COMMERCIAL CRIME PART Flashcards
Burglary
The taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry into, or exit from, the property of another while trespassing.
Premises – The interior of that portion of a building occupied by the insured. The burglar does not have the owner’s permission to be on the premises. Visible signs of forced entry or exit must also exist. Most burglaries occur when a premises is unoccupied.
Robbery
The taking of property from the care and custody of a person by one who has:
Caused or threatened bodily harm to that person
Committed an obviously unlawful act witnessed by that person
Robbery includes the taking of property in the presence of an employee.
Theft
The broadest of the crime coverages, theft includes any act of stealing. Example: A shoplifter steals items while a store is open.
Coverage includes losses by burglary or robbery.
Mysterious Disappearance
The loss of property when the cause of loss is not known. This is NOT theft, burglary, or robbery.
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General Definitions
Employee – A person in the insured’s service, whom the insured compensates and has the right to direct. A person remains an employee for a period of 30 days after termination.
Money – Coins, currency, bank notes in current use, travelers checks, money orders, and registered checks held for sale to the public. The definition of money does not include evidences of debt.
Securities – Negotiable and non-negotiable instruments or contracts representing money or other property, including tokens, tickets, revenue stamps, and other stamps in current use, and evidences of debt in connection with charge or credit cards.
Property Other Than Money & Securities – Any tangible property, other than money and securities, which has intrinsic value.
Messenger – The insured, or any of the insured’s partners or employees, while having care and custody of covered property while outside the premises.
Custodian – The insured or any of the insured’s partners or employees, while having care and custody of covered property while inside the premises, excluding any person while acting as a watchperson or janitor.
Watchperson – Any person the insured retains specifically for the purpose of having care and custody of property inside the premises and who has no other duties.
Crime Coverage Forms
Crime insurance is written on two different types of coverage forms. Although crime insurance is property insurance, its coverage forms are similar to liability coverage forms. The Loss-Sustained Form is similar to the Occurrence form and the Discovery Form is similar to the Claims-made Form.
Loss-Sustained Form
The Loss-Sustained Form provides coverage for losses that both took place and were discovered during the policy period OR that took place within the policy period and were discovered within one year of the termination of the policy period.
Discovery Form
The Discovery Form provides coverage for losses that are discovered during the policy period, but that did not necessarily occur during the policy period. Discovery Forms typically, though not always, require the use of a Retroactive Date.
Commercial Enterprises
In addition to being written on two types of policy forms, crime coverage is written for 2 types of commercial enterprises.
The Commercial Crime Coverage Forms (both Loss-Sustained and Discovery) are designed for private businesses. The insuring agreements of these policies and forms contain one limit of insurance for all types of employee theft.
The Government Crime Coverage Forms (both Loss-Sustained and Discovery) are designed for government entities. They contain two different employee theft insuring agreements. One contains a separate loss limit that applies to each employee theft loss and the other contains its own loss limit for all losses occurring due to one employee.
The Crime coverage forms offer eight types of coverage, or Insuring agreements. The insured may choose one, several, or all of the coverages. None of them are mandatory.
Employee Theft or Dishonesty (Form A)
Employee Theft covers acts of theft by an employee that result in loss of, or damage to, money, securities, and other property. Examples of employee theft include an employee stealing money from the cash register or several employees stealing office supplies. Forgery or Alteration
Forgery or Alteration
Forgery or Alteration insures against the forgery or alteration of checks, drafts, promissory notes, and similar items regarding the payment of a sum of money that are made or drawn by the insured or someone acting on behalf of the insured.
Forgery is the signing of the name of another person or organization with intent to deceive; it does not mean a signature that consists in whole or in part of one’s own name signed with or without authority, in any capacity, for any purpose.
An example of forgery is the company accountant stealing money by signing the business owner’s name to a $1,000 check made payable to the accountant’s husband—without the business owner’s knowledge or permission.
Inside the Premises: Theft of Money and Securities
This coverage insures against three specific types of loss:
Theft, disappearance, or destruction of money and securities inside the insured’s premises, or inside a banking premises, when committed by a person present on the premise
Damage to the insured’s premises or its exterior when caused by an attempted or actual theft
Loss or damage to a locked safe, vault, cash register, cash box, or cash drawer that results from actual or attempted entry into such property. Vandalism, if not related to a theft, is not covered. Accounting errors are also excluded
Note
Resulting fire loss from vandalism, theft, burglary, or robbery isn’t covered by the crime forms; such coverage is found under the standard property forms.
Inside the Premises: Robbery or Safe Burglary – of other Property
This covers most types of tangible property, including jewelry, firearms, computers, etc., from loss or damage resulting from an actual or attempted robbery of a custodian. Coverage is also provided for the actual or attempted robbery of a safe inside the insured’s premises, damage to the premises or its exterior, and damage to a locked safe, vault, cash register, etc.
Outside the Premises
This insures money and securities in the hands of a messenger or armored car service for loss resulting directly from theft, disappearance, or destruction. Other types of property are only covered for direct loss or damage from actual or attempted robbery.
The following types of property are excluded: motor vehicles, vandalism or malicious mischief, deception or trickery, property transferred without authorization or under threat.
Computer Fraud
Computer Fraud covers losses when a computer is fraudulently used to transfer money, securities, and other property from the insured premises, banking premises, OR to a person or place outside the insured premises.
This is not computer insurance; it provides fraud insurance for acts committed when using a computer.
Fund Transfer Fraud
This covers loss of funds resulting from a fraudulent instruction that directs a financial institution to transfer, pay, or deliver funds from the insured’s transfer account.
Funds are money and securities and a transfer account is an account maintained by the insured at a lending institution from which electronic, cable, or written instructions can be initiated by the insured to transfer, pay, or deliver funds.
Money Orders and Counterfeit Money
This covers the insured’s acceptance in good faith of money orders and counterfeit money received in exchange for merchandise or services during the course of conducting regular business activities.
