Crime Section

Question 1

Why is a crime policy needed if an insured has a commercial property policy?

Answer 1

Property policy has the following exclusions:

Property not covered - money and securities
Covered perils sometimes exclude theft, specifically by an employee
Dishonesty exclusion
Voluntary parting/unauthorized instructions exclusion
Even if theft is covered, often includes low sub limits

Question 2

Identify the insuring agreements in the ISO Commercial Crime form

Answer 2

Fidelity
Forgery or Alteration
Inside the premises - Theft of money and securities
Inside the premises - Robbery or safe burglary of other property
Outside the premises
Computer and Funds Transfer Fraud
Fraudulent Impersonation
Money Orders and Counterfeit Money

Question 3

Describe the difference between Loss sustained and discovery crime forms

Answer 3

Loss sustained - Occurrence must take place within the policy period, must also be discovered by a designated person during policy period of during extended period to discover loss (normally one year).

Discovery - occurrence can take place at any time, just must be discovered during policy or extended reporting period (normally 60 days)

Question 4

When a deductible changes with a same carrier and a loss is discovered that took place in two different policy years, which deductible applies?

Answer 4

The current one

Question 5

If an insured changes their limits and a claim is discovered occurring over both policy periods, which limit is applicable?

Answer 5

The highest of the two

Question 6

What are the three fidelity insuring agreements?

Answer 6

Employee Theft
ERISA Plan Official Dishonesty
Employee Theft of Client’s Property

Question 7

What are common crime policy exclusions?

Answer 7

Acts committed by you, your partners, or members
Acts committed prior to policy period
Confidential or Personal Information
Data security breach
Indirect loss
Unlawful demands
Virtual currency

Question 8

What are the two types of losses covered in insuring agreement #6, Computer and Funds Transfer Fraud?

Answer 8

1. The entering or changing of data or computer programs within the computer system of the insured or that of a third party performing services for the insured.
2. A fraudulent transfer instruction sent to a financial institution, purportedly by the insured, directing the financial institution to transfer money or securities from the insureds account

Question 9

What are the two types of crime covered by insuring agreement #7, Fraudulent Impersonation?

Answer 9

1. A thief tricks the insured into changing the transfer instructions for payment due a client or vendor so that payment goes to the thief instead.
2. The insured transfers money or securities based on instructions from a thief impersonating a client, vendor, or another person within the insured’s organization.

Question 10

What’s the additional condition required for fraudulent impersonation to provide coverage?

Answer 10

There is a documented effort to confirm the request prior to the transfer taking place, using a method other than email.