Commercial Crime Insurance Flashcards
Which of the following statements is TRUE regarding the definition of “mysterious disappearance” as it applies under a Crime insurance policy?
Answer Choices: Select the Correct Answer
“Mysterious disappearance” may apply to any type of property theft.
For “mysterious disappearance” to apply, theft of the property must be ruled out.
The “mysterious disappearance” of property is only covered if the insured can prove the property was stored in an area where the safety of that property can be presumed.
The “mysterious disappearance” of covered property is considered negligence on the part of the insured and is not covered.
For “mysterious disappearance” to apply, theft of the property must be ruled out. is correct.
EXPLANATION:
For “mysterious disappearance” to apply under a Crime policy, theft of the property must be ruled out.
Which of the following would be considered “other property” as it is defined by a Commercial Crime policy?
Answer Choices: Select the Correct Answer
Money stolen during a burglary while off the premises.
Securities while on the premises due to a burglary.
An employee’s wallet that was on the premises during a robbery.
Electronic data stolen from within devices located on the premises.
The correct answer is: An employee’s wallet that was on the premises during a robbery.
EXPLANATION:
An employee’s wallet stolen while the insured business is being robbed would be considered “other property”.
Which of the following statements is NOT TRUE regarding a basic standardized Commercial Crime coverage form?
Answer Choices: Select the Correct Answer
It can be written as a stand-alone policy or added to a Commercial Package Policy (CPP).
It can be written with either a “loss sustained” or “discovery coverage” trigger.
It cannot be written with a deductible higher than $250.
It cannot be written without a limit of liability scheduled on the form.
The correct answer is: It cannot be written with a deductible higher than $250.
EXPLANATION:
The answer choice that is NOT TRUE is: “It cannot be written with a deductible higher than $250.” The insured will select a deductible and schedule it on the form.
Under a commercial crime policy, the unlawful taking of property from within a locked safe or vault through forcible entry that leaves visible marks is known as:
Answer Choices: Select the Correct Answer
Robbery.
Mysterious disappearance.
Safe burglary.
Extortion.
Safe burglary. is correct.
EXPLANATION:
The unlawful taking of property from within a locked safe or vault through forcible entry that leaves visible marks of that entry is included in the definition of “safe burglary”.
Which of the following is included in the Crime policy’s definition of “securities”?
Answer Choices: Select the Correct Answer
Currency in current use.
Money orders held for sale at a shipping store.
Deposits into the insured’s account at any financial institution.
Evidences of debt.
Evidences of debt. is correct.
EXPLANATION:
Evidences of debt ARE included in the Crime policy’s definition of securities. The other answer choices are included in the definition of “money”.
Which of the following would NOT be considered an “employee” as defined by the Commercial Crime form?
Answer Choices: Select the Correct Answer
A guest student or intern.
A manager while performing acts usually assigned to employees.
A temporary worker.
An independent contractor.
The correct answer is: An independent contractor.
EXPLANATION:
The Commercial Crime form does NOT consider an independent contractor to be an “employee”.
In Crime insurance terminology, a salesperson having possession of the insured’s property on-premises is known as a:
Answer Choices: Select the Correct Answer
Custodian.
Insured.
Messenger.
Watchperson.
Custodian. is correct.
EXPLANATION:
A custodian means the named insured, any of the insured’s partners, or any employee, while having care and custody of the property inside the premises. It does not mean a watchman or a janitor.
A person takes bank deposits to the bank every day for a business. In Commercial Crime insurance terminology, this person is known as a:
Answer Choices: Select the Correct Answer
Messenger.
Custodian.
Cashier.
Manager.
Messenger. is correct.
EXPLANATION:
This person is called a messenger. A messenger has custody of the insured’s property outside the insured’s premises.
All of the following are excluded under the Commercial Crime “Inside the Premises - Theft of Money and Securities” insuring agreement, EXCEPT:
Answer Choices: Select the Correct Answer
Dishonest acts of customers.
Fire.
Vandalism.
Accounting errors.
The correct answer is: Dishonest acts of customers.
EXPLANATION:
Fire, vandalism, and accounting errors are specifically excluded in this insuring agreement. Review the exclusions listed in Module B of the Virtual Classroom.
Under the “Money Orders and Counterfeit Money” insuring agreement of a standard Commercial Crime form, all would be covered, EXCEPT:
Answer Choices: Select the Correct Answer
Taking a forged check from a customer in exchange for merchandise.
Receiving counterfeit currency in a sale.
Making change on a counterfeit bill.
Cashing a forged money order.
The correct answer is: Taking a forged check from a customer in exchange for merchandise.
EXPLANATION:
Taking a bad check from a customer is not a covered loss under this insuring agreement.
All of the following are general exclusions in the Crime policy, EXCEPT:
Answer Choices: Select the Correct Answer
Governmental actions.
Legal fees.
Acts committed by the insured.
Fraud.
The correct answer is: Fraud.
EXPLANATION:
Fraud is NOT a general exclusion of the Crime policy insuring agreements. The answer choices use wording that is slightly different than the wording used in the course module. This is to assist students in understanding the different verbiage that may be seen on the state exam that has the same meaning as the wording we use in our course module.
The “Forgery or Alteration” insuring agreement of a Crime policy provides coverage for:
The correct answer is: Forgery of financial instruments.
EXPLANATION:
The “Forgery or Alteration” insuring agreement covers forgery, it does not cover robbery, extortion, or theft.
When the Employee Theft insuring agreement is selected as part of a Crime insurance policy and coverage is provided on a named scheduled basis, this means:
Answer Choices: Select the Correct Answer
All employees within the company are covered for theft or forgery.
The employee positions within the company are listed by name.
The coverages provided are listed by name.
The employees covered are listed by name.
The correct answer is: The employees covered are listed by name.
EXPLANATION:
When coverage for Employee Theft is written on a named scheduled basis, it means that the employees covered are listed by name.
Which of the following would NOT be covered under the “Outside The Premises” insuring agreement of a Crime policy?
Your answer: Money in the custody of a messenger. is incorrect. The correct answer is: Securities deposited with others.
EXPLANATION:
Securities deposited with others is NOT covered under the “Outside the Premises” insuring agreement of a Crime policy.
Which insuring agreement of the Commercial Crime policy would cover loss resulting from fraudulent instruction?
Answer Choices: Select the Correct Answer
Insuring Agreement 7 - Money Orders and Counterfeit Money.
Insuring Agreement 5 - Outside the Premises.
Insuring Agreement 6 - Computer Funds Transfer Fraud.
Insuring Agreement 2 - Forgery or Alteration.
The correct answer is: Insuring Agreement 6 - Computer Funds Transfer Fraud.
EXPLANATION:
“Fraudulent Instruction” has to do with fund transfer fraud, which is covered by “Insuring Agreement 6 - Computer Funds Transfer Fraud”.
