BROCHURE: UNDERSTANDING THE ISO COMMERCIAL CRIME COVERAGE FORM

Billions of dollars of corporate profits are stolen annually, with everyday thefts from warehouses, stores or offices rarely publicized. Even advances in crime prevention technology, employee screening and implementation of procedures and controls can be ineffective in keeping employees from cheating their employers out of their hard-earned profits. Most theft losses are comparatively small, fall under the deductible, are excluded, or are uninsured. However, larger ones can put a company out of business as quickly as an uninsured fire. Business personal property coverage forms and policies written on a Special Causes of Loss basis usually cover theft of property and merchandise by outside parties. However, they exclude losses due to employee dishonesty, theft of money and securities, computer fraud, safe burglary, extortion, and related criminal acts. This is why every business needs a sound crime coverage program.

Consult the policy for definitions, exclusions, conditions, and limitations. The terms of this brochure do not represent contract terms. The policy referenced is subject to company underwriting practices.

BASIC INSURING AGREEMENTS

The Insurance Services Office (ISO) Commercial Crime Coverage Form has seven basic insuring agreements. You can choose any one or more of them.

• Employee Theft covers loss or damage to money, securities, and other property that one or more of your employees causes.
• Forgery or Alteration covers loss caused when someone other than an employee forges or alters a negotiable instrument such as a check.
• Inside the Premises�Theft of Money and Securities pays for theft, disappearance, and destruction of money and securities from inside your premises or a financial institution premises. It does not cover theft of merchandise or stock.
• Inside the Premises�Robbery or Safe Burglary of Other Property pays for loss or damage to property other than money and securities inside the premises. It is subject to the conditions that either you or an employee must be robbed or the safe burglarized.
• Outside the Premises pays for loss of money or securities while outside the premises in the care of a messenger or armored car service as a direct result of theft, disappearance, or destruction. It also pays for loss or damage to property other than money and securities but only as a direct result of robbery outside the premises while the property is in the care of a messenger or armored car service.
• Computer and Funds Transfer Fraud pays for loss or damage to money, securities, and other property fraudulently transferred using a computer from your premises or a financial institution�s premises to an unauthorized person or premises. It also covers loss of funds as a direct result of fraudulent instruction to a financial institution telling it to transfer, pay, or deliver funds from your transfer account.
• Money Orders and Counterfeit Money pays for loss as a direct result of you or your employees accepting fraudulent money orders or counterfeit money in good faith and in exchange for merchandise, money, or services.

OPTIONAL INSURING AGREEMENTS

Any of the following insuring agreements can be selected in addition to or in place of any of the more common ones listed above. Some are specific to types of business but most are available to all commercial entities.

• Clients� Property
• Funds Transfer Fraud
• Extortion�Commercial Entities
• Extortion�Government Entities
• Inside the Premises�Theft of Other Property
• Inside the Premises�Robbery of a Watchperson or Burglary of Other Property
• Inside the Premises�Robbery of a Custodian or Safe Burglary of Money and Securities
• Employee Theft�Name or Position Schedule
• Lessees of Safe Deposit Boxes
• Securities Deposited With Others
• Guests� Property
• Safe Depository
• Destruction of Electronic Data or Computer Programs
• Unauthorized Reproduction of Computer Software by Employees
• Identity Fraud Expense
• Telephone Toll Fraud
• Fraudulent Impersonation

CONDITIONS

There are a number of important conditions that should be reviewed. However, one of the most serious ones applies to Employee Theft coverage. It is unique because of how suddenly it terminates coverage.

Termination as to Any Employee ends coverage under the Employee Theft Insuring Agreement with respect to any employee as soon as the named insured, its partners, members, managers, officers, directors, or trustees learns that that employee committed theft or any other dishonest act either before or after being employed. The termination is immediate. If the person remains an employee, any loss he or she may cause will be denied.

ENDORSEMENTS

A number of endorsements are available to amend, restrict, or broaden the coverage the insuring agreements provide.

Note to subscribers:

Related Article: Commercial Crime Coverage Forms Checklist provides a listing of endorsements to consider.

REPRINT PERMISSION

PF&M subscribers in any manual or electronic form are permitted to reprint any portion of this brochure for their commercial insurance customers. Other uses require permission by The Rough Notes Company, Inc.