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Caib 2 Chapter 6 studies > chapter 6 > Flashcards

chapter 6 Flashcards

1
Q

Three factors of personal property that can help business owners determine loss potential from a criminal act.

A

1) Convertibility;
2) Value;
3) Portability.

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2
Q

Methods criminals use that can result in loss to real and personal property.

A

1) Forced entry into building;
2) Forced entry into protected enclosures;
3) Unforced entry into building or protected enclosures;
4) Forced opening of building and protected enclosures;
5) Vandalism and mailicious acts;
6) Espionage;
7) Shoplifting;
8) Employee theft

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3
Q

Main function of physical and electronic protection devices

A

To restrict unauthorized access to property

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4
Q

The purpose of a perimeter protection system

A

To control access to premises when the business is closed

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5
Q

3 methods to gain access to protected enclosures and provide an example of each

A

1) Mechanical; Drills & Pry Bars
2) Thermal; cutting torches
3) Explosion; dynamite

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6
Q

Partial perimeter protection.”

A

Only the openings to the building are protected.

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7
Q

Disadvantages of partial perimeter protection

A

1) Forced entry through walls or ceilings not detected;

2) Stay-behind thieves not detected until they leave premises

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8
Q

Complete perimeter protection

A

Protects all openings into the building, including enclosing walls, ceilings and floors

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9
Q

“Physical protection

A

Physical barriers to restrict unauthorized access to property.

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10
Q

What is the purpose of Area Protection Devices?

A

these devices protect the interior of the buildings when businesses are closed or open

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11
Q

Two kinds of physical protection

A

1) Locks;

2) Bars or screens

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12
Q

“Electronic protection.”

A

Electronic barriers to restrict unauthorized access to property.

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13
Q

Describe how interior trapping devices work and provide two examples

A

these devices guard the interior of buildings and have an element of surprise to the intruder

1) Pressure sensitive mats under carpeting or stair treads
2) Magnetic contact switches on interior doors

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14
Q

Explain how heat detectors work and provide 2 advantages

A

These are passive devices which do not transmit signals, they sense the body heat of the thief as they enter the area being protected

1) low cost
2) fewer false alarms

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15
Q

Two kinds of electronic protection

A

1) Magnetic contact switches;

2) Glass breakage alarms

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16
Q

The main purpose of area protection devices

A

To restrict unauthorized entry into areas where valuable property is stored

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17
Q

Frequency of false alarms - movement of drapes, banners, signs, etc

A

Key disadvantage of motion detector systems.

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18
Q

How infrared intrusion detection systems work

A

Senses the body heat of intruder as s/he moves through the area under surveillance; the change in the normal heat profile causes alarm to trigger.

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19
Q

Advantages of infrared intrusion detection systems.

A

) Can be installed to provide several patterns of coverage;

2) Several units can be operated from one master device;
3) Good for use in areas where moving fans, drapes of falling objects would cause nuisance alarms.

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20
Q

Advantages of cameras and CCTV for area protection.

A

Hold-up and fraud deterrent;

2) Assist police in identifying and convicting criminals;
3) Reduce shoplifting.

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21
Q

The purpose of point protection.

A

Provides direct security for individual items

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22
Q

Items that require point protection.

A

Safes;

  • Vaults;
  • Chests;
  • Filing cabinets;
  • Display cases;
  • Expensive equipment
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23
Q

Two ways alarm systems can be controlled

A

1) Locally supervised;

2) Central station (the most effective

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24
Q

What type of alarm service offers the best form of supervisory service?

A

Central Station Service

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25
Q

Purpose of an alarm system

A

To detect any breach or attempted breach to the physical security of the premises, and to provide warning signal so effective and immediate response can be instituted

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26
Q

The way alarm systems are usually transmitted.

A

Through leased telephone lines

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27
Q

Line security

A

Ability of the phone line to withstand tampering.

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28
Q

“Central station service.”

