds ii. Confidential or personal information of another person or organization. This means that there is no coverage when a threat is made to divulge such information. The previous edition excluded only the threat to divulge such information of the named insured.
1. b. (vi) iii adds the word “any” before “computer system” in place of the word “your” in the 05 06 edition.

4. Insuring Agreement A. 6. does not cover

The 08 13 edition adds the following exclusions:

a. Authorized Access
c. Exchanges or Purchases
d. Fraudulent Instructions

CHANGES TO E. CONDITIONS

1. e. Duties in the Event of Loss

The 08 13 edition adds the requirement that the named insured must secure all rights of recovery against any person or organization responsible for the loss.

1. f. Employee Benefit Plans

This condition in the 08 13 edition makes minor changes through renumbering and adds direct reference to ERISA and its requirements.

1. n. Ownership of Property: Interests Covered

The 08 13 edition broadens coverage to property that the named insured holds in any capacity.
The 08 13 edition changes property subject to legal liability to only such property that the named insured was legally liable for before the loss occurred.

1. s. Valuation–Settlement

(3) Property other than Money and Securities:

The 08 13 edition changes the order of the sub-items under (a).
The 08 13 changes the word “occurred” under (i) and (ii) in the 05 06 edition to “was sustained.”

CHANGES TO F. DEFINITIONS

The 08 13 edition removes two definitions that were in the 05 06 edition:

1. Banking premises
9. Funds

The 08 13 edition adds five new definitions:

1. Computer program
2. Computer system
6. Electronic data
9. Financial institution
10. Financial institution premises

The 08 13 edition makes minor changes in the following definitions:

7. Employee
12. Fraudulent instruction
13. Manager
16. Money
24. Transfer account

ISO COMMERCIAL CRIME COVERAGE FORMS AND POLICIES ANALYSIS (08 13 edition)

This analysis is of the 08 13 edition of these Insurance Services Office (ISO) coverage forms and policies. Changes from the 05 06 edition are in bold print. It does not address editorial or format changes that do not affect coverage.

INTRODUCTION

Commercial crime coverage can be written on either a discovery basis or a loss sustained basis. It may be written as a monoline policy or as a coverage part in a commercial package policy. The following are the coverage forms and policies:

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)

This analysis begins with CR 00 21–Commercial Crime Coverage Form (Loss Sustained Form). This is followed by comparing it to the other coverage form and policies.

CR 00 21 opens by stating that certain provisions in it restrict coverage and encourages reading the entire coverage form to determine what is covered and what is not covered, as well as rights and duties. It defines the terms "you or your" as the named insured and "we, us, and our" as the company that provides the insurance coverage. CR 00 21 has other words that have special meanings. They are defined in F. Definitions.

A. INSURING AGREEMENTS

CR 00 21 has seven insuring agreements. Coverage applies only if there is a limit of insurance on the declarations for a given insuring agreement. Coverage applies to losses the named insured sustains under the following circumstances:

The loss must be the result of an occurrence.
The occurrence must take place DURING the policy period on the declarations.
The named insured must discover the loss DURING the policy period or the extended discovery period.

All of the above are subject to all of the following:

Condition E. 1. g: Extended Period To Discover Loss
Condition E. 1. k: Loss Sustained During Prior Insurance Issued By Us Or Any Affiliate
Condition E. 1. l: Loss Sustained During Prior Insurance Not Issued By Us Or Any Affiliate
Definitions of the terms discovered and occurrence in Section F

1. Employee Theft

Employee theft covers losses to money, securities, and other property. It also covers employees unlawfully taking eligible insured property. Coverage applies regardless of the number of employees involved in the loss. This insuring agreement’s definition of theft also includes forgery.

Note: The statement about the number of employees involved in a loss is an important point because the limit of insurance applies to each act, not to each employee.

Example: Easy Pickings, Inc.’s employee theft limit is $200,000.

Scenario One: Ten employees at Easy Pickings participate in a scheme to siphon cash from the accounts receivable. The total loss is $500,000. Easy Pickings argues in vain that each employee should be covered for $200,000 with a total possible loss payout of $2,000,000. This coverage pays the $200,000 limit per occurrence, not per employee, because the employees are all part of the same scheme.

Scenario Two: An employee at Easy Pickings steals merchandise from the warehouse and sells it to friends. This employee’s actions are completely separate from the ten-person scheme. As a result, the $200,000 limit of insurance applies separately to this claim.

2. Forgery or Alteration

a. This insuring agreement pays losses that are the direct result of forged or altered drafts, checks, or promissory notes. It also pays if similar written directions, orders, or promises to pay a certain amount of money are forged or altered. The forged or altered instruments must be made, drawn on, or drawn upon the named insured or an agent that acts on the named insured’s behalf. Coverage applies for the actual drawing or an allegation of such.

This insuring agreement treats substitute checks as defined in the Check Clearing for the 21st Century Act the same as the original check it replaces.

Example: Peter breaks into Plumber’s Palace and steals checks from the bottom of a stack he finds in the comptroller’s office. During the next few weeks, Peter writes checks against Plumber’s Palace’s account until the controller discovers the unauthorized checks that were cashed.

b. The named insured may be sued when it refuses to pay money for an instrument it believes is forged. The insurance company reimburses the named insured for its cost to defend the suit but only if the insurance company gave the named insured its written consent to defend against the suit. The expenses must be reasonable. These amounts are in addition to this insuring agreement’s limit of insurance.

3. Inside the Premises–Theft of Money and Securities (08 13 change)

The insurance company pays the following:

a. Loss of money and securities inside the premises or inside the premises of a financial institution premises that result directly from either of the following:

Theft committed by a person who is actually present within the premises or within a financial institution premises
Destruction or disappearance

“Financial institution” in the 08 13 edition replaces “banking” in the 05 06 edition.

Note: This Coverage Form defines premises. The definition is much more restrictive than the term used in the ISO Commercial General Liability (CGL) or Commercial Property Coverage Forms.

Example: Sharon owns a small card shop.

Scenario One: An armed robber enters her card shop and demands all her money. This loss is covered.

Scenario Two: Sharon receives a phone call. The caller tells her that he has a weapon pointed at her premises and demands that she place money in a bag and put it outside her door. This loss is not covered.

b. Loss due to the premises or its exterior being damaged because of an attempted or actual theft of money and securities. However, this coverage applies only if the named insured owns the premises or is liable for damage to the premises.

c. Damage to or loss of a locked vault, safe, cash box, cash drawer, or cash register. Coverage applies only if they are located inside the premises and the loss is a direct result of an attempted or actual theft of those containers or attempted or actual unlawful entry into them.

4. Inside the Premises–Robbery or Safe Burglary of Other Property

The insurance company pays the following:

a. Loss or damage to other property inside the premises due to either of the following:

That is a direct result of attempted or actual robbery of a custodian
That is a direct result of an attempted or actual safe burglary. This applies to items within the safe or vault that is burglarized.

b. Loss due to the premises or its exterior being damaged as a direct result of attempted or actual robbery or safe burglary of other property. However, this coverage applies only if the named insured owns the premises or is liable for damage to the premises.

c. Damage to or loss of a locked vault or safe that is located inside the premises. Coverage only applies if the loss is a direct result of an attempted or actual robbery or safe burglary.

Notes:

Other property means property other than money and securities that has intrinsic value and that is not otherwise excluded. The American Heritage College Dictionary defines intrinsic to mean “of or relating to the essential nature of a thing; inherent.” A chair has intrinsic value. An idea, in and of itself, does not have intrinsic value unless it is applied and made into something.

This insuring agreement’s coverage applies to only robbery of a custodian or to safe burglary. The act must take place within premises located in a described building. Robbery is a subset of theft that involves actual bodily harm or the threat of bodily harm, violence, or intimidation or the unlawful taking of property that another person witnesses. A custodian may be the named insured, members, partners, or employees but NOT watchpersons or janitors.

Losses from robberies either during normal business hours or after hours that do not involve watchpersons or janitors are covered. A person who works late and turns on the alarm before leaving is not a watchperson, unless hired specifically to have custody of the property and without any other duties. A watchperson is the security guard hired to watch the premises during normal business hours.

Example: Eric works late and is asked to lock up when he leaves. This means he has custody of the premises. However, he is not a watchperson or a janitor. He sees the cleaning staff opening desk drawers to dust inside. The next day, several people report missing valuable tools, software, and other items. Eric believes the cleaning staff stole them. However, this insuring agreement does not provide coverage because he was not threatened and did not actually witness an obvious act of stealing.

Under this insuring agreement, damage to the premises from an attempted or actual act of robbery or safe burglary is covered as well as damage to a LOCKED safe or vault. Damage to an open safe or vault during a robbery is not covered. However, loss to property inside the safe or vault is covered.

5. Outside the Premises

The insurance company pays the following:

a. Loss of money and securities that occurs outside the premises while it is in an armored car company or messenger’s care and custody that is a direct result of theft, disappearance, or destruction.

Example: A suitcase full of cash bounces out of the back of a messenger’s pickup truck, tumbles across a bridge, falls 120 feet into a river, and is never recovered. This loss is covered.

b. Damage to or loss of other property that occurs outside the premises while it is in an armored car company or messenger’s care and custody that is a direct result of attempted or actual robbery.

Note: Robbery must include at least the threat of bodily harm, violence, or intimidation or the messenger must actually observe an unlawful act being committed.

Example: A crate of rare vases bounces out of a messenger’s truck and falls into the river below, never to be seen again. This loss is not covered. However, coverage applies if a robber carjacks the same vehicle and throws the crate into the river.

Note: In either case, the named insured or its partner or employee must be the messenger. Employees do not include independent contractors (other than armored car companies), temporary employees, or any agent or broker.

Example: Pink Elephant Phine Liquors replaces its employee-operated truck fleet with independent truck drivers. One of these drivers is robbed at gunpoint while delivering a load of liquor to a Pink Elephant warehouse. There is no coverage for this claim because the independent driver was not a messenger as CR 00 21 defines it.

6. Computer and Funds Transfer Fraud (08 13 changes)

The 05 06 edition of CR 00 21 had separate insuring agreements for Computer Fraud and Funds Transfer Fraud. The 08 13 edition combines these two insuring agreements into one and is essentially a new insuring agreement

a. The insurance company pays the following:

(1) Loss caused when money, securities, or other property is transferred, paid, or delivered because of a fraudulent computer entry or change or a fraudulent electronic data entry or change. The entry or change must be within a computer system that the named insured owns, operates, or leases. This also applies if the fraudulent entry or change resulted in the named insured’s account at a financial institution being either debited or deleted.

(2) Loss caused when money or securities are transferred, paid, or delivered from the named insured’s account at a financial institution based on fraudulent instructions.

b. Fraudulent entry or fraudulent change of electronic data or a computer program as described in 6. a. (1) above is broadened to include such entries when made in good faith by employees. However, coverage applies only if the entries are made based on fraudulent instructions received from a computer software contractor. This contractor must have a written agreement with the named insured to design, implement, or service computer programs for computer systems that this insuring agreement covers.

Example: Ken receives an electronic update file from his network provider and is told that it is a required patch. Ken uploads the file as instructed. Charlene’s financial institution informs her that unusual charges are being made against the company account. Ken and Charlene review the timing and realize the patch is actually a program designed to redirect funds. Ken changes network providers and Charlene files a police report and a computer transfer claim.

7. Money Orders and Counterfeit Money (08 13 changes)

This insuring agreement pays losses that result from the named insured accepting in good faith (08 13 words added) either of the following:

a. Money orders issued by any financial institution, express company, or post office that are not paid when presented

“Financial institution” in the 08 13 edition replaces “banking” in the 05 06 edition.

b. Counterfeit money but only when collected while engaged in a business activity.

Coverage under this Insuring Agreement applies only if the instruments were accepted in exchange for merchandise, service, or money.

Note: Coverage does not apply to cashier’s checks and other negotiable instruments.

B. LIMIT OF INSURANCE

The limit on the declarations is the most paid for all loss that results from an occurrence. If a loss is covered under more than one insuring agreement, the company pays ONLY the largest limit of insurance available, not the sum of each available limit.

Example: Acme Company sustains a loss that involves both employees and non-employees. It is determined that it is one occurrence and that Insuring Agreements 1, 3, and 7 provide coverage. The limit of insurance for Insuring Agreement 1. is $300,000. Insuring Agreement 3. has a $100,000 limit of insurance and Insuring Agreement 7 has a $250,000 limit of insurance. The total loss is $500,000. In some previous editions, Acme could recover under each insuring agreement and be fully compensated. Under the 08 13 edition, the maximum recovery is $300,000, the highest limit available.

Note: A situation like this could have claimants and their attorneys seeking ways to utilize the different definitions of occurrence within the insuring agreements so a loss situation may qualify as a multiple occurrence.

C. DEDUCTIBLE

The insurance company does not pay for a loss that results directly from an occurrence unless the amount of loss is more than the deductible amount on the declarations. It then pays the amount of loss that exceeds the deductible amount up to the limit of insurance for the coverage or insuring agreement that applies.

Notes:

Each insuring agreement can have a different deductible. In most cases, smaller accounts do not require deductibles for most coverages. The insurance company does not pay any loss until the deductible amount stated on the declarations is satisfied.

When the deductible provision is now read in conjunction with the limit of insurance, it may be implied that the applicable deductible is the one on the declarations and associated with the highest limit of insurance. However, it is not stated this way. With the removal of the deductible limitation language, confusion may arise about which or how many deductibles apply to a given loss. Due to this ambiguity, an insured could argue that the lowest (or even no) deductible should be used. In such disputes, any ambiguity could be construed in favor of an insured’s interpretation.

