Chapter 6

Question 1

List three considerations that make some property items “target” items and provide an explanation for each.

Answer 1

i) Convertibility
explanation: This refers to the ease at which property can be sold and converted to cash
ii) Value
explanation: Higher valued articles are more attractive to thieves
iii) Portability
explanation: This refers to the ease at which property can be transported

Question 2

Other than forced entry into safes, what are four other methods of used by thieves which may result in loss to insured property? Also provide an example of each.

Answer 2

i) Forceable entry into building
example: Thieves enter building by breaking window
ii) Unforced entry into building
example: Thief had key to building
iii) Forced opening of building
example: Thief forces owner to open locked building
iv) Vandalism and malicious acts
example: Damage caused by thieves during break-in

Question 3

Examples of a protected enclosure.

Answer 3

Locked safes, chests and vaults on client’s premises.

Question 4

What are three methods to gain access to protected enclosures and provide an example of each?

Answer 4

i) Mechanical; example: drills and pry bars
ii) Thermal; example: cutting torches
iii) Explosion; example: dynamite

Question 5

What is the purpose of perimeter protection?

Answer 5

To secure access to premises when business is closed.

Question 6

What is partial protection?

Answer 6

This refers to perimeter protection limited to protection of openings, such as doors and windows.

Question 7

What are two weaknesses of partial protection systems?

Answer 7

i) Forced entry through ceilings and walls will not be detected
ii) Thieves that stay behind after closing, will not be detected until they leave

Question 8

What is the purpose of Area Protection devices?

Answer 8

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

Question 9

Describe how interior trapping devices work and provide two examples.

Answer 9

Explanation: These devices guard interior of buildings and have an element of surprise to intruder.
Example: Single beam photo-electric device.
Example: Magnetic contact switches on interior doors.

Question 10

Explain how heat detectors work and provide a advantages.

Answer 10

Explanation: These are passive devices which do not transmit signals. They sense the body heat of the thief as they enter the area being protected.
Advantage: Low cost

Question 11

What are three advantages of cameras and CCTV?

Answer 11

i) Thieves are less likely to commit crimes when being videoed
ii) Helps authorities identify and convict thieves
iii) Deters shoplifting

Question 12

What is the purpose of Point Protection?

Answer 12

This provides security directly to single items of high interest to thieves.

Question 13

What three types of property need Point Protection?

Answer 13

i) Safes
ii) Vaults
iii) Chests

Question 14

How are alarm signals transmitted to alarm companies?

Answer 14

Alarm signals are transmitted to alarm companies using leased telephone lines.

Question 15

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

Answer 15

Central station service

Question 16

What are five functions are served by Central Stations?

Answer 16

i) Monitors all closing and openings of business
ii) Turns on alarm automatically at closing time of business
iii) Confirms after hour users and provides list of these users to owner of business
iv) Contact police as soon as an alarm is activated
v) Send central station staff member to meet police with key to building

Question 17

What are two weaknesses of Local Alarms?

Answer 17

i) They only ring at the business protected
ii) Thieves can disable these alarms with little effort

Question 18

What is a ULC rating and what does it mean?

Answer 18

When devices have a ULC rating, this simply means that ULC’s minimum standard for devices of this type were met.

Question 19

What are three types of property normally excluded or receive limited coverage on commercial property insurance policies?

Answer 19

i) Money
ii) Furs
iii) Jewellery

Question 20

Define: Securities

Answer 20

Securities mean all negotiable and non-negotiable instruments or contracts representing money or other property, and includes revenue and other stamps in current use, tokens and tickets but does not include money.

Question 21

What is the criminal law definition of ‘Robbery’?

Answer 21

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

Question 22

What are three coverages provided by ‘Stock Burglary’ policy?

Answer 22

i) Actual or attempted burglary of stock or equipment.
ii) Robbery of a watchman
iii) Vandalism and malicious acts committed on the same occasion.

Question 23

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

Answer 23

Stock and equipment within showcases not opening into premises is insured when premises are open.

Question 24

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

Answer 24

i) Safes
ii) Vaults

Question 25

What two requirements must be met regarding the doors of safes or vaults for coverage to be provided by Safe Burglary policies?