A
  • Highest level of service as it monitors all opening and closing times of the premises;
  • Automatically activates alarm at closing time, screens after-hours users and provides reports;
  • Provides immediate notice to police when alarm is received, and dispatches a company rep to premises after police are informed.
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29
Q

2 weaknesses of Local Alarms

A

1) they only ring at the business protected

2) thieves can easily disable these alarms

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30
Q

“Monitoring station service.”

A

Same as Central Station Service, but instead of a company rep the owner is called to open the premises.

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31
Q

Emergency station service.”

A

Owner turns system on and off;

  • Once on, the system is centrally monitored;
  • Police alerted when alarm sounds
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32
Q

“Digital communicator service.”

A

Owner turns system on and off;

  • When alarm sounds, it’s sent along subscriber’s standard phone system to the alarm control centre;
  • Alarm control centre contacts police
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33
Q

Two disadvantages of local alarm systems.

A

1) Alarm rings on premises only – neighbours or passers-by relied upon to contact police;
2) Can be easily tampered with.

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34
Q

“ULC-approved rating.”

A

Means the device meets minimum ULC standards for such devices.

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35
Q

Why crime insurance is needed

A

Because items like money, furs, jewellery and property in the custody of a sales rep are excluded from coverage under the Broad Form commercial property form.

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36
Q

Four key coverage areas of all crime insurance riders

A

1) Property covered;
2) Perils insured;
3) Location of property covered;
4) Persons causing the loss

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37
Q

Insurance definition of “theft

A

All means of taking property without the owner’s consent.

38
Q

“Burglary.”

A

The wrongful taking of property from within the premises by a person who has unlawfully entered or exited such premises, evidenced by marks of force.

39
Q

Coverages provided by the Stock and Equipment Burglary rider

A

Insures stock and equipment against actual or attempted burglary, robbery of a watchman, vandalism or malicious acts committed at the same location.
Damage to interior of the premises, showcases or show windows is also insured for these perils.

40
Q

Three coverages provided by the Safe Burglary rider

A

1) Unlawful taking of insured property from a locked vault or safe;
2) Unlawful taking of the safe from within the premises;
3) Resultant damage to premises and property inside the insured premises.

41
Q

Describe coverage provided for losses occurring from within showcases found in the Stock Burglary policy

A

stock and equipment within showcases not opening into the premises is insured when the premises is open

42
Q

What types of receptacles are insured using a Safe Burglary policy?

A

1) Safes

2) Vaults

43
Q

2 requirements that must be met regarding the doors of safes or vaults for coverage to be provided by the Safe Burglary policy

A

1) doors must be closed

2) doors must be locked with a combination lock

44
Q

What other proof is required to be shown before a loss with be paid by Safe Burglary policies?

A

visible signs of forcible entry must be proven

45
Q

What is another situation where safes will be insured by Safe Burglary policies?

A

when safes are removed from the premises they will be insured

46
Q

3 situations that constitute a robbery by Inside/Outside Robbery policies?

A

1) Wrongful taking of property from a custodian by actual or threatened violence
2) taking of property by person who committed an overt wrongful act witnessed by custodian
3) wrongful taking of property from custodian who was killed or unconsciou

47
Q

Good prospect for the Damage to Building by Burglary rider.

A

Tenant who has assumed responsibility for burglary or robbery damage to the portion of the premises they occupy

48
Q

Two coverages provided by the Damage to Building by Burglary rider

A

1) Actual or attempted burglary or robbery;

2) Vandalism or malicious acts committed on the same occasion.

49
Q

Three Inside Robbery coverages in the Inside/Outside Robbery rider

A

1) Actual or attempted burglary or robbery
2) Vandalism or malicious acts committed on the same occasion
3) Theft from window display area inside the premises while the premises are open for business, by a thief or accomplice having broken the window at the time of the theft.