Example: Continuing the Acme example above, the deductible for Insuring Agreement 1 is $10,000, the deductible for Insuring Agreement 3 is $1,000, and Insuring Agreement 7 does not have a deductible. The insured argues that no deductible applies. The insurance company argues that the $10,000 deductible applies.

D. EXCLUSIONS

1. These exclusions apply to all insuring agreements unless stated otherwise.

a. Acts Committed by You, Your Partners or Members

There is no coverage for theft or any other dishonest act the named insured or its members or partners commit, whether committed alone or in collusion with others.

Note: The named insured cannot claim coverage for an employee’s dishonest act if the named insured is involved in the same dishonest act. For the purposes of this exclusion, a member is an owner of a Limited Liability Corporation (LLC).

b. Acts Committed by Your Employees Learned of by You Prior to the Policy Period (08 13 title change)

This exclusion applies to losses caused by employees with a history of committing dishonest acts. Coverage does not apply to any loss that employee causes if the named insured, its partners, members, managers, officers, directors, or trustees knew about his or her previous dishonest acts that took place prior to the policy period. However, coverage does apply if the member, partner, manager, officer, director, or trustee who knew about the dishonest acts is in collusion with the employee.

The 08 13 edition substitutes the words “Committed by Your” between the words “Acts” and “Employees in the title for the word “of” in the 05 06 edition.

Example: Trent has a troubled background and Rick, the vice president of operations, knows about it. Rick uses Trent and his shady contacts to help him fence items they steal from their company’s warehouse. When the loss is discovered, the insurance company cannot deny coverage because Rick is the only one at the company who knows about Trent’s dishonest past.

c. Acts Committed by Your Employees, Managers, Directors, Trustees, or Representatives (08 13 title change)

This exclusion applies to all insuring agreements except Insuring Agreement A. 1. Employee Theft. There is no coverage for loss that results from theft or any other dishonest act that any of the named insured’s employees, managers, trustees, directors, or authorized representatives commit. Coverage is denied whether they act alone or in collusion with other persons. It is also denied whether not that perpetrator provides services for the named insured at that particular time.

The 08 13 edition substitutes the words “Committed by Your” between the words “Acts” and “Employees in the title for the word “of” in the 05 06 edition.

d. Confidential or Personal Information (08 13 title and other changes)

The insurance company does not pay for loss that results from either of the following:

(1) Disclosing the named insured’s or another person’s or organization’s confidential or personal information. Examples of such information are patents, trade secrets, customer lists, processing methods, credit card information, financial information, health information, or any other kind of information that is not available to the public. These are only examples and are not meant to restrict the term confidential or personal information.

(2) Using another person’s or organization’s confidential or personal information. The same examples used in (1) above apply.

The 08 13 edition adds the words in bold print and the words “or Personal” in the title between the words “Confidential” and “Information. It also removes the word “unauthorized” in both (1) and (2) in the 05 06 edition.

Note: This is considered a clarifying exclusion because CR 00 21 was never intended to cover such losses.

Example: Marguerite works in Acme College’s Record’s Department. Her boyfriend, Phillip, asks for some information about his roommate, Paul, and uses it to steal Paul's identity. Paul discovers the identity theft when he attempts to secure a student loan. The police track the release of information to Phillip and Marguerite, both of whom have left town. Paul demands that Acme compensate him for the monetary loss due to Marguerite’s actions. The crime coverage written on Acme College does not respond because of this exclusion.

e, Data Security Breach (08 13 addition)

Coverage does not apply for any expenses or costs the named insured must incur or for any fines, fees or penalties it must pay because access was provided to another person or organization’s personal or confidential information or that information was somehow disclosed. The personal or confidential information examples are the same as described in Exclusion d. above.

Example: Acme College is reprimanded by its accreditation board and both the state and local governments for permitting Paul’s identity to be stolen. The college must perform an audit, review and update its procedures, and add levels of security to protect student information. The college must also pay fines. None of these costs are covered.

f. Government Action

Coverage does not apply to loss that results when property is taken or destroyed because of an order from a governmental authority.

g. Indirect Loss

There is no coverage for loss that is an indirect result of an occurrence that this insurance covers. This following are examples of such excluded indirect losses but the exclusion is not limited to just these:

Loss of income as a result of not being able to use money, securities, or other property.

Note: This means that coverage does not apply to loss of interest income on money that could have been invested. There is no coverage for loss of income on stock holdings that could have appreciated during an upturn in the market. Finally, loss of profit due to the loss of a chance to sell product stolen from an insured is excluded. Business income coverage available in commercial property forms pays for the loss of income on property other than money or securities.

Damages for which the named insured is legally liable. However, the insurance company pays for any direct damages that this insurance covers.
Costs, fees, or other expenses the named insured incurs in order to establish that a loss actually happened or to determine the amount of a loss.

Note: These costs, fees, or expenses can be substantial.

Examples:

The expenses to hire auditors to examine books that an employee “cooked”
The costs to hire independent investigators to ferret out the scope of a financial loss and who caused it
The costs to hire forensic or other specialists to determine the part of missing inventory that was stolen and the part that was simply part of an inventory shortage

Coverage for these costs and expenses is available by attaching CR 25 40–Include Expenses Incurred to Establish Amount of Covered Loss.

h. Legal Fees, Costs, and Expenses

There is no coverage for any legal fee, cost, or expense the named insured incurs. However, there is an exception explained under Insuring Agreement A. 2.

i. Nuclear Hazard

There is no coverage if nuclear reaction or radiation causes loss or damage. Radioactive contamination is also excluded. This exclusion applies regardless of how such losses occur.

j. Pollution

Loss or damage caused by or that results from pollution is excluded. Pollution means any release or escape of any solid, liquid, gaseous, or thermal contaminant or irritant. These include vapor, smoke, acids, fumes, chemicals, alkalis, and waste. Waste includes materials to be reclaimed, recycled, or reconditioned.

Note: This definition is identical to the one used in ISO Commercial Property Coverage Forms.

k. War and Military Action

There is no coverage for loss or damage that results from war, undeclared war, or civil war. This includes a military force’s warlike actions or actions to hinder or defend against an expected or actual attack by any governmental authority that uses military personnel or other agents.

This also includes rebellion, insurrection, usurped power, revolution, or action a governmental authority takes to defend against or hinder any of these.

Note: This wording is identical to the wording in ISO Commercial Property Coverage Forms.

2. These exclusions apply to Insuring Agreement A. 1: Employee Theft Coverage.

a. Inventory Shortages

There is no coverage for shortages of money, securities, or other property when only an inventory shortage or a profit and loss statement proves the loss. However, such books, ledgers and inventory records may be used to help calculate the amount of a loss that can be substantiated some other way.

b. Trading

Losses that result from trading in the named insured’s name are excluded, whether the trading is in a genuine or fictitious account.

Notes:

Trading activities include stock-trading losses, commodity-trading losses, and merchandise-trading losses (where batches of product are exchanged).

CR 25 16–Add Trading Coverage may cover certain trading losses to a genuine, not a fictional, account.

c. Warehouse Receipts

Warehouse receipts document storage and transfer of products between (usually) separate entities. A fraudulent transfer can occur when property is delivered to someone not authorized to receive it. A forged instrument is frequently used by an individual having a seemingly legitimate claim to the property but does not. Coverage does not apply to these situations or to errors in issuing, signing, cancelling, or failing to cancel any warehouse receipt.

Note: CR 25 17–Add Warehouse Receipts Coverage can be attached to insure fraudulent transfer of warehouse receipts.

Note: Warehouse Operators Legal Liability Coverage is an inland marine coverage. It can also be purchased to cover fraudulent or other improper or negligent transfer of goods by other than employee theft.

3. The following exclusions apply to Insuring Agreements A. 3: Inside the Premises–Theft of Money and Securities, A. 4–Inside the Premises–Robbery or Safe Burglary of Other Property, and A. 5–Outside the Premises.

a. Accounting or Arithmetical Errors or Omissions

Losses that result simply from mathematical errors or from accounting errors or omissions are excluded.

Note: There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

b. Exchanges or Purchases

There is no coverage for loss in any exchange or purchase of any property.

Note: There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

Example: Sylvester pays the marked price of $2,000 for a piece of furniture. It is determined at a later date that the price should have been $20,000. Further investigation shows that the price tag was intentionally altered and Sylvester, who paid in cash, provided false contact information. Even though this appears to be criminal activity, coverage does not apply because this loss was the result of a purchase.

c. Fire

There is no coverage for loss or damage that fire causes. However, there are two exceptions:

Coverage applies when money and securities sustain either loss or damage.

Note: This is very important because other commercial property coverage forms do not cover fire damage to money and securities.

Coverage applies when a safe or a vault is damaged.

Note: This is duplicate coverage with property coverage forms. It could be considered primary because it is specific.

d. Money Operated Devices

Theft of money from vending machines or other money or coin-operated devices is excluded unless the machine itself continuously counts and records the money.

Note: There is no standard endorsement available to "buy back" this exclusion or to purchase broader coverage.

e. Motor Vehicles or Equipment and Accessories

Damage to any motor vehicle, its accessories, or trailer is excluded.

Note: Coverage for theft of motor vehicles is available under various commercial automobile coverage forms and policies. It is also available for vehicle manufacturers through commercial property coverage forms. CR 00 21 does not define the term “motor vehicle” as other ISO coverage forms do.

f. Transfer or Surrender of Property (08 13 changes)

(1) Coverage does not apply to loss or damage to property when it is given to someone outside the premises or financial institution (was banking” in the 05 06 edition) premises because of unauthorized instructions. There is also no coverage for property surrendered due to any of the following threats:

To do bodily harm to a person
To damage any property
To introduce a denial of service attack into any (was “your” in the 05 06 edition) computer system
To introduce a virus or other malicious instruction into any (was “your” in the 05 06 edition) computer system designed to destroy, damage, or corrupt computer programs or electronic (word added in the 08 13 edition) data stored in the (was “your” in the 05 06 edition) computer system.
To utilize, divulge, or disseminate any of the following:

The named insured’s confidential information
Another person or organization’s personal or confidential information (08 13 addition)
Weakness in the source code in any (was “your” in the 05 06 edition) computer system

Note: This type of activity is considered to be a form of extortion. Coverage is available by purchasing Optional Insuring Agreement CR 04 03–Extortion–Commercial Entities or by purchasing Kidnap/Ransom and Extortion Coverage.

(2) This exclusion does not apply to Insuring Agreement A.5, Outside the Premises, if the property was in the custody of a messenger who did not know about the threat at the time the trip began or who knew about the threat but the loss was not related to it.

g. Vandalism

Loss from damage by vandalism or malicious mischief to the building, premises, safes, cash drawers, or cash registers is excluded.

Note: Vandalism and malicious mischief is properly insured under commercial property coverage forms. In certain situations, vandalism and theft are concurrent causes of loss. These are different losses that occur at the same time.

Example: Vandals break Oscar’s Office Outlet’s showroom windows and remove fixtures and other building items. Thieves enter through the broken window and steal merchandise before Oscar can secure the building. The commercial property coverage form should cover the building losses. Crime Insuring Agreement A.4, Inside the Premises–Robbery or Safe Burglary of Other Property covers the merchandise the thieves stole after they entered through the broken window.

h. Voluntary Parting of Title to or Possession of Property

There is no coverage when the named insured or someone working with the named insured is tricked into parting with title to or possession of any covered property.

Note: There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

4. The following exclusions apply to Insuring Agreement A. 6: Computer and Funds Transfer Fraud. (08 13 changes)

a. Authorized Access (08 13 addition)

Coverage that Insuring Agreement 6. Provides does not apply if the loss results from actions of a person or organization authorized to access that computer system. The only exception is described in Insuring Agreement A. 6. b.

b. Credit Card Transactions

Coverage does not apply if the loss is the result of using any type of credit, debit, charge, or other similar card. Coverage also does not apply is the loss is due to the information contained on any of those cards.

c. Exchanges or Purchases (08 13 addition)

There is no coverage for loss in any exchange or purchase of any property.

Note: There is no standard endorsement available to "buy back" this exclusion or to purchase this coverage.

d. Fraudulent Instructions (08 13 addition)

Loss caused when money or securities or other property is transferred, paid, or delivered by an employee or financial institution carrying out fraudulent instructions is excluded. Similarly, there is no coverage if the named insured’s account is debited or deleted under the same circumstances.

The only exceptions are the coverages described in Insuring Agreement A. 6. a. (2) and A. 6. b.

Note: This exclusion appears to be used to clarify the exact circumstances when coverage is provided and eliminating all others.

e. Inventory Shortages

There is no coverage for part or all of a loss that can be proven or the amount determined by only a profit and loss or an inventory calculation.

The 08 13 edition does not have the Funds Transfer Fraud exclusion or the Computer Fraud exclusion that were in the 05 06 edition because the 08 13 edition combined these two insuring agreements into a single insuring agreement.

E. CONDITIONS

These conditions apply in addition to the Common Policy Conditions.

1. Conditions Applicable to All Insuring Agreements

a. Additional Premises or Employees (08 13 change)

Coverage automatically applies without an additional premium charge when a named insured adds employees and/or premises during that policy term. The only exception is when the new premises or employees are the result of a consolidation, merger, or acquisition. The named insured is not required (was “need not be given” in the 05 06 edition) to notify the insurance company and tell it about the additional premises and/or employees.

