Unit 16 Crime Insurance

Question 1

____ - is the taking or attempted taking of property from inside the premises by a person unlawfully entering or leaving the premises. Evidence of forcible entry or exit, such as marks made by tools, explosives, chemicals, or electricity are required.

Answer 1

Burglary

Question 2

____ - is the taking of property from within a locked safe or vault by a person unlawfully entering the safe or vault, as evidenced by marks of forcible entry on the exterior of the safe or vault. It also includes the taking of the enter safe or vault from inside the premises.

Answer 2

Safe Burglary

Question 3

____ - is the unlawful taking of property from the care and custody of another person. The robber must have caused or threatened to cause bodily harm to the person being robbed, or must have committed an obviously unlawful act that is witnessed by the person being robbed.

Answer 3

Robbery

Question 4

____ - means the unlawful taking of property. This broad term includes burglary, safe burglary, and robbery. However, unlike burglary, safe burglary, and robbery, which involve the use of force, theft also includes the taking of property by stealth. (e.g. - shoplifting)

Answer 4

Theft

Question 5

____ - is signing the name of another person or organization with the intent to deceive.

Answer 5

Forgery

Question 6

____ - is defined as property of the insured which has vanished with no explanation. This is the only definition listed that does not involve theft. Theft must be ruled out! The item is just gone with no explanation as to where it is.

Answer 6

Mysterious Disappearance

Question 7

____ - is someone who has care or custody of property INSIDE the premises. It includes the insured, the insured’s partners or members, or any employee. It does not include a watchperson or janitor.

Answer 7

Custodian

Question 8

____ - is someone who has care and custody of property while it is OUTSIDE the premises. It can include the insured, a relative of the insured, the insured’s partners or members, or any employee. A messenger is acting on behalf of the insured/business.

Answer 8

Messenger

Question 9

____ - is someone retained specifically by the insured whose sole duty is to have care and custody of property inside the premises.

Answer 9

Watchperson

Question 10

What are the two forms of Commercial Crime Insurance?

Answer 10

The Loss Sustained Form and the Discovery Form

Question 11

The loss sustained form covers losses that are sustained during the policy period and discovered either during the policy period or up to ____ after the policy expires.

Answer 11

One Year

Question 12

Crime insurance written on a discovery basis covers losses that are sustained at any time and discovered either during the policy period or up to ____ days after the policy expires. (up to ____ for losses related to employee benefit plans)

Answer 12

60 Days, 1 Year

Question 13

A loss is discovered when the insured: (2)

Answer 13

1. First becomes aware that a loss has occurred or will occur, even if the actual amount of loss or details are still unknown
2. Gives notice of an actual or potential claim for a covered loss

Question 14

Name the 10 commercial crime forms:

Answer 14

1. Employee theft
2. Forgery or alteration
3. Inside the premises - theft of money and securities
4. Inside the premises - robbery or safe burglary of other property
5. Outside the premises
6. Computer fraud
7. Money orders and counterfeit money
8. Funds transfer fraud
9. Extortion - commercial entities
10. Guest’s property

Question 15

Employee Theft - Can proof of loss be based on an inventory shortage or profit and loss computation?

Answer 15

No

Question 16

Employee Theft - There is no coverage for: (3)

Answer 16

1. an employee who has previously had similar insurance canceled and not reinstated
2. loss resulting from trading, either in the insured’s name or in a genuine or fictitious account
3. loss resulting from fraudulent or dishonest use of warehouse recipts

Question 17

What are the 3 ways a business can cover employees for theft?

Answer 17

1. Name scheduled
2. Position scheduled
3. Blanket

Question 18

____ coverage pays for loss resulting from forgery or alteration of checks, drafts, promissory notes, or similar instruments made, drawn by, or on the named insured or the insured’s agent. Coverage is worldwide. This coverage excludes employee acts of dishonest, as this would be covered under employee theft.

Answer 18

Forgery or Alteration Coverage

Question 19

____ coverage pays for theft, disappearance, or destruction of money and securities inside the insured premises or a banking premises. If the insured owns the premises or is liable for damage to it, it also covers damage to the interior or exterior of the premises that results from theft or attempted theft.

Answer 19

Inside the Premises - Theft of Money and Securities

Question 20

____ - has two primary coverage:
-Loss of other property(not money or securities) while inside the premises from actual or attempted robbery of the insured, the insured’s partner or members, or any employee
-Loss of other property from a safe or vault inside the premises from actual or attempted safe burglary

If the insured owns or rents the building does this cover damage to the building?

Answer 20

Inside the Premises - Robbery or Safe Burglary of Other Property

Yes

Question 21

Outside the Premises Coverage provides (2) types of coverage:

