Chapter 6 - Crime Insurance Flashcards
Types of property susceptible to Crime Losses
Property that have high susceptibility to theft: Real property (buildings) and personal property
Target items are usually convertible (can be sold for cash), high value, and small in size
7 Sources of Crime Losses
- forced entry into building
- forcing way into protected enclosures: by MET (mechanical, explosion or thermal means)
- unforced entry by knowing keys or combinations/access codes
- forcing others to open the building such as kidnapping
- Vandalism or Malicious Acts - happens commonly with attempted theft
- Espionage - stealing trade secrets
- Shoplifting
- Employee Theft
Two Types of Protection System Used
Physical Protection System
Electronic Protection
Key components of a complete property protection system
APP
Area Protection
- Physical Protection - Metal doors / metal bars
- Electronic Protection - during and after hours protection. After hours protection include:
- Interior trapping device (pressure sensitive mat)
- Motion (disadvantage of being highly sensitive to movement) and heat detectors
-During hours protection include:
-hold up alarms
- Cameras and closed circuit televisions
- Scanning Devices (exit alarms)
Perimeter Protection
- levels of protection:
1. none
2. partial protection (windows/doors)
3. Complete (all areas, floors, roof and walls)
- Physical Protection - Locks, Bars and Screens
- Electronic Protection - Magnetic Switches and Glass Breakage Alarms
Point Protection
-provides direct security for individual items such as vibration or shock sensitive alarms on safes
Line Security
The ability of alarm signaling lines to withstand tampering. Can be:
1. Central Station - provides best supervision for both alarm control (who controls turning on and off) and alarm signaling (whether alarm is heard on/off premises)
2. Monitoring station (owner called when alarm sounds)
3. Emergency station (owner turns on alarm and supervisory firm alerts police
4. Digital Communicator (owner turns system on and off and telephone dialer sends alarm to supervisory firm who alerts police)
5. Local alarms - alarms sounded on premises only (easily tampered and no one may hear alarm / or want to get involved)
ULC Approved Alarm System
Rating system for property protection device. Means the device has met the minimum standards established for such device
Three components of Crime Insurance Policy
Declarations - Name Limits and Coverages
General Conditions - rules governing how policy works
General Definitions - crime coverage and types of property insured
Four key items in every Crime Insurance Rider
- Identifies and Defines Property Covered. Key definitions include:
a. Money
b. Securities (unrestricted negotiability e.g. bearer bonds & restricted negotiability e.g. for deposit only cheques) - Identifies Perils Insured
- Location of Property
- Persons causing the loss (no coverage if property taken by insureds or partners)
Define Burglary
The unlawful taking of property by person who made an unlawful entry where visible signs of force was used. Where there is no force, there is no burglary
Define Robbery
The wrongful taking of property from custodian where violence or threat of violence is inflicted. The wrongful property was done overtly with no attempt to conceal the crime and witness by custodian. The wrongful taking of property from a custodian who has been killed or rendered unconcious.
Custodian includes insured, partners or employees having care and custody of insured property. excludes guard, janitor, porter or watchman
Define Theft
Broadest form of crime coverage, insures all means of taking property without consent, includes burglary and robbery
Four Crime Insurance Riders
Stock Burglary
Property Insured: Stock and Equipment
Perils Insured: Actual/Attempted Burglary, Robbery of watchman, vancdalism or malicious acts
Conditions:
Premises must be closed, except for stock contained in showcases or show windows is insured at all times?
Safe Burglary: requires insured to show that safe or vault property was wrongfully taken and that vault is closed locked by a combination lock, not key lock. Or entire safe was taken. Insures money securities and stock only
Damage to building during burglary/Robbery - Tenants who have assumed responsibility for building or building owners who do not have this coverage in their policy. Includes vandalism. Insures building and permanent fittings. Excludes glass
Inside/Outside Robbery
Parts of Inside/Outside Robbery
Inside Robbery: must show attempted robbery of custodian on premises. Premises refers to interior of building only, portion of building occupied by insured not property in hallways or public entrances or showcases or show windows that open into interior of building. includes kidnapping, theft from window display inside premises that is broken during business hours
Outside Robbery includes actual or attempted robbery of custodian away from premisis , property up to $500 within the custodian home or theft from night depository.
Commercial Crime Insurance General Conditions
Condition:
1. Canadian Currency Clause, all losses paind in canadian
2. Cancellation: 15 days non payment, 30 day any other reason
4: Brokers can only consent to insurer by writing
5. Discovery for loss must be submitted within one year after expiry
6. insured must notify insurer asap, file proof of loss within 120 days of discovering loss, insured must take all steps to prevent sale, negotiation or conversion, if crime involved, must notify police, and submit to examination under oath
7. Insurer can inspect premises at any time
9. Insured cannot sue insurer when policy has been expired for 2 or more years
10. Loss Sustained During Prior Insurance - if loss could not be claimed in prior insurance policy, it can be paid by this policy
13. Policy Period, Territory: Canada and USA
14. No records = no coverage
Condition 18. Valuation securities are based on the value on day befoer loss discoverd. Other property ACV
Comprehensive Dishonesty, Disapperance and destruction policy (3d policy)
General features: insured can choose coverages they want, other crime coverages can be added, policy issued on continous bases.
Insures Employee Dishonesty - Insider fraud caused by employees. The amount can be bought based on employees covered and discovery period (1 to 2 years of expirty)
Coverage via Commercial Blanket Bond - (all employees are insured, no requirement to prove loss by specific person, amount purchsased is maximum amount for each occurence regardless of number of employees, discovery period is one year of expiry
Coverage via blanket Position bond - all employees working in idntified positions (insured can choose to only insure for employees that handle cash). Amount puchaesd is for aech employee involved. Discovery period 2 years
Both forms require the following conditions:
Prior knowledge of fraud (being convicted of fraud) will cease coverage
Loss cuased by unidentified employee must be tied to the loss. Under commercial blanket, ther eis no requiremetn to prove a specific employee cuased the loss. under form b, the insurer agrees to pay loss when evidence is such that is was liekly loss was cuasde by person insude by policy
If a prior policy covered but passed the discovery period, this polic ywill pay providing that loss is covered b ythis policy and amount payable will be the least of the limits provided