Note: E. 1. c. Consolidation–Merger or Acquisition below provides additional information on this subject.

b. Concealment, Misrepresentation, or Fraud

Any fraudulent act the named insured commits voids coverage. It is also void if the named insured or any insured intentionally misrepresents or conceals material facts with respect to the insurance provided, property it covers, the named insured’s interest in that property, or any claim made.

c. Consolidation–Merger or Acquisition

When the named insured merges or consolidates with or acquires another entity, the insurance company must be notified as soon as possible. This notice must be in writing and the insurance company must agree to provide the coverage. The insurance company may require additional premium.

Automatic coverage applies for 90 days for the premises, assets, or liabilities of the other entity and its employees. There is no coverage after 90 days unless the insurance company adds it to the policy. The only losses covered are those that occur AFTER the date of consolidation, merger, or acquisition.

d. Cooperation

The named insured must be cooperative and work with the insurance company. The policy’s terms and conditions establish that required cooperation.

e. Duties in the Event of Loss (08 13 change)

The named insured has certain duties it must perform after it discovers a loss or a situation that may result in loss of or damage to money, securities, or other property. They are the following:

Notify the insurance company as soon as possible. In addition, notify local law enforcement agencies if a law has been violated. Law enforcement is not required to be notified if the loss involves only Insuring Agreements A. 1. or A. 2.
Give the insurance company a detailed, sworn proof of loss within 120 days of discovering the loss.

Note: This is longer than in most policies. This is because of the extraordinarily long amount of time that may be needed to work through a complicated employee theft scheme or other fraud and where trails of money or computer fraud are involved.

Cooperate with the insurance company as it investigates and settles the claim.
Provide any records considered pertinent to the loss to the insurance company so it can examine them as needed.
Submit to an examination under oath and sign a statement. This is required when the insurance company requests it.
When the named insured has rights of recovery against any organization or person because of their responsibility for a loss, it must not do anything to impair those rights. It must actually secure them. (08 13 addition)

Note: The 08 13 edition also changed the order of some of the items above compared to the order in the 05 06 edition.

f. Employee Benefit Plans (08 13 changes)

Insuring Agreement A. 1. Employee Theft coverage applies to the employee benefit plans listed on the declarations.

Note: This is not employment practices legal liability coverage that covers such things as forgetting to enroll an employee during the open enrollment period. Employee benefit plans coverage applies to fraudulent or dishonest acts, such as theft of retirement funds by an employee.

Example: The Jones Company Retirement Plan is listed on the declarations as covered:

Scenario One: The plan administrator changes during the policy period but the plan name does not. Coverage continues.

Scenario Two: The named insured starts a separate retirement plan called The Jones 401k Retirement Plan. Coverage does not apply because this entity was not added to the declarations.

Coverage provided for the plan is subject to the following:

The plan may be jointly insured with another entity on the policy. In that case, the named insured or the plan administrator must select a limit of insurance for Insuring Agreement 1. that is high enough to at least equal the amount that ERISA would require (08 13 edition words added) if each Employee Benefit Plan was insured separately.

Note: This language is included because ERISA has specific minimum requirements based on the plan’s value. This provision requires that the named insured or the plan administrator select the limit, not the insurance company.

Insuring Agreement 1. A. is modified by replacing the term “theft” with the term “fraudulent or dishonest acts”. This applies only for losses the plan discovers or sustains.
When the plan is not the first named insured, the insurance company agrees to insure the plan and not the first named insured for any loss the plan sustains.
Two or more plans may be insured. In those cases, there is a special arrangement for any payment the insurance company makes for covered loss that two or more plans sustain, or loss of commingled money, securities, or other property of two or more plans that result from an occurrence. The insurance company makes payments to each plan that sustained loss in the same proportion that the limit of insurance that ERISA requires (08 13 edition words added) bears to the total of those limits.

Example: Three plans that share coverage under the same policy sustain a $100,000 loss. Covered Plan A requires a limit of $500,000, Covered Plan B requires a limit of $200,000, and Covered Plan C requires a limit of $50,000. The policy’s limit is $750,000. The insurance company reimburses Plan A 500/750 of the loss, Plan B 200/750 of the loss, and Plan C 50/750 of the loss.

Deductibles do not apply to employee benefit plan coverage.

g. Extended Period to Discover Loss

Losses must occur prior to the cancellation date of coverage but may be discovered at either of the following:

Within one year from the date that coverage is cancelled. However, this extended period to discover loss ends immediately on the date that the named insured obtains other coverage.

Example: Peggy did not know that her employees were skimming money from the cash registers. Her crime coverage expired on 01/01 2014 and was not renewed. She discovered the loss on 06/10/2014. The loss is covered if the employees began stealing the money from the cash registers before 01/01/2014.

Not more than one year from the date that cancellation is effective with respect to employee benefit plans. There are no exceptions.

h. Joint Insured

There may be cases where there is more than one insured named on the declarations. In those cases, the first named insured acts for itself and all other insureds with respect to the coverage that CR 00 21 provides. If the first named insured ceases to be insured, the next insured named becomes the first named insured.

Example: The named insured reads John Wilson, Wilson, Inc., Wilson, LLC, and Wilson, Johnson, and Miles. As the first named insured, John Wilson is responsible for paying the premium. He does not pay and he receives the cancellation notice because he is the first named insured. He does not tell any of the other entities that coverage is cancelled. When a loss occurs at a later date, the other named insureds do not have any recourse against the insurance company because it had properly notified the first named insured.

Knowledge by one insured of anything that affects the insurance coverage is considered to be knowledge held by all insureds. This is an important point because the named insured may not wholly own all insureds on the policy. They may be partnerships or corporations that involve significant outside ownership.

Example: Continuing the example above, prior to the cancellation, John Wilson lets Wilson, Johnson, and Miles hire Millie, one of his employees. John forgets to tell Wilson, Johnson, and Miles that Millie has a criminal record. Any employee theft loss that involves Millie is excluded because each named insured is considered to know what each other named insured knows.

Employees of one insured are considered employees of all insureds.
The extended period to discover loss condition applies separately to each insured.

Example: John Wilson did not purchase any replacement coverage. This means he has a one-year extended loss discovery period. The other named insureds purchased additional coverage when they learned of the cancellation. Their extended period to discover loss ends on the date that the new coverage is effective.

The limit of insurance applies to all insureds. A separate limit does not apply to each insured.

Example: All three named insureds shared a single bookkeeper. When she didn’t return from her vacation, it was discovered that all accounts had been emptied. John Wilson sustains a $100,000 loss, Wilson, Johnson, and Miles has a $75,000 loss, and Wilson LLC has a $50,000 loss from this single occurrence. The insurance company pays only the $100,000 limit on the declarations.

When the insurance company pays the first named insured for a loss, the claim is satisfied for all named insureds. The one exception is employee benefit plans that must receive a separate settlement.

Example: The insurance company pays John Wilson the $100,000 loss. He takes the payment and leaves town. The other two named insureds do not receive anything. Their only recourse is against John Wilson’s assets.

i. Legal Action Against Us

As with most policies, no insured can pursue legal action until that insured has complied with all the policy terms. An insured cannot bring the action until 90 days after filing a proof of loss. However, the lawsuit must be filed within two years of the date the insured discovered the loss. It is very important to note that the two years does not start on the date the loss was filed but instead starts on the date the loss was discovered. If a state law or local statute requires different time periods, the policy is amended or conforms to comply with those requirements.

j. Liberalization

The insurance company may adopt a revision that broadens the coverage this insurance provides and not charge any additional premium for it. If it does so 45 days prior to this policy period or during this policy period, the broadened coverage applies to this policy.

k. Loss Sustained During Prior Insurance Issued by Us or Any Affiliate

A person or persons may engage in numerous dishonest acts over a period of years before being caught. However, all such acts are considered one occurrence. If the named insured maintains continuous coverage with the same insurance company or group of insurance companies, coverage applies back to the date that the continuous insurance began. However, the limits of insurance do not accumulate because of the multiple years. Instead, the highest limit available during the total period is available to settle the total loss over the years when they occurred. This condition now has three parts and includes three examples because of some confusion and court cases such as Auto Lenders Acc Ace. Corp.v Gentilini Ford, Inc., 181 N.J. 245, 854 A.2d 378 2004.

Example: Alice stole $50,000 two years ago, $20,000 last year, and $30,000 this year, for a total of $100,000. Alice’s employer carried a $50,000 limit of insurance each of these three years. These limits cannot be added together even though the dishonest acts took place during each of these years because this provision treats the series of thefts as a single occurrence. $50,000 is the maximum limit available for this single occurrence.

(1) Loss Sustained Partly during this Insurance and Partly during Prior Insurance

If a loss is sustained in part during the current insurance and in part during prior policies and there was no break in coverage, the loss in the current policy period is settled first. The losses in the prior periods are then settled.

(2) Loss Sustained Entirely during Prior Insurance

If a loss is sustained entirely during a previous policy period and there was no break in coverage between the date of loss and the current policy and the current policy covers the loss, the insurance company settles the loss under the most recent previous insurance first. It then settles the remaining amounts during previous insurance.

(3) When the insurance company settles losses under k. (1). And k. (2) above:

· The highest single limit of insurance available during any policy period when the loss occurred is available for the loss.

· No settlement is paid until the deductible that applies under the current policy is satisfied. That deductible is the only one applied to the entire loss settlement, regardless of the number of policy periods involved.

Examples:

Low down Bob has been stealing from Below Ground Enterprises for three years. Below Ground discovers the loss this year and calculates that the amount of loss is $100,000.

Scenario One: The limit of insurance on the current policy is $100,000. However, it was only $25,000 three years ago. The insurance company pays $100,000.

Scenario Two: The limit was reduced from $100,000 to $25,000 two years ago. The insurance company still pays Below Ground $100,000 because the limit of insurance was $100,000 at the time of the occurrence.

l. Loss Sustained During Prior Insurance Not Issued by Us or Any Affiliate

(1) This condition applies only if there was no lapse in coverage between the current coverage and the previous coverage. Even a one-day lapse in coverage nullifies this important benefit. If a loss sustained in a previous policy term is discovered after the end of that policy's discovery period, coverage applies under the current policy if both the old and new policy have the same coverage and one immediately replaces the other. The limit of insurance available is the lesser of the two policy limits.

Example: Number One, Inc. moved its coverage from STU Accident and Casualty Insurance Company to ABC Indemnity Company. It had been with STU for five years. Number One discovered a loss that occurred during the STU policy but after the discovery period expired. ABC Indemnity covers the loss for either the limit of insurance under the STU policy or the limit under its policy, whichever is less.

Note: The important distinction is that the highest limit is used to settle claims if coverage is continuously with one company or group. If coverage moves between companies, the lowest limit is used to settle claims. This creates a significant gap in coverage if coverage moves from one insurance company to another.

m. Other Insurance

(1) Primary Insurance

If other insurance is written under the same terms and conditions as this insurance, the policies share any loss proportionally. If the other insurance is not written under the same terms and conditions, this coverage is excess. It pays only after the loss exceeds the limit of insurance under the other policy or the deductible under this insurance, whichever is higher. The ability of the insured to collect the other coverage does not enter into consideration.

Example: Hershel changes insurance companies. Because of the cancellation and non-renewal terms and conditions, the two package policies overlap by two days. A holdup occurs at his business on one of those days.

Scenario One: The two crime coverages are identical. In this case, each contributes equally.

Scenario Two: One of the package policies has an automatic property extension endorsement that provides holdup coverage with a $2,500 limit. The policy with the extension is primary and the crime coverages are excess.

(2) Excess Insurance

Example: Continuing the example above, each of the two crime coverages had a $2,500 deductible. The property extension had a $2,500 limit, the deductible was satisfied, and the crime coverages paid the remaining loss, subject to the limit of insurance condition.

n. Ownership of Property; Interests Covered (08 13 changes)

This insurance covers only the following types of property:

Property the named insured owns or leases
Property the named insured holds, regardless of the capacity under which it is holding it (08 13 addition)

Note: The 08 13 edition deletes the words “whether or not you are legally liable for the loss of such property” and adds it in the next item.

Property the named insured is legally liable for but only if that liability was in place before the loss occurred (08 13 change)

o. Records

The named insured must maintain records of all property that this insurance covers so the insurance company can verify the amount of loss.

p. Recoveries

Recoveries are reduced by recovery expenses and are returned in the following order:

First, the named insured receives the amount of loss that exceeded the amount the insurance company paid.
Next, the insurance company receives the amount of loss it paid.
Next, the named insured receives the amount of deductible that was its responsibility.
Last, the named insured then receives any remaining amount that this insurance did not cover.

Recoveries do not include reinsurance the insurance company recovered or the cost of original securities if duplicates were issued.

q. Territory

This insurance covers losses that the named insured sustains that result directly from an occurrence that takes place within the United States of America, its territories and possessions, Puerto Rico, and Canada.

Note: There are territory exceptions for Insuring Agreements A. 1., A. 2., and A. 6. They are outlined below.

r. Transfer of Your Rights of Recovery Against Others to Us

The named insured must transfer all its rights against any organization or person for any loss it sustained to the insurance company. It must also do everything required to secure those rights. The named insured must not do anything after a loss to impair such rights. This applies only for losses the insurance company pays or settles.