Answer 25

i) Doors must be closed
ii) Doors must be locked with combination locks

Question 26

What other proof is required to be shown before a loss will be paid by safe burglary policies?

Answer 26

Visible signs of forcible entry must be proven.

Question 27

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

Answer 27

When safes are removed from premises, these safes will be insured.

Question 28

What are three situations that constitute a robbery by Inside/Outside Robbery policies?

Answer 28

i) Wrongful taking of property from a custodian by actual or threatened violence
ii) Taking of property by person who committed an overt wrongful act witnessed by custodian
iii) Wrongful taking of property form a custodian who was killed or unconscious

Question 29

Define: Custodian

Answer 29

You or your partner or any employee authorized by you to have the care and custody of insured property, excluding guards, janitors, porters, or watchmen.

Question 30

List three coverages provided for losses occurring outside premise

Answer 30

i) Robbery away from premises when performing employment duties
ii) Theft at home of messenger up to limit of insurance or $500 whichever is less
iii) Theft from a night depository safe provided by bank for customer’s use

Question 31

Explain the Canadian currency clause.

Answer 31

Premiums collected and losses paid in Canadian dollars.

Question 32

What notice of cancellation is required when crime policies are cancelled for non-payment of premium during the notice period?

Answer 32

15 days

Question 33

What notice of cancellation is required when crime policies are cancelled for any other reason during the notice period?

Answer 33

30 days

Question 34

Explain ‘broker’s binding authority’ on crime policies.

Answer 34

Broker’s binding authority is limited when placing coverage on crime policies.

Question 35

What are six duties of insureds when making a claim under crime policies?

Answer 35

i) Notify insurer as soon as possible
ii) Swear a proof of loss within 120 days
iii) Take steps to prevent sale or negotiation of securities
iv) Notify authorities when losses involve criminal acts
v) Submit to examination under oath
vi) Sign statement of their answers

Question 36

What requirement is placed upon insureds regarding record keeping when claiming on crime policies?

Answer 36

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

Question 37

Define: Employee Dishonesty

Answer 37

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

Question 38

Identify and explain three differences between the Form A: Commercial Bond and Form B: Blanket Position Bond.

Answer 38

Difference 1 - Employees covered
Form A - All employees are covered for the same amount of coverage
Form B - Coverage is purchased on individual employees and the amount of coverage can be different between employees

Difference 2 - Limits of insurance
Form A - The limit purchased applies per occurrence of losses
Form B - The limit purchased applies to each employee involved in losses

Difference 3 - Discovery period
Form A - Discovery period: 1 year
Form B - Discovery period: 2 years

Question 39

Define: Discovery Period

Answer 39

This is the time beginning with expiry of policy in which claims must be discovered to be insured.

Question 40

What advice would you provide insureds when they are selecting an amount of coverage?

Answer 40

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

Question 41

Explain: Prior Fraud, Dishonesty, Cancellation Clause

Answer 41

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

Question 42

Explain the loss caused by Unidentifiable Employee Clause

Answer 42

When employees who cannot be identified cause losses, coverage is provided, when circumstances support the fact that the loss had to be caused by an employee.

Question 43

Identify two phases of risk management of employee dishonesty and provide three examples of techniques in each phase.

Answer 43

Phase - Pre-employment phase
Example: Written applications
Example: Personal interviews
Example: Verification of all references

Phase - Post-employment phase
Example: All sensitive data should be duplicated and stored off site
Example: All cheques should require two signatures
Example: Employees should be required to take vacations

Question 44

Provide an example of destruction losses insured by Agreement II: Loss Inside the Premises.

Answer 44

Fire loss to contents of safe when thieves use cutting torches to gain access to safe.

Question 45

What requirement must be met for money in coin operated machines to be insured?

Answer 45

Coin operated machines must have a continuous recording device for losses to money inside coin operated machines to be insured.

Question 46

Provide three locations insured by Agreement III: Loss Outside Premises.

Answer 46

i) While being transported outside the premises by messenger
ii) While being transported by armoured motor vehicle company
iii) While in the home of messenger

Question 47

Define: Messenger

Answer 47

Messenger is the insured or partner of insured or any employee who is duly authorized by insured to have the care and custody of the insured property outside the premises.