50
Q

Three Outside Robbery coverages in the Inside/Outside Robbery rider

A

1) 1) Actual or attempted robbery of a custodian away from the premises while engaged in his/her regular duties in connection with insured property within Canada or the U.S.;
2) Theft from within the home of a custodian not exceeding the limit of insurance or $500, whichever is less;
3) Theft from a night depository safe provided by a bank or trust company for its customers’ use.

51
Q

Criminal law definition of “robbery

A

The wrongful taking of property from the possession of another against their will, accomplished by force or fear.

52
Q

Insurance definition of “robbery

A

The taking of insured property from a custodian by a person or persons who have:

  • caused or threatened to cause the custodian bodily harm;
  • committed an overt unlawful act witnessed by the custodian; or
  • taken such property from a custodian who has been killed or rendered unconscious.
53
Q

Qualifies as a “custodian” under robbery policies

A

The insured(s), their partner(s) or any employee authorized by them to have care and custody of insured property.

54
Q

Does not qualify as a “custodian” under robbery policies.

A

Guard, janitor, porter or watchman

55
Q

Canadian Currency Clause” condition.

A

All losses under the policy paid in Canadian funds.

56
Q

Cancellation” condition.

A

Insured entitled to 30-days notice when insurer elects to cancel policy.
In the event of non-payment of premium, insurer can cancel after 15-days notice

57
Q

Changes” condition.

A

Any changes requested by insured are effective only when consented to by insurer

58
Q

Explain brokers binding authority on Crime policies

A

brokers binding authority is limited when placing coverage on crime policies

59
Q

What requirement is placed on the insured regarding record keeping when claiming on Crime policies

A

clients are required to prove amount of loss with records from their business, when records cannot be produced, no coverage is provided

60
Q

Duties in the Event of Loss” condition.

A
  • Insured must notify insurer of any loss as soon as possible;
  • Within 120 days of its discovery, sworn proof of loss must be provided to insurer;
  • If loss of securities, insured must take all reasonable means to prevent their negotiation, sale or conversion;
  • If loss is in violation of law, must be reported to police;
  • If required by insurer, insureds must submit to examination under oath, and provide insurer with signed statement of their answers.
61
Q

Policy period” condition.

A

Coverage provided only for losses that occur during the policy period and within Canada or the U.S.

62
Q

“Records” provision.

A

Insured’s records must be maintained to verify the amount of any loss. A claim that cannot be substantiated as to amount won’t be paid.

63
Q

“Valuation” provision

A

Valuation of securities limited to ACV at the close of business on the business day immediately preceding discovery of loss. Other property subject to ACV settlement. Any disputes about valuation are settled by arbitration.

64
Q

“Money

A

Currency and coins in current use and having face value.

65
Q

“Securities.”

A

All negotiable and non-negotiable instruments or contracts representing money or other property, includes revenue and other stamps in current use, tokens and tickets, but not money

66
Q

Employee Dishonesty.”

A

Loss resulting directly from one or more fraudulent or dishonest acts committed by an employee, acting alone or in collusion with others.

67
Q

“Discovery period

A

Time permitted by an insurer, commencing with the expiry date of the policy, in which a claim must be discovered by the insured if it’s to be covered.

68
Q

“Messenger.”

A

The insured or partner of the insured who is authorized by insured to have the care and custody of property outside the premises

69
Q

“Forgery.”

A

Fraudulent alternation of any writing of another without authority, or making, completing, executing, authenticating, issuing or transferring of any writing so it purports to be the act of another who didn’t authorize the act.

70
Q

The Continuous until cancelled provision of the Comprehensive Dishonesty, Disappearance and Destruction 3D policy

A

Ensures there are no gaps in coverage

71
Q

Two Characteristics of the 3D policy that differentiates in from other property insurance

A

Amount of loss hard to predict

Losses may be undiscovered, or discovered only after a long time

72
Q

Two conditions needed to constitute a Fraudulent or Dishonest Act

A

1) There was clear intent to cause the insured to sustain a loss;
2) There was clear intent to obtain financial benefit, other than earned during the course of employment, for the employee or any other person or organization.