Note: The named insured can waive rights of subrogation in writing before the loss in most property coverage forms and policies. This option is not available in this policy.

s. Valuation–Settlement (08 13 changes)

The following determines valuation of losses based on the coverage that CR 00 21 provides

(1) Money (bold title added in the 08 13 edition)

Money is valued at its face value. Money that is foreign currency can be replaced for the face value of that country’s currency or the equivalent in U. S. dollars. The equivalent value is based on the exchange rate or value published in The Wall Street Journal on the day the loss was discovered.

(2) Securities (bold title added in the 08 13 edition)

Securities are valued at their price at the close of business on the day the loss was discovered. The insurance company has two options. It can replace securities in kind or with cash. If replaced, the insured must sign over to the insurance company all rights to the lost securities. The second option is for the insurance company to pay for the cost of a lost securities bond in order to issue duplicates of the securities. The cost cannot exceed the market value of the securities as of the close of the business day when the loss was discovered or the limit of insurance, whichever is less.

(3) Property Other than Money and Securities (bold title added in the 08 13 edition)

Other property and damaged premises are valued at replacement cost. Payment is limited to the least of the following: (08 13 change in order)

The limit of insurance on the declarations
The amount to replace such property with similar property used for the same purpose
The amount the named insured spent to repair or replace such property

The insurance company does not pay any loss or damage on a replacement cost basis until such property is actually repaired and replaced. The replacement cost is not paid unless the items are repaired or replaced in a reasonable amount of time following the date of loss or damage. If not repaired or replaced, payment is made on an actual cash value basis.

At the named insured’s option, the insurance company pays for loss or damage to such property in the money of the country where the loss or damage was sustained (was “occurred” in the 05 06 edition) or the equivalent in U. S. dollars. The equivalent value is based on the exchange rate or value published in The Wall Street Journal on the day the loss was discovered.

Any property the insurance company pays for or replaces becomes its property.

2. Conditions Applicable to Insuring Agreement A. 1: Employee Theft

a. Termination as to Any Employee

This insuring agreement ends with respect to any employee based on the earlier of the following:

As soon as the named insured, its partners, members, managers, officers, directors, or trustees learn that an employee has committed theft or any other dishonest act either before or after being employed.

Example: Sherry is watching a rerun of a reality crime show and is shocked to see the on-screen arrest of Jackie, who she had hired six months earlier and who she considers trustworthy. Sherry decides not to share this information with her business partners. Jackie disappears two months later along with half of the company’s inventory. Coverage is denied because examination under oath reveals that Sherry knew about Jackie’s past.

On the date specified in a notice the insurance company mails to the first named insured. That date must be at least 30 days after the date the notice is mailed. The notice is mailed to the last mailing address of the first named insured that the insurance company knew about. Proof of mailing is sufficient proof that the notice was sent.

b. Territory

Coverage applies to losses caused by employees located temporarily outside the United States of America, its territories and possessions, Puerto Rico, and Canada. However, it is limited to the employee being outside this territory for not more than 90 consecutive days.

Note: This coverage does not apply to employees who permanently relocate to other countries.

3. Conditions Applicable to Insuring Agreement A. 2: Forgery or Alteration

a. Deductible Amount

Legal expenses are not subject to a deductible.

b. Electronic and Mechanical Signatures

The insurance company considers mechanically or electronically produced or reproduced signatures to be the same as handwritten signatures.

Note: However, coverage does not apply to electronic signatures that do not produce a visible handwritten signature but that are used in electronic commerce to verify the sender and the sender’s intent.

c. Proof of Loss

The named insured must include the instrument involved with the loss with the proof of loss. An example is a check. If it cannot, it must include an affidavit that states the cause of loss and the amount of loss.

d. Territory

The territory condition does not apply to this insuring agreement. Coverage applies anywhere in the world.

4. Conditions Applicable to Insuring Agreement A. 4: Inside the Premises–Robbery or Safe Burglary of Other Property and Insuring Agreement A. 5: Outside the Premises

a. Armored Motor Vehicle Companies

If there is a contract that allows for recovery from the armored vehicle company directly or from its insurance company, this policy is excess over that recovery amount.

b. Special Limit of Insurance for Specified Property

$5,000 is the maximum amount available in any one occurrence for loss of precious metals, precious or semiprecious stones, pearls, furs, or fur articles. This limit also applies to articles whose principal value is derived from the fur, precious metals, or precious stones, whether they are complete or not. This limit also applies to any kind of manuscripts, drawings, or records or the cost to reconstruct them or reproduce any information in them.

5. Conditions Applicable to Insuring Agreement A. 6: Computer and Funds Transfer Fraud

a. Special Limit of Insurance for Specified Property

$5,000 is the maximum amount available in a single occurrence for loss or damage to manuscripts, drawings, or records. This amount includes the cost to reconstruct them or reproduce any information in them.

b. Territory

The territory condition does not apply to this insuring agreement. Coverage applies anywhere in the world.

F. DEFINITIONS

These definitions apply to all insuring agreements. There are 25 definitions.

Note: The 08 13 edition removes the definition of “banking premises” that was in the 05 06 edition.

1. Computer program (08 13 addition)

This is a set of related electronic instructions that direct the function and operation of computers or the devices attached to them. A computer program enables computers and attached devices to receive, process, store, or send electronic data.

2. Computer system (08 13 addition)

This means any of the following if they collect, transmit, process, store, or retrieve electronic data:

Computers, Personal Digital Assistants (PDAs), other handheld or transportable devices, electronic storage devices, and related peripheral components
Applications and systems software
Related communications networks

3. Counterfeit money

This is a money imitation designed to deceive and be accepted as real, genuine money.

4. Custodian

This is the named insured and any of its partners, members, or employees who have care and custody of property inside the premises. It does not include watchpersons or janitors.

Note: Watchperson is defined as someone hired to watch. An employee who works late and is responsible for locking up when he or she leaves is not a watchperson. Janitor is not defined. A person hired to perform duties such as cleaning or light maintenance is the common understanding of the term.

Example: Becky is a very conscientious administrative assistant. She came in one Sunday night to clean up the company conference room so that it was ready for a Monday morning partners meeting. Even though she performed janitorial type duties, she was still considered a custodian, not a janitor, because her job is an administrative assistant.

5. Discover or discovered

This is when the named insured has enough information to reasonably believe that a covered loss will happen soon or has already occurred. The named insured is not required to know about the specific details, such as the time or location of a loss.

It also means the time when the named insured receives notice of an actual or potential claim that involves an insured being held liable to another party for a loss that this policy may cover.

Note: This definition’s paragraphs may cause confusion. Under the first paragraph, how does one determine when there is enough information to prompt a reasonable person to get the insurance company involved? The second paragraph refers to “notice” but does not define the word. The result is that interpretation could lead to litigation.

6. Electronic Data (08 13 addition)

This is all programs, information, and data stored, created, transmitted, or used on computers. The data can be in the form of floppy disks, hard disks, CD-ROMS, tapes, and similar storage media even when not on the computer.

7. Employee (08 13 changes)

Employees ARE:

(1) Natural persons who meet all of the following criteria:

Are in the named insured’s service. This applies for up to 30 days after such a person is terminated unless the termination is due to theft or any dishonest act the employee committed
Who the named insured compensates directly by wages, commissions, or salary?
Who the named insured has the right to control or direct while he or she performs services for the named insured?

The difference between employees and independent contractors can be vague and is somewhat fluid. Recent employment cases have scrutinized long-term independent contracts to determine if individuals are truly independent or are de facto employees. Each situation is different and requires expert legal advice to determine if these persons should be considered employees or not.

(2) Natural persons furnished to the named insured to temporarily substitute for a permanent employee. This applies only if that permanent employee replaced is on leave. Such employees may also be furnished to meet short-term workload demands. To be considered employees, they must be subject to the named insured’s control or direction while they perform services for the named insured.

The 08 13 edition broadens coverage for these employees because they remain employees even when they take property off premises, which was not the case in the prior edition.

(3) Natural persons leased to the named insured under a written agreement with a leasing firm. They must perform duties that relate to conduct of the named insured’s business. This does not include temporary employees.

(4) Employees are trustees and officers of the employee benefit plan, as well as the plan employees. Third-party administrators or other independent contractors hired to administer covered employee benefit plan(s) are not employees. Directors or trustees of the named insured plans are considered employees while handling money and securities (was “funds” in the 05 06 edition) and other property that belong to the plan. A plan director may have administrative duties that relate to only the plan but have nothing else to do with the insured’s business.

(5) A former employee, director, partner, member, manager, representative or trustee the named insured (words added) uses as a consultant is an employee if he or she is a natural person.

(6) An intern or guest student pursuing studies or duties provided he or she is a natural person.

The 08 13 edition broadens coverage for these employees because they remain employees even when they take property off premises, which was not the case in the prior edition.

(7) Employees of merged or consolidated entities and who are natural persons are employees, provided the merger or consolidation occurred before the effective date of the current policy.

(8) Managers, directors, or trustees are employees if they are natural persons and when they perform duties usual to those of an employee or when serving on a committee at the request of the board of directors or board of trustees. A director is not an employee when sitting in board meetings or doing tasks of a director.

Employee ARE NOT brokers, agents, commission merchants, factors, consignees, independent contractors, or similar parties and any others not specifically listed above as employees.

8. Employee benefit plan

This is any welfare or pension plan subject to the Employee Retirement Income Security Act of 1974 (ERISA) and amendments to it.

Notes:

Insurable plans include defined benefit pension, target benefit, profit sharing, 401(k), Keogh, Simplified Employee Pension (SEP) Plans, group health, life, disability, unemployment and cafeteria (Section 125) plans, and prepaid legal services. It does not include government plans such as Social Security.

This definition is much more restrictive compared to the same term used in liability coverage forms.

9. Financial institution (08 13 addition)

When used in Insuring Agreement A. 3., financial institution is a bank, savings bank, savings and loan association, credit union, or similar depository institution. It is also an insurance company.

When used in Insuring Agreement A. 6., financial institution is a bank, savings bank, savings and loan association, credit union, or similar depository institution. It is also an insurance company, an investment company, or a stock brokerage firm.

10. Financial institution premises (08 13 addition)

This is the interior of only that portion of any building that a financial institution occupies.

11. Forgery

This is the signing of someone else’s name with the intent to deceive. However, forgery is not when the named insured or an employee signs something using his or her own signature for which he or she does not have signature authority.

12 Fraudulent instruction (08 13 changes)

Note: The 08 13 changes this definition so that it no longer applies to all of crime insuring agreements. The definition is now restricted to only Insuring Agreement A. 6. Because of this change, the definition is less broad and much more specific.

a. When fraudulent instruction is used in Insuring Agreement A. 6. a. (2), it has the following meaning:

(1) A fraudulent telephone or electronic instruction that directs a financial institution to debit the named insured’s transfer account. That same instruction must then direct the financial institution to pay, transfer, or deliver money or securities from that transfer account. It includes any type of fraudulent electronic instruction. The instructions are considered fraudulent when they appear to have been issued by the named insured but that were actually written without the named insured’s knowledge.

(2) A fraudulent written instruction that directs a financial institution to debit the named insured’s transfer account. That same instruction must then direct the financial institution to use an electronic funds transfer system to pay, transfer, or deliver money or securities from that transfer account. The instructions are considered fraudulent when they appear to have been issued by the named insured but that were actually written without the named insured’s knowledge.

This definition does not apply to written instructions that Insuring Agreement A. 2. covers.

(3) A fraudulent electronic or written instruction issued by an employee to the named insured. The instructions are considered fraudulent when they appear to have been issued by the employee but that were actually written without knowledge of either the employee or the named insured.

b. When fraudulent instruction is used in Insuring Agreement A. 6. a. (2), it has the following meaning:

Any type of fraudulent instruction from the named insured’s computer software contractor that directs an employee to make changes in programs or data within the computer system. This applies only if this Insuring Agreement covers the computer system.

Note: The 08 13 edition removes the definition of “funds” that was in the 05 06 edition.

13. Manager (08 13 change)

This is a natural person who is a director of a limited liability company.

Note: Manager is not the typical employee with supervisory responsibilities. That person is considered an employee.

14. Member

This is an owner of a limited liability company represented by its ownership interest. A member may also serve as a manager if he or she is a natural person. (08 13 words added)

15. Messenger

This is the named insured, the named insured’s relative, partner, member, or any employee who is responsible for property in his or her possession while outside the premises.

Note: Most entities are not persons and therefore do not have relatives. The broadening of the term messenger to apply to relatives applies only when the named insured is an individual.

16. Money (08 13 changes)

This is currency, coin, or bank notes that have a face value that are in current use. It also means traveler’s checks and money orders held for sale. The 08 13 edition removes the term “register checks” that was in the 05 06 edition because the banking industry no longer uses register checks.

It is also any of the named insured’s deposits that are in a financial institution. This broadening applies to only coverage that Insuring Agreements A. 1. and A. 2 provide.

When Insuring Agreement A. 6. provides coverage, deposits of the named insured that are in the types of financial institutions described in the F. 9, b, definition of Financial institutions are also considered money.

Note: Cashier’s checks are not considered money.

Checks

17. Occurrence

This term has different meanings under different Insuring Agreements.

a. When used in Insuring Agreement A. 1., occurrence is one act, the total of multiple acts, or a series of acts an employee commits during the policy period. The acts are not required to be related but they may be. The employee may commit them alone or in collusion with others.

Examples:

Five employees work together to skim money from their company’s accounts at different times and in different ways. This is treated as a single occurrence.

Five employees who do not know of each other’s plans or what they are doing skim money from their company’s accounts at different times and in different ways. This is treated as five different occurrences.

The policy period is the period on the declarations but modified in Conditions E. 1. k. and E. 1. l. that explain how losses sustained during prior insurance are handled.

b. When used in Insuring Agreement A. 2., occurrence is one act, the total of multiple acts or a series of acts an employee commits during the policy period that involve one or more instruments. The acts are not required to be related but they may be. The employee may commit them alone or in collusion with others. The policy period is the period on the declarations but modified in Conditions E. 1. k. and E. 1. l. that explain how losses sustained during prior insurance are handled.

c. When used in any other Insuring Agreement, occurrence is one act, the total of multiple acts, or a series of acts committed during the policy period. The acts are not required to be related but they may be. The act(s) may be committed by a person who acts alone or in collusion with others. The act(s) are not required to have been committed by a person.

Example: A theft ring is never identified but there is evidence that it has been at work in the insured’s plant for five months and has stolen hundreds of different products. This is a single occurrence.

The policy period is the period on the declarations but modified in Conditions E. 1. k. and E. 1. l. that explain how losses sustained during prior insurance are handled.

18. Other property

This is any tangible property with value that is inherent. It does not include money and securities or electronic data, computer programs, or any property that this policy specifically excludes.

19. Premises

This is the interior PORTION of the building the named insured occupies to conduct its business.

Note: What portion of the building does the named insured occupy when it is a tenant in a mall with an interior corridor or if it operates a pushcart or kiosk in the mall? What about the storage locker located in a separate part of the mall? The lease of premises is the starting point to determine what premises means in these situations.

20. Robbery

This is unlawfully taking covered property from a person who has care and custody of that property. The unlawful taking can involve actual or threatened bodily harm. It may also involve that person witnessing an obviously unlawful act.

Example: A customer at the end of an aisle in a store is observed shoplifting and security is called. A robbery has not taken place because no person had control of the property at the time.

Example: An employee takes a package of product from one store to another. A pedestrian reaches into the vehicle and steals the package when the employee stops his vehicle at a stop sign. This is a robbery because the employee had the package and witnessed it being removed.

21. Safe burglary

This is unlawfully taking covered property from inside a locked safe or vault. There must be evidence on the outside of the safe or vault that a person entered it and removed the property. Safe burglary also occurs when a vault or safe is unlawfully removed from inside the premises.

22. Securities

These are instruments and contracts that represent money or property. The instruments can be negotiable or nonnegotiable. Examples of such instruments or contracts are tokens, tickets, revenue, and other stamps, including stamps in a postage meter. Another example is evidences of debt related to credit or charge cards. However, this applies only when the named insured does not issue the cards.

Note: Some securities may represent commodities, such as grain or coal.

23 Theft

This is unlawfully taking any covered property but only if it results in the insured being deprived.

Note: The theft must result in deprivation or loss of the insured. According to this definition, there is no theft if the item stolen does not have any value.

Example: Manny’s Book Publishing set aside 3,000 books. The plan was to take the books to a recycling center. Phyllis, an inventory clerk, took the books, placed them in her van, and sold them on Ebay. This definition does not consider Phyllis’ action to be theft because Manny was not actually deprived of anything.

24. Transfer account (08 13 changes)

This is an account the named insured maintains at a financial institution from which money and securities (was “funds” in the 05 06 edition) may be transferred, paid, or delivered by means of computer (word added), telegraphic, cable, teletype, telefacsimile, telephone, or other electronic instructions. This is done through an electronic funds transfer system or by written instructions that permit certain types of electronic transfers to be completed. However, the written instructions are not those which are covered under Insuring Agreement A.2.

25. Watchperson

This is a person with a very limited duty. He or she must have the care and custody of property inside the premises and been retained for only that duty.

Note: A watchperson the named insured hires who also patrols the grounds is not a watchperson with respect to this definition.

CR 00 20–COMMERCIAL CRIME COVERAGE FORM (DISCOVERY FORM)

This analysis addresses only the parts of CR 00 20 that are different than CR 00 21. This includes the following sections:

A. Insuring Agreements
E. Conditions

g. Extended Period to Discover Loss
k. Loss sustained During Prior Insurance Issued by Us or Any Affiliate
l. Loss Sustained During Prior Insurance Not Issued by Us or Any Affiliate
m. Policy Bridge–Discovery Replacing Loss Sustained

Note: The HOW, WHAT, WHO, and WHERE of coverage are unchanged. All differences are based on the “simple” question of WHEN.

A. Insuring Agreement

This is the major change in CR 00 20. The occurrence can take place at any time instead of it taking place only during the policy period.

Example: Martin discovers that his trusted employee, John, stole equipment from him. He discovered the theft on 12/05/2014. John stole the equipment on 08/03/2012. The current policy period is 10/01/2014 to 10/01/2015.

Scenario One: Martin is covered under CR 00 20. The loss is covered in the current policy period.

Scenario Two: Martin is covered under CR 00 21. The loss is not covered in the current policy period unless there was no break in coverage.

E. Conditions

g. Extended Period to Discover Loss

CR 00 20 provides a 60-day period to discover loss compared to the one-year period CR 00 21 provides. All other parts of this condition are identical.

Example: Paula’s commercial crime policy period is 10/01/2014 to10/01/2015. She does not renew coverage when the policy expires on 10/01/2015. Gerald and Nancy had been stealing from her for three years. She discovers this on 06/01/2016.

Scenario One: Paula is covered under CR 00 20. The loss is covered because it was discovered within one year of the date coverage ended.

Scenario Two: Paula is covered under CR 00 21. The loss is not covered because it was discovered more than 60 days after the date coverage ended.

E. Conditions

k. Loss Sustained During Prior Insurance Issued by Us or Any Affiliate

l. Loss Sustained During Prior Insurance not Issued by Us or Any Affiliate

CR 00 21 does not have either of these conditions because it does not have a limitation that the occurrence must take place during the policy period. CR 00 20 has these conditions because of that limitation.

E. Conditions

m. Policy Bridge–Discovery Replacing Loss Sustained

This condition is in only CR 00 20. It applies only if coverage written on a discovery basis replaces coverage written on a loss sustained basis. In addition, this condition applies only if the policy being replaced has an extended period of time to discover a loss. This restriction applies only if the extended period of time did not terminate when this policy was issued.

If a loss is discovered within the prior coverage’s extended reporting period, this coverage pays only in excess of that coverage’s limit of insurance plus its deductible. However, it does not exceed the difference between that coverage’s limit plus its deductible and this coverage’s limit of insurance.

Example: Marjorie’s coverage written on a discovery basis has a term from 01/01/2014 to 01/01/2015. Her prior coverage was written on a loss sustained basis from 01/01/2013 to 01/01/2014. It had a one-year extended reporting period. Marjorie discovers a $100,000 loss on 03/02/2014.

Scenario One: The current limit of insurance is $100,000. The prior limit of insurance was $100,000. The prior policy limit pays the loss.

Scenario Two: The current limit of insurance is $100,000. The prior limit of insurance was $50,000. Marjorie collects $50,000 from the prior policy and 50,000 from the current policy.

Scenario Three: The current limit of insurance is $50,000. The prior limit of insurance was $100,000. In this case, the prior policy pays the entire loss.

CR 00 23–COMMERCIAL CRIME POLICY (LOSS SUSTAINED FORM)

This is a monoline policy. Its wording is identical to the wording in CR 00 21 except that it incorporates six conditions from IL 00 17–Common Conditions that are not in CR 00 21. This means there are more conditions and different letters assigned to the conditions but the actual content is unchanged. The six conditions from IL 00 17 incorporated into CR 00 23 are:

b. Cancellation of Policy

c. Changes

i. Examination of Your Books and Records

k. Inspections and Surveys

s. Premiums

w. Transfer of Your Rights and Duties Under This Policy

Neither IL 00 03–Common Policy declarations nor IL 00 17–Common Policy Conditions are attached when CR 00 23 is issued. Only CR DS 02–Crime Policy Declarations and CR 00 23 are needed for a complete policy.

CR 00 22–COMMERCIAL CRIME POLICY (DISCOVERY FORM)

b. Cancellation of Policy

c. Changes

i. Examination of Your Books and Records

k. Inspections and Surveys

s. Premiums

w. Transfer of Your Rights and Duties Under This Policy

Neither IL 00 03–Common Policy declarations nor IL 00 17–Common Policy Conditions are attached when CR 00 22 is issued. Only CR DS 02–Crime Policy Declarations and CR 00 22 are needed for a complete policy.

ISO COMMERCIAL CRIME COVERAGES AVAILABLE ENDORSEMENTS AND THEIR USES( 08 13 edition)

INTRODUCTION

This list identifies endorsements available to modify the Insurance Services Office (ISO) Commercial Crime Coverage Forms and Policies. It is arranged by form number and title and briefly explains how each endorsement is used. It does not include any state specific endorsements, changes, or amendments. New endorsements introduced or changed in the 08 13 edition are in bold print.

Note: This section lists but does not otherwise address any of the various ISO Terrorism Endorsements.

FORM NUMBERING

The ten-digit numbering sequence of ISO forms and endorsements has a very specific meaning.

The first two entries are alphabetical characters that indicate the line of insurance involved. For example, CR denotes Commercial Crime.
The next two digits designate the specific insurance category. Additional detail and information on these categories is in the next section below.
The next two digits are the form or endorsement number within the insurance category.
The last four digits are the edition date of the form or endorsement expressed in month and year format. These digits are not used in this analysis.

Endorsements are grouped in categories according to their purpose as follows:

CR 00	Coverage Forms and Policies
CR 04	Optional Crime and Fidelity Insuring Agreements
CR 07	Terrorism Endorsements
CR 20	Common Crime and Fidelity Endorsements
CR 25	Fidelity Amendatory Endorsements
CR 35	Crime Amendatory Endorsements
CR 45	Kidnap/Ransom and Extortion Coverage Endorsements

COVERAGE FORMS AND POLICIES (CR 00)

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)

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)

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)

CR 00 40–Kidnap/Ransom and Extortion Coverage Form

CR 00 41–Kidnap/Ransom and Extortion Policy

OPTIONAL CRIME AND FIDELITY INSURING AGREEMENTS (CR 04)

CR 04 01–Clients’ Property (08 13 changes)

CR 04 03–Extortion-Commercial Entities (08 13 changes)

CR 04 04–Extortion–Government Entities (08 13 changes)

CR 04 05–Inside the Premises–Theft of Other Property (08 13 changes)

CR 04 06–Inside the Premises–Robbery of a Watchperson or Burglary of Other Property

CR 04 07–Inside the Premises–Robbery of a Custodian or Safe Burglary of Money and Securities (08 13 changes)

CR 04 08–Employee Theft–Name or Position Schedule (08 13 changes)

CR 04 09–Lessees of Safe Deposit Boxes (08 13 changes)

CR 04 10–Securities Deposited With Others (08 13 changes)

CR 04 11–Guests’ Property (08 13 changes)

CR 04 12–Safe Depository (08 13 changes)

CR 04 13–Destruction of Electronic Data or Computer Programs (08 13 changes)

CR 04 14–Unauthorized Reproduction of Computer Software by Employees (08 13 changes)

CR 04 15–Identity Fraud Expense (08 13 changes)

CR 04 16–Telephone Toll Fraud (08 13 changes)

TERRORISM ENDORSEMENTS (CR 07)

Note: These endorsements are used with the ISO Crime Coverage Forms and Policies in response to the Terrorism Risk Insurance Act of 2002 (TRIA) and following.

CR 07 30–Exclusion of Terrorism

CR 07 31–Exclusion of Terrorism Involving Nuclear, Biological, or Chemical Terrorism

CR 07 50–Amendment–Delete Provision Regarding Certain Acts of Terrorism (Applicable to Crime/Fidelity Only)

CR 07 51–Replace Terrorism Provisions (Applicable to Crime/Fidelity Only)

CR 07 52–Conditional Exclusion of Terrorism (Relating to Disposition of Federal Terrorism Risk Insurance Act)

CR 07 53–Conditional Exclusion of Terrorism Involving Nuclear, Biological, or Chemical Terrorism (Relating to Disposition of Terrorism Risk Insurance Act)

COMMON CRIME AND FIDELITY ENDORSEMENTS (CR 20 SERIES):

CR 20 01–Policy Change (Discovery Form)

(Use with CR 00 20, CR 00 22, CR 00 24, CR 00 26, CR 00 28, and CR 00 30)

This is a miscellaneous or general coverage change endorsement used with Discovery Coverage Forms and Policies. The changes being made are entered on the endorsement schedule.

CR 20 02–Policy Change (Loss Sustained Form)

(Use CR 0021, CR 00 23, CR 00 25, CR 00 27, CR 00 29, and CR 00 31)

This is a miscellaneous or general coverage change endorsement used with Loss Sustained Coverage Forms and Policies. The changes being made are entered on the endorsement schedule.

CR 20 04–Change Extended Period to Discover Loss

(Use with CR 00 20, CR 00 22, CR 00 24, CR 00 26, CR 00 28, and CR 00 30)

This endorsement adds extra days to the 60-day time period in the loss condition. The number of days entered in the schedule is added to the 60 days the basic coverage forms and policies automatically provide. The change does not affect the one-year discovery period for employee benefit plan(s).

This endorsement changes the number of days in the Extended Period to Discover Loss Condition from 60 days to 60 days plus the number of days entered in this endorsement schedule. It does not affect the one-year discovery period for employee benefit plan(s).

CR 20 05–Include Retroactive Date

(Use with all except CR 00 40 and CR 00 41)

This endorsement restricts coverage to actions that occur after the retroactive date entered on the endorsement schedule.