73
Q

Persons who qualify as an “employee” under Agreement I of the 3-D policy.

A

1) Natural persons hired by the insured in the ordinary course of business affairs;
2) Directors or trustees of the business who are actively involved as officers or employees;
3) Persons hired by an employment agency or employer, whose activities are directed and compensated by the insured;
4) Persons who become employees through consolidations or mergers.

74
Q

Employees covered under Form A: Commercial Blanket Bond

A

All employees. Coverage automatically extends to new employees, and terminates on those leaving the insured’s services

75
Q

Employees covered under Form B: Blanket Position Bond.

A

Coverage does not have to be purchased for all employees. Different limits can be purchased for different classes of employees.

76
Q

Insurance limit under Form A: Commercial Blanket Bond

A

Limit is the maximum payable regardless of the number of employees involved in the loss.

77
Q

Insurance limit under Form B: Blanket Position Bond.

A

Limit available for each employee involved in the loss.

78
Q

Discovery period under Form A: Commercial Blanket Bond.

A

One year from date of expiry

79
Q

Discovery period under Form B: Blanket Position Bond.

A

Two years from date of expiry

80
Q

What advice would you give to an insured when they are selecting an amount of coverage?

A

clients should purchase limits of coverage equal to maximum amount of loss the business could incur from the actions of one employee

81
Q

Explain “Prior Fraud, Dishonesty or Cancellation Clause

A

in some cases employees may have been involved in prior dishonest acts - coverage on this employee ends as soon as the insured becomes aware of prior dishonest act. coverage on other employees is not affected by this

82
Q

How Agreement I of the 3-D policy responds when a loss under a previous bond is discovered

A

The new policy will pay if the loss…
- would have been covered under the previous policy;
- can’t be claimed under previous bond due to expiry of discovery period.
The amount paid is a part of the previous limits, and isn’t higher than the previous limit

83
Q

Two phases of risk management program to eliminate or reduce employee dishonesty losses.

A

1) Pre-employment phase
- written application
- personal interview
- verify all references.
2) Post-employment phase
- cheques require 2 signatures
- ensure employees take holidays
- if possible, rotate employee job positions and responsibilities
- surprise audits
- rotate bank accounts periodically and prepare special reconciliations.

84
Q

Coverages provided for Money and Securities under Agreement II of the 3-D policy.

A

Actual destruction, disappearance or wrongful abstraction of money and securities.

85
Q

Two exclusions of the Money and Securities coverage under Agreement II of the 3-D policy.

A

1) Money in a vending machine, unless the machine is equipped with a continuous recording instrument;
2) Loss by fire to property other than money, securities, a safe or vault.

86
Q

Coverages provided for Money and Securities under Agreement III of the 3-D policy.

A

Actual destruction, disappearance or wrongful abstraction of money and securities while conveyed by a messenger, any armoured motor vehicle company or in the living quarters in the home or any messenger

87
Q

When coverage under Agreement IV of the 3-D policy responds

A

When a money order is not paid upon presentation to the post office, or if money taken in the regular course of insured’s business is counterfeit.

88
Q

Under what conditions would you recommend that an insured purchase Depositors Forgery Coverage

A

When a large number of cheques or other negotiable instruments are written

89
Q

Coverage provided by Depositors Forgery Coverage

A

For the forgery or alteration of insured’s cheques, drafts and similar instruments

90
Q

The limit generally selected by those who purchase Depositors Forgery Coverage.

A

The business’s potential exposure to loss, which is usually the same limit for the Employee Dishonest coverage.

91
Q

Risk management techniques to eliminate or reduce depositors forgery losses.

A

Use safety paper for cheques;

2) Protect blank cheques;
3) Control use of fax machines and plates

Caib 2 Chapter 6 studies (1 decks)

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