CR 20 08–Convert to an Aggregate Limit of Insurance

(Use with all except CR 00 40 and CR 00 41)

This endorsement adds the aggregate limit of insurance on the endorsement schedule. It is the most the insurance company pays in a year. This is a very restrictive endorsement and should be used carefully.

CR 20 09–Amend Territorial Limits (08 13 changes)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, CR 00 29)

This endorsement previously allowed for territories to be added or deleted from the territory definition. It now permits only territories to be added. It also adds a provision to the Legal Action Condition that requires bringing legal action in the coverage form or policy’s basic territory.

CR 20 10–Concurrent Insurance (08 13 changes)

(Use with all except CR 00 40 and CR 00 41)

This endorsement is used when there are multiple carriers. It lists their names and their limits of insurance on the endorsement schedule. The coverage form or policy pays only its portion of the loss as that limit bears to the total of all limits of insurance. The 08 13 changes are in format and do not affect or change coverage.

Example: Company A insures for a $10,000 limit, Company B for a $10,000 limit, and Company C (this insurer) for a $20,000 limit. Company C has 50% of the total limits for indemnity in any loss. In the case of a $5,000 claim, Company C pays $2,500 even if Company A and/or Company B do not respond.

CR 20 11–Coindemnity

(Use with all except CR 00 40 and CR 00 41)

This endorsement is used when two or more companies provide coverage for the same insured. The difference between it and CR 20 10–Concurrent Insurance is that a lead or controlling insurance company is selected. This controlling company collects premiums and sends notices of cancellation for the benefit of all companies. However, any other company listed on the endorsement schedule can cancel its coverage by notifying both the named insured and the controlling company. Each company pays its portion of the loss as its limit bears to the total of all limits of insurance.

CR 20 12–Binding Arbitration

(Use with all coverage forms and policies)

CR 20 13–Non-Binding Arbitration (10 10 change)

(Use with all coverage forms and policies)

The named insured and the insurance company may disagree about the amount of loss and not be able to resolve it by any means. In that case, this endorsement permits either party to resolve the issue by demanding binding arbitration. However, any decision the arbitrators agree to may be appealed to a court of competent jurisdiction.

CR 20 14–Loss Payable

(Use with all except CR 00 40 and CR 00 41)

This is a standard loss payable clause. It requires loss payments that involve certain property to be made to designated entities listed on the endorsement schedule.

CR 20 15–Joint Loss Payable

(Use with all except CR 00 40 and CR 00 41)

This is a standard loss payable clause. It requires loss payments that involve certain described property to be made jointly to the named insured and to designated entities listed on the endorsement schedule instead of just to one or another.

CR 20 16–Provide Notice of Cancellation to Another Entity

(Use with all except CR 00 40 and CR 00 41)

This endorsement lists other entities that receive notice of cancellation. Their names and the required number of days’ notice are entered on the endorsement schedule. However, cancellation is still effective even if the insurance company fails to notify any party listed. In other words, cancellation still applies if the insurance company sends a ten-day notice when the endorsement states that it will provide a 90-day notice. As a result, this endorsement does not guarantee that the insurance company will fulfill its obligation to provide the cancellation with the specified number of days.

CR 20 17–Provide Required Notice of Cancellation to Another Entity

(Use with all except CR 00 40 and CR 00 41)

Unlike CR 20 16, this endorsement requires that the insurance company give the entity named on the endorsement schedule the number of days’ notice of cancellation listed on the endorsement schedule. Coverage remains in effect for the specific entity if the insurance company does not give the entity the specified number of days’ notice.

CR 20 18–Include Joint Venture or Partnership as Insured(s)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement restricts coverage. It limits payment to the named insured’s percentage ownership in the named joint venture or partnership. However, using the word “you” throughout the endorsement makes identifying the entity it refers to difficult.

CR 20 19–Obligee

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement adds an obligee (one to whom another is bound by a contract or legal agreement) to be protected against covered losses. The insurance company must notify a listed obligee of any cancellation. The obligee also has the right to request cancellation. The obligee has the same obligations as the named insured with respect to knowledge of current and prior dishonest acts by employees. Coverage does not apply to any loss that involves such employees.

CR 20 20–Calculation of Premium

(Use with CR 00 22, CR 00 23, CR 00 26, CR 00 27, CR 00 28, CR 00 29, CR 00 30, CR 00 31, and CR 00 41)

This endorsement is used with policies that have a term of more than one year or that are continuous until cancelled. It specifies that the policy can be re-rated and the premiums recalculated using the rules and rates in effect at the anniversary date, continuation date, or renewal.

CR 20 21–Exclusion of Certain Computer-Related Losses

(Use with CR 00 22, CR 00 23, CR 00 26, CR 00 27, CR 00 28, CR 00 29, CR 00 30, and CR 00 31)

This endorsement is used to add an exclusion similar to the Year 2000 (Y2K) exclusion to crime policies. Crime coverages that are part of a package policy are presumed to have the Y2K endorsement included in other policy conditions.

CR 20 22–Include Designated Person Required to Have Knowledge of Loss (Discovery Form)

(Use with CR 00 20, CR 00 22, CR 00 24, CR 00 26, CR 00 28, and CR 00 30)

The standard coverage forms and policies require that the named insured discover a loss. This endorsement changes this requirement to the named insured or the person in six listed positions or in any of the scheduled positions, if any.

CR 20 23– Include Designated Person Required to Have Knowledge of Loss (Sustained Form)

(Use with CR 00 21, CR 00 23, CR 00 25, CR 00 27, CR 00 29, and CR 00 31)

CR 20 24–Provide Limited Coverage for Loss Occurring Before Retroactive Date

(Use with all except CR 00 40 and CR 00 41)

This endorsement permits different entities to have different retroactive dates and varies in one important aspect from form CR 20 05–Include Retroactive Date. CR 20 24 provides coverage if an occurrence takes place partly before and partly after the retroactive date. CR 20 05 requires that the occurrence be entirely after the retroactive date.

CR 20 25–Loss Reporting Threshold (08 13 changes)

(Use with all except CR 00 40 and CR 00 41)

This endorsement revises the duty to report a loss to apply only when the amount of the loss exceeds a certain percentage of the deductible that applies listed on the declarations. The 08 13 changes were only the changes needed to match the changes to this condition in the coverage forms and policies.

CR 20 26–Provide Automatic Coverage for Acquired Entities

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement provides automatic coverage for entities that the named insured purchases or acquires provided it has more than 50% of that entity’s voting rights.

CR 20 27–Provide Varying Deductibles

(Use with all except CR 00 40 and CR 00 41)

This endorsement allows different deductibles for specific named insureds and insuring agreements.

CR 20 28–Add Protective Devices or Services

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement lists devices the named insured must maintain in proper working order. Failing to do so results in no coverage unless failing to properly maintain them is beyond the named insured’s control.

CR 20 29–Change in Control of the Insured–Notice to the Company

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement restricts coverage. It requires that the named insured notify the company of significant ownership changes. There is no coverage if the named insured fails to do so.

CR 20 30–Amend Territory Condition–Include Worldwide Coverage (08 13 addition)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement replaces the territory condition in the coverage form or policy. The territory is expanded to anywhere in the world. There are two exceptions. Losses sustained in scheduled territories and losses sustained in territories subject to United States of America embargo or trade or other economic sanctions are not covered. However, any legal action taken must be brought in the United States, its territories and possession, Puerto Rico or Canada.

CR 20 31–Include as Joint Insured(s) (08 13 addition)

(Use with all crime coverage forms and policies)

This endorsement considers the entities listed on the endorsement schedule to be named insureds.

CR 20 32–Amend Definition of Financial Institution (08 13 addition)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement revises the Inside the Premises–Theft of Money and Securities Insuring Agreement and the Computer and Funds Transfer Insuring Agreement definition of financial institution by adding and/or deleting the institutions on the endorsement schedule.

FIDELITY AMENDATORY ENDORSEMENTS (CR 25 SERIES)

CR 25 01–Exclude Designated Persons or Classes of Persons as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement is used to revise the definition of employee by excluding specific individuals or classes of persons listed on the endorsement schedule.

CR 25 02–Include Designated Agents as Employees

(Use with all except CR 00 40 and CR 00 41)

All crime coverage forms and policies exclude agents as employees. This endorsement adds agents who operate in the scheduled capacities as employees but only for theft losses and only up to the limit of insurance on the endorsement schedule.

CR 25 03–Include Partners as Employees

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement adds partners as employees for theft coverage but the coverage is limited. Any loss the insured partner-employee causes must be more than the sum of the following:

· Any amounts the named insured owes the partner

· The value of the partner's interest on the day the loss is discovered

· The deductible that applies

In other words, a partner who takes what he or she is entitled to from the partnership is not stealing. However, if the partner steals property that belongs to other partners and that property’s value is more than the deductible, the loss is paid.

CR 25 04–Include Members of a Limited Liability Company as Employees

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement adds members of a Limited Liability Company (LLC) as employees for theft coverage but the coverage is limited. Any loss the insured member-employee causes must be more than the sum of the following:

Any amounts the named insured owes the member
The value of the member’s interest on the day the loss is discovered
The deductible that applies

In other words, a member who takes what he or she is entitled to from the LLC is not stealing. However, if the member steals property that belongs to other members and that property’s value is more than the deductible, the loss is paid.

CR 25 06–Include Chairpersons and Members of Specified Committees as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement treats the chairperson and all members of the committee(s) listed on the endorsement schedule as employees when they perform work of that committee or committees.

CR 25 08–Include Specified Non-Compensated Officers as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement amends the definition of employee to include the named insured’s scheduled officers who are not compensated as employees. The officers can be scheduled by named or by title.

Note: Some examples are the chairman emeritus, honorary officers of city boards, and others in similar or related capacities.

CR 25 09–Include Volunteer Workers as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement amends the definition of employee. It includes any natural person who the named insured does not compensate but who performs services for the named insured usual to employees’ duties or who acts as a fundraiser during fundraising activities.

CR 25 10–Include Volunteer Workers Other Than Fund Solicitors as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement amends the definition of employee. It includes any natural person who the named insured does not compensate who performs services for the named insured usual to employees’ duties.

Unlike CR 25 09, CR 25 10 does not cover volunteers who engage in fundraising activities.

CR 25 11–Include the Spouse and Children of Building Manager, Superintendent, or Janitor as Employees

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement includes the spouse and any child of the building manager, janitor, or superintendent over the age of 18 as employees provided, they actually reside with the employee. The spouse and children are considered as a unit for everything in the coverage form or policy except for the Termination of Any Employee Condition. This means that a child may be terminated from coverage due to his or her dishonest acts while coverage continues to apply to the spouse and other children.

CR 25 12–Include Treasurers or Tax Collectors as Employees (10 10 change)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement deletes the treasurers and tax collectors exclusion in the coverage form or policy. A treasurer or tax collector listed on the endorsement schedule is covered as an employee.

This endorsement is name specific. If a treasurer is replaced for any reason, there is no coverage for the new treasurer until his or her name is listed on the endorsement schedule.

CR 25 13–Include Students as Employees

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement includes students enrolled in a school within the named insured’s jurisdiction who handle funds and property in connection with sanctioned school activities as covered employees. It deletes the treasurers and tax collectors exclusion in the coverage form or policy.

This endorsement does not apply to children who collect money for the band trip to the Rose Bowl or to private institutions.

CR 25 14–Include Officers and Employees of Federal Reserve Bank Acting as EFTS Agent as Employees

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement adds officers and employees of a Federal Reserve Bank as employees. However, this is only when they act as the named insured’s agent for electronic funds transfers (EFT). These parties are employees only when they perform services on the named insured’s behalf or when they have care or custody of the named insured's covered property.

CR 25 15–Amend Definition of Employee to Comply with Labor-Management Reporting and Disclosure Act of 1959

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement broadens the definition of employee to include officers, dues collectors, shop stewards, and shop chairpersons who the named insured does not compensate.

CR 25 16–Add Trading Coverage

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. It adds trading coverage that uses a genuine account to the coverage form or policy. A separate limit of insurance on the endorsement schedule applies to this coverage. This limit is part of the limit on the declarations, not in addition to it.

Example: The crime policy for Fred’s Financial Consulting has a $60,000 limit of insurance for employee theft and a separate $25,000 limit of insurance for trading. If an employee is involved in both a trading loss and a theft loss, the most the insurance company pays is $25,000 for the trading loss and up to another $35,000 for the theft loss.

CR 25 17–Add Warehouse Receipts Coverage

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It replaces the exclusion that applies to warehouse receipts but only up to the limit of insurance on the endorsement schedule. This limit is part of the limit on the declarations, not in addition to it.

CR 25 18–Add Faithful Performance of Duty Coverage

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It broadens coverage to include loss due to an employee failing to faithfully perform his or her job.

CR 25 19–Add Faithful Performance of Duty Coverage for Government Employees (08 13 changes)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement applies to only the employee theft insuring agreement. It broadens coverage to include loss due to an employee failing to perform his or her job faithfully. The endorsement schedule has spaces to enter limits for either the Employee Theft–per Loss Coverage or the Employee Theft–per Employee Coverage Insuring Agreement. The changes in the 08 13 edition are in format and do not change or affect coverage.

CR 25 20–Add Credit, Debit, or Charge Card Forgery

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the forgery or alteration insuring agreement. Forgery coverage can be extended to include credit, debit, or charge card forgery or apply to only credit, debit, or charge card forgery based on entries and subject to the limit of insurance on the endorsement schedule.

CR 25 21–Add Warehouse Receipts Forgery

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the forgery or alteration insuring agreement. Forgery coverage can be extended to include either warehouse receipts forgery or apply to only warehouse receipts forgery based on entries and subject to the limit of insurance on the endorsement schedule.

CR 25 22–Include Personal Accounts of Specified Persons

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the forgery or alteration insuring agreement. Coverage applies to the personal accounts of designated persons. The endorsement schedule has spaces for the name of each person and the limit of insurance that applies to that person. The limit is part of the limit of insurance on the declarations, not in addition to it.

This endorsement is especially useful for sole proprietors who have individual accounts, as well as business accounts on which employees may be able to write checks. Other parties, such as executives, are exposed to losses because their staff members and others familiar with their handwriting might steal the executive’s checkbook and write checks to themselves or for cash.

CR 25 23–Exclude Certain Risks Inherent in Insurance Operations

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It excludes losses associated with issuing insurance, indemnity, or surety contracts.

CR 25 24–Exclude High-Grading Loss

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It excludes precious metals and precious stones (including the ores that contain them) unless an authorized employee receives them and deposits them in a safe or vault for safekeeping.

CR 25 25–Exclude Unauthorized Advances, Require Annual Audit

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It excludes losses caused by employees who make unauthorized advances of funds for dues or other assessments for any member. It requires an annual audit of the named insured's books and records, including verifying all bank balances and securities that pertain to each employee as a condition of coverage.

This endorsement is designed primarily for clubs and similar organizations.

CR 25 26–Rural Utilities Service Borrowing Corporations–Limit Amount of Insurance on Collection Agents

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It covers losses caused by collection agents included as an employee up to the limit of insurance on the endorsement schedule. The limit is part of the limit of insurance on the declarations, not in addition to it.

CR 25 27–Rural Utilities Service Joint Insured (08 13 changes)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement significantly changes the Joint Insured Condition and the Termination As to Any Employee Condition to provide additional protections for a borrowing corporation of the rural utilities service. The changes in the 08 13 edition are in format and do not change or affect coverage.

CR 25 28–Rural Utilities Services Regulations (08 13 changes)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement is used when coverage is provided to rural utility companies in order to comply with federal regulations. The changes in the 08 13 edition reflect only changes made in the coverage forms.

CR 25 29–Insured at Military Center

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement adds a member of the armed services or a department of government who performs duties for a commercial or not-for-profit insured that is not a government entity as an employee. If a loss occurs, the endorsement requires a form of binding settlement administered by either a military or government board of officers. The insurance company can request arbitration if it disagrees with the result of such a binding settlement. However, it must do so within 30 days or it loses that right.

CR 25 30–Banks for Cooperatives and Federal Intermediate Credit Banks

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement applies to only the employee theft insuring agreement. It meets specific federal requirements and pays specifically named Banks for Cooperatives or Federal Intermediate Credit Banks for the named insured’s losses caused by employee theft. The named insured cannot be a financial institution. Coverage applies even if the named insured allows the coverage to be terminated or suspended. The bank scheduled must be notified of the cancellation within the number of days on the endorsement schedule.

CR 25 31–Add Blanket Excess Limit of Insurance for Specified Joint Insured

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. It can be added if one or more joint insureds require higher limits. The joint insured(s) that require higher limits and the blanket excess limit of insurance are entered in the spaces provided on the endorsement schedule.

CR 25 32–Provide Employee Theft Coverage Excess Over a Statutory Bond Requirement

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement applies to only the employee theft insuring agreement. It covers bonded employees, treasurers, and tax collectors for losses that exceed the statutory limits required by law. If a loss exceeds a certain employee’s required bond limits, this coverage pays the additional amount subject to the lesser of either the limit of insurance or the amount of loss.

CR 25 33–Employee Theft–Per Loss Excess over Employee Theft–Per Employee

(Use with CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement applies to only the employee theft insuring agreement. It explains how the per-loss limit of insurance applies if the limit for employee theft–per employee is not high enough to pay the loss.

CR 25 34–Add Schedule Excess Limit of Insurance for Specified Employees or Positions

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. It provides excess coverage for persons and/or positions listed on the endorsement schedule up to a specific limit of insurance also on the endorsement schedule. As a result, the limit of insurance on the declarations applies to all employees and the limits on this endorsement’s schedule are in addition to the limit for all employees. The insurance company pays only the highest limit for a person who holds two or more positions. This coverage applies only if a covered employee is identified as the thief.

CR 25 35–Add Schedule Excess Limit of Insurance for Specified Employees or Positions for Employee Theft Only

(Use with all except CR 00 40 and CR 00 41)

This endorsement is identical to CR 25 34 except that it limits coverage to only employee theft.

CR 25 36–Change Schedule (Discovery Form)

(Use with CR 00 20, CR 00 22, CR 00 24, CR 00 26, CR 00 28, and CR 00 30)

This endorsement is used to add or delete named and/or positions on the employee theft insuring agreement. It is used with only policies or coverage forms written on a discovery basis. It explains how losses affected by this endorsement’s changes are handled from a discovery standpoint.

CR 25 37–Change Schedule (Loss Sustained Form)

(Use with CR 00 21, CR 00 23, CR 00 25, CR 00 27, CR 00 29, and CR 00 31)

This endorsement is used to add or delete named and/or positions on the employee theft insuring agreement. It is used with only policies or coverage forms written on a loss sustained form basis. It explains how losses affected by this endorsement’s changes are handled from a loss sustained standpoint.

CR 25 38–Change Schedule Excess Limit of Insurance for Specified Employees or Positions (Discovery Form)

(Use with CR 00 20, CR 00 22, CR 00 24, CR 00 26, CR 00 28, and CR 00 30)

This endorsement is used to modify CR 25 34 or CR 25 36. It cannot be used if one of those forms is not attached to the policy. It is used to add or delete names and/or positions and is used with only coverage forms and policies written on a discovery basis. It explains how losses affected by this endorsement’s changes are handled from a discovery standpoint.

CR 25 39–Change Schedule Excess Limit of Insurance for Specified Employees or Positions (Loss Sustained Form)

(Use with CR 00 21, CR 00 23, CR 00 25, CR 00 27, CR 00 29, and CR 00 31)

This endorsement is used to modify CR 25 34 or CR 25 36. It cannot be used if one of those forms is not attached to the policy. It is used to add or delete names and/or positions and is used with only coverage forms and policies written on a loss sustained basis. It explains how losses affected by this endorsement’s changes are handled from a loss sustained standpoint.

CR 25 40–Include Expenses Incurred to Establish Amount of Covered Loss (08 13 changes)

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to either the employee theft insuring agreement, the computer and funds transfer fraud insuring agreement, or both. Coverage applies to the cost to hire the services of an accountant to determine the amount of a loss. This endorsement pays the lesser of the limit of insurance or the percent of the loss on the endorsement schedule. Any amount paid reduces the limit of insurance available to pay for the entire loss. Previous editions provided computer fraud and funds transfer fraud as separate insuring agreements. The 08 13 edition combines them under the Computer and Funds Transfer Fraud insuring agreement.

Example: The employee theft limit of insurance is $750,000. The Costs, Fee, or other Expenses limit is $30,000 (15% of the actual loss). The employee theft loss is $500,000. The named insured receives $75,000 ($500,000 X .15), $30,000, or the actual expenses, whichever is less.

CR 25 41–Include Designated Persons or Classes of Persons as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. It is used to broaden the definition of employee by adding the individuals or classes of persons listed on the endorsement schedule. For example, a named insured may want certain temporary employees added as employees but not all of them.

CR 25 42–Include Computer Software Contractors as Employees

(Use with all except CR 00 40 and CR 00 41)

This endorsement applies to only the employee theft insuring agreement. It adds employees of the computer software contractor listed on the endorsement schedule as employees of the named insured. All employees of a given computer software contractor are treated as one employee. The limit of insurance on the endorsement schedule is a sub-limit. It is part of the limit on the declarations, not in addition to it.

CR 25 43–Add Faithful Performance of Duty Coverage for Specified Government Employees or Positions
(08 13 changes)

(Use with CR 00 24, CR 00 25, CR 00 26, CR 00 27, CR 00 30, and CR 00 31)

This endorsement applies to only the employee theft–name or position schedule insuring agreement. This is blanket coverage for all employees or positions listed. It broadens coverage to include loss due to an employee failing to faithfully perform his or her job. The changes in the 08 13 edition are in format and do not change or affect coverage.

CR 25 44–ERISA Inflation Guard

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 28, and CR 00 29)

This endorsement automatically increases the employee theft limit of insurance for ERISA up to the minimum amount of coverage that ERISA requires. It applies only when the limit was equal to or greater than ERISA’s minimum requirement when the policy was issued.

CRIME AMENDATORY ENDORSEMENTS (CR 35 SERIES)

CR 35 01–Exclude Specified Property (08 13 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It can be used to exclude certain specific property, such as securities, liquor, cigarettes, vending machines, watches, and other target commodities and merchandise insuring agreement selected. The 08 13 edition changes “Computer Fraud” on the endorsement schedule in the 08 07 edition to “Computer and Funds Transfer Fraud” to track with the same change in the coverage forms and policies.

CR 35 04–Increase Limit for Specified Property Subject to Special Limit of Insurance (08 13 change)

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

Crime coverage forms and policies cover furs, jewelry, and similar property for a $5,000 sub-limit. This endorsement is used to increase the sub-limit but only for the type of property described on the endorsement schedule and only for the insuring agreements selected. The 08 13 edition changes “Computer Fraud” on the endorsement schedule in the 08 07 edition to “Computer and Funds Transfer Fraud” to track with the same change in the coverage forms and policies.

CR 35 10–Forcible Entry into Premises Requirement

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It can be used with CR 04 06–Inside the Premises–Robbery or Safe Burglary of Other Property and/or CR 04 07–Inside the Premises–Robbery or Safe Burglary of Money and Securities. It requires forcible entry into the premises in order for safe burglary to be covered.

This means that actions by a thief who hides inside, burglarizes the safe, and then exits by the front door without leaving any marks are excluded.

CR 35 11–Include Outside Showcases or Show Windows as Premises (Withdrawn 11 09)

This endorsement was withdrawn with the 11 09 changes. Consider using CR 35 23 or CR 35 26.

CR 35 12–Convert to Schedule Coverage (Withdrawn 11 09)

This endorsement was withdrawn with the 11 09 changes due to lack of use.

CR 35 13–Exclude Designated Premises

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It is used to remove designated premises from the insuring agreement(s) selected.

CR 35 14–Reduce Limit of Insurance for Designated Premises

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It is used to reduce the limit of insurance at designated premises for the insuring agreement(s) selected.

CR 35 15–Decrease Limit of Insurance While Premises Not Open for Business

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It reduces the limit(s) of insurance for the insuring agreement(s) selected on the endorsement schedule when the premises is closed for business and there is no custodian on duty.

Some businesses do not have any money on their premises when they are closed. Certain facilities may be closed for extended periods, such as arenas and stadiums. In these cases, limits can be decreased when the business or facility is not open for business.

CR 35 16–Exclude from Extortion Coverage Persons or Property at Designated Premises

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement applies to only the extortion insuring agreement. It excludes any location on the endorsement schedule from coverage for threats against people who work there and/or property situated there.

CR 35 17–Include Personal Extortion for Named Individuals

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement broadens coverage. It applies to only the extortion insuring agreement. Any person listed on the endorsement schedule is considered an insured person.

This endorsement is normally used to extend insured status to a retired chairperson, former board member, former elected official, or another person who the unendorsed insuring agreement does not cover.

CR 35 18–Change Schedule Coverage (Withdrawn 11 09)

This endorsement was withdrawn with the 11 09 changes due to lack of use.

CR 35 19–Limit Coverage to Fixtures, Fittings or Appliances or Property in Public Entrances, Hallways or Storerooms (Withdrawn 11 09)

This endorsement was withdrawn with the 11 09 changes due to lack of use.

CR 35 20–Add Property of Others

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement broadens coverage because property for scheduled others is covered. The others are selected by class and are scheduled by insuring agreement with a limit entered. That limit can be a sub-limit or can be a separate limit based on the entry made. The limit is a separate limit if “limited to” is selected. The limit is a sub-limit to the limit of insurance on the declarations if “includes” is selected. However, the most paid for the property of any single person within the class is 10% of the limit on the endorsement schedule.

CR 35 21–Include Theft of Outdoor Signs (Withdrawn 11 09)

This endorsement was withdrawn with the 11 09 changes. Consider using CR 35 23 or CR 35 26.

CR 35 22–Require Record of Checks

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It requires either a photocopy or a complete written description of any check accepted.

CR 35 23–Extend Definition of Premises to Include Portion of Grounds Enclosed by Fence or Wall

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement extends coverage to the grounds where the premises is situated but only for the coverage(s) selected on the endorsement schedule. Coverage applies to only the portion(s) entirely enclosed by a fence or wall.

CR 35 24–Increase Limit of Insurance for Specified Periods

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement increases the limits of insurance for various insuring agreements at designated premises for specified periods during the year. The increased limit(s) applies to only covered losses discovered before the end of the specified period.

Note: This endorsement is similar to the peak season endorsement in commercial property coverage forms.

CR 35 25–Include Selling Price or Processing Charge

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement changes the valuation terms. It adds the named insured’s processing charge to the value of raw material and material being processed. Stock that is ready to be sold is valued at its selling price less discounts and expenses that the named insured does not incur because the item is not being sold. This valuation applies to only the insuring agreement(s) selected on the endorsement schedule.

CR 35 26–Extend Premises to Entire Plot of Ground under Your Control

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement extends coverage from only the defined premises to the land area under the named insured’s control. This applies to only the insuring agreement(s) selected on the endorsement schedule.

There is no requirement that the plot of ground be enclosed with or surrounded by walls or fences.

CR 35 27–Include Covered Property in Custody of Designated Agents

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement extends the definition of premises to include an agent’s premises. It also extends the definition of messenger to include the agent’s employees and officers. The agent’s name, address, services it performs for the named insured, and a sub-limit of insurance must be entered in the spaces provided for the insuring agreement(s) selected on the endorsement schedule.

CR 35 28–Include Guests’ Property Accepted for Safekeeping

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement provides a maximum of 10% of the limit of insurance per guest for the insuring agreements on the endorsement schedule.

This endorsement is appropriate for businesses such as hotels, inns, and lodges.

This endorsement is poorly written and does not explain the coverage it provides. CR 04 11–Guests’ Property may be more appropriate.

CR 35 29–Include Securities Held by a Depository in Trust

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage in CR 04 09–Lessees of Safe Deposit Boxes Section 1.a. It provides coverage for securities that are in specifically described safe deposit boxes when the depository holds them in trust. This coverage applies only while under dual control of the depository and a co-fiduciary.

CR 35 30–Include Bulky Property

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage in CR 04 09–Lessees of Safe Deposit Boxes Section 1.b. It eliminates the requirement that the items be kept in a safety deposit box for the described property. It is required only to be in a vault on the depository’s premises.

Examples of property this endorsement may cover are manuscripts, paintings, and other large or bulky items.

CR 35 31–Provide Sublimits for Money, Securities, or Checks

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage. It provides separate sub-limits of insurance for money, securities, and checks (other than retail checks) for the insuring agreements on the endorsement schedule. The sub-limit of insurance is part of the limit of insurance on the declarations, not in addition to it.

CR 35 32–Limit Coverage for Money and Securities Outside the Premises to Robbery Only

(Use with CR 00 20, CR 00 21, CR 00 22, CR 00 23, CR 00 24, CR 00 25, CR 00 26, and CR 00 27)

This endorsement restricts coverage when money and securities is off the premises. Only losses that involve robbery or attempted robbery are covered.

CR 35 33–Increase Limit of Insurance per Guest

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement is used to increase the limits per-guest and per-occurrence in CR 04 11–Guests’ Property to the limits per guest and per occurrence on the endorsement schedule.

CR 35 34–Include Damage from Food or Liquid

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage that CR 04 11–Guests’ Property provides to include coverage for the damage that food or drink spills, leaks, or upset cause.

CR 35 35–Include Property in Custody of Laundry or Cleaner

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage that CR 04 11–Guests’ Property provides to include damage to guest property while in the named insured’s care and custody for laundering or cleaning.

This endorsement does not extend coverage to the dry-cleaning establishment that receives the customer’s property from the named insured.

CR 35 36–Include Property of Guests Occupying Leased Lodging Accommodations

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage that CR 04 11–Guests’ Property provides to covered leased accommodations. Some hotels and other temporary lodging facilities occasionally provide extended lease arrangements for rooms and suites. This endorsement covers damage to property of such guests as long as the lease does not involve any business use. It does not apply to any guest who is the named insured’s employee.

CR 35 37–Include Samples or Articles Carried or Held for Sale or Delivery

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage that CR 04 11–Guests’ Property provides to include coverage for samples or property that guests hold for sale.

CR 35 38–Include Money for Full or Partial Limit of Insurance

(Use with CR 00 20, CR 00 21, CR 00 22, and CR 00 23)

This endorsement broadens the coverage that CR 04 12–Safe Depository provides to cover money, securities, and other property that belongs to the named insured’s customers at the location and for the limit of insurance on the endorsement schedule. This limit is part of the limit on the declarations, not in addition to it.

CR 35 39–Reduce Limit of Insurance for Specified Premises (Withdrawn 08 07)

This endorsement was withdrawn with the 08 07 edition because this change can be made on CR 04 12–Safe Depository’s endorsement schedule.

CR 35 40–Safe Deposit Box Transfer

(Use with CR 04 12)

This endorsement broadens the coverage that CR 04 12–Safe Depository provides. It covers customers’ property in safe deposit boxes while they are being transferred from one specified location to another. Coverage is limited to the date and time periods on the endorsement schedule.

KIDNAP/RANSOM AND EXTORTION COVERAGE ENDORSEMENTS (CR 45 SERIES)

CR 45 01–Policy Change

(Use with CR 00 40 and CR 00 41)

This endorsement can be used to make a number of different changes to the coverage form or policy.

CR 45 02–Death and Dismemberment

(Use with CR 00 40 and CR 00 41)

This endorsement adds coverage. It pays a scheduled amount to the insured person for his or her loss of any limb, hand, or foot, loss of sight in both eyes, mutilation, or permanent total disability that results from a kidnapping, extortion threat, detention, or hijacking. It pays the life benefit to the person’s estate if the person dies.

CR 45 03–Products Recall Expenses

(Use with CR 00 40 and CR 00 41)

This endorsement adds coverage for specified products recall expenses that are a direct result of an extortion threat to violate the named insured’s products or goods. This is subject to the limit of insurance on the endorsement schedule.

CR 45 04–Business Income and Extra Expense

(Use with CR 00 40 and CR 00 41)

This endorsement covers loss of business income and extra expenses incurred as a direct result of a covered incident. The amount paid is the lesser of the amount of loss sustained in each 24-hour period immediately following the incident or the limit entered on the endorsement schedule. Business income is defined to include payroll in addition to continuing normal operating expenses.

CR 45 05–Amend Territory Condition to Suspend Coverage for Foreign Business Operations (Withdrawn
08 07)

This endorsement was withdrawn with the 08 07 edition.

ISO GOVERNMENT CRIME COVERAGE FORMS AND POLICIES

INTRODUCTION

The coverage that the Insurance Services Office (ISO) Government Crime Coverage Forms and Policies provide is similar to the coverage that the ISO Commercial Crime Coverage Forms and Policies provide. This analysis addresses only the differences between them

The following are the applicable Coverage Forms and Policies:

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)

This analysis compares CR 00 25–Government Crime Coverage Form (Loss Sustained Form) to CR 00 21–Commercial Crime Coverage Form (Loss Sustained Form).

DECLARATIONS

CR DS 03–Crime and Fidelity Coverage Part Declarations (Government Entities) differs from CR DS 01–Crime and Fidelity Coverage Part Declarations (Commercial Entities) in only one way. It makes two options available under employee theft coverage. The named insured can purchase coverage on either a per-loss basis or a per-employee basis.

A. INSURING AGREEMENTS

The only coverage difference is adding employee theft-per employee coverage.

Insuring Agreement 1–Employee Theft is renamed Employee Theft–Per Loss Coverage. This coverage is identical to the coverage that the Commercial Crime Coverage Form provides.
Insuring Agreement 2–Employee Theft–Per Employee Coverage is unique to the government crime coverage form. Instead of providing coverage and limits per loss, it provides coverage and limits per employee or position. Specific employees or positions can be insured separately by using CR 04 08–Employee Theft–Name Schedule or Position Schedule.

B. LIMIT OF INSURANCE

This section is identical in both coverage forms.

C. LIMITS DEDUCTIBLE

This section is identical in both coverage forms.

D. EXCLUSIONS

Exclusion 1. applies to all Insuring Agreements. The following subparagraphs are amended:

a. Acts Committed by You replaces Acts Committed by You, Your Partners, or Your Members. This is because government entities do not have partners or members. This exclusion does not refer to partners and members.

b. Acts Committed by Your Employees Learned of by You Prior to the Policy Period substitutes the word “officials” in place of “partners, members, managers, officers, directors, or trustees.”

c. Acts Committed by Your Officials, Employees, or Representatives replaces 1. c. Acts Committed by Your Employees, Managers, Trustees, or Representatives. It substitutes “officials” in place of “managers, directors, or trustees.”

Exclusion 2. applies only to Insuring Agreements A. 1. and A. 2. Two exclusions are added, one is deleted, and one is amended:

The two new exclusions are:

Bonded Employees

There is no coverage for any loss caused by any employee required by law to be bonded.

Note: The exclusion applies whether the employee is actually bonded or not.

Treasurers or Tax Collectors

Coverage does not apply to any loss caused by a treasurer or tax collector even if the position is not identified as that of a treasurer or a tax collector.

The exclusion deleted is for warehouse receipts.
3. f. Transfer or Surrender of Property is amended by removing the threat to contaminate, pollute, or render substandard the named insured’s products or goods portion of the exclusion that is part of the Commercial Crime Coverage Form.

E. CONDITIONS

1. Conditions Applicable to all Insuring Agreements

Additional Premises or Employees

All references to consolidation, merger, purchase, or acquisition of another entity in the Commercial Crime Coverage Form are removed. This is not needed because government entities do not engage in these activities.

Consolidation–Merger or Acquisition

This condition in the Commercial Crime Coverage Form is not in the Government Crime Coverage Form because government entities do not engage in mergers or acquisitions.

Employee Benefits

This condition is revised to be more streamlined and direct because of the differences between commercial and government operations. The commercial version must address multiple benefits plans, joint ventures, and multiple named insureds. Because the government version deals with only one plan and one named insured, additional and unrelated conditions are deleted. The basic elements of the condition are the same in both cases. This means any payment made is for the plan’s benefit and no deductible applies to any plan losses.

Extended Period to Discover Loss

The Government Crime Coverage Form does not include the separate paragraph that provides the one-year limitation with respect to employee benefit plans without exception described in the Commercial Crime Coverage Form.

Joint Insured

The Government Crime Coverage Form substitutes “official” for the phrase “partner, member, or officer in the Commercial Crime Coverage Form. The Government Crime Coverage Form also does not include the separate paragraph that provides the one-year limitation with respect to employee benefit plans without exception described in the Commercial Crime Coverage Form.

Valuation–Settlement

All Government Crime Coverage Forms delete all references to countries other than the United States of America and the valuation of money in those countries.

2. Conditions Applicable to Insuring agreements A. 1. and A. 2.

Indemnification

This condition is added as a condition that applies to insuring agreements A. 1 and A. 2. Under these insuring agreements, public officials required BY LAW to have individual faithful performance bonds on employees for theft coverage are indemnified, subject to the policy limit.

Termination as to Any Employee

The Government Crime Coverage Form substitutes “officials” for the phrase “partners, members, managers, officers, directors, or trustees” in the Commercial Crime Coverage Form

4. Conditions Applicable to Insuring Agreements A. 5. and A. 6.

Special Limit of Insurance for Specified Property

This condition in the Government Crime Form is revised by deleting precious metals, stones, furs, and similar property from the $5,000 coverage limitation.

F. DEFINITIONS

4. Custodian

The Government Crime Coverage Form removes the terms partners and members.

7. Employee

The Government Crime Coverage Form substitutes “officials” for the phrase “partners, members, managers, officers, directors, or trustees” in the Commercial Crime Coverage Form. It also does not refer to mergers or acquisitions or include agents, brokers, factors, consignee, or commission merchant terms that are used in the Commercial Crime Coverage Form.

12. Messenger

The Government Crime Coverage Form removes the terms partners and members.

14. Occurrence

This definition is identical in both coverage forms. However, the Government Crime Coverage Form adds a section for Insuring Agreement A. 2. Employee Theft–Per Employee. The slight change in this definition is very significant. Under Insuring Agreement A. 1., an occurrence includes the actions of all employees who act in collusion with others. Under Insuring Agreement A. 2., an occurrence includes the actions of each employee who acts in collusion with others.

Example: Mary, Paula, and John work for a branch of the Bureau of Motor Vehicles. They decide to keep and evenly split the proceeds of every tenth transaction. Mary becomes ill and leaves. Paula and John approach her replacement with their scheme but she reports everything to her supervisors. The total loss is determined to be $300,000. There is only one occurrence if occurrence is defined to be the acts of all employees. However, there are three occurrences if occurrence is defined as the acts of each employee. If the limit of insurance under Insuring Agreement A. 1. is $100,000. $100,000 is the most the named insured can recover. If the named insured had purchased Insuring Agreement A. 2. instead, the most it can recover is $100,000 per employee or $300,000 for the three employees who acted in collusion.

The following are not considered defined terms in the Government Crime Coverage Form:

Employee Benefit Plan
Manager
Member

1. n. Ownership of Property: Interests Covered

The 08 13 edition broadens coverage to property that the named insured holds in any capacity.
The 08 13 edition changes property subject to legal liability to only such property that the named insured was legally liable for before the loss occurred.

1. s. Valuation–Settlement

(3) Property other than Money and Securities:

The 08 13 edition changes the order of the sub-items under (a).
The 08 13 changes the word “occurred” under (i) and (ii) in the 05 06 edition to “was sustained.”

CHANGES TO F. DEFINITIONS

The 08 13 edition removes two definitions that were in the 05 06 edition:

1. Banking premises
9. Funds

The 08 13 edition adds five new definitions:

1. Computer program
2. Computer system
6. Electronic data
9. Financial institution
10. Financial institution premises

The 08 13 edition makes minor changes in the following definitions:

7. Employee
12. Fraudulent instruction
13. Manager
16. Money
24. Transfer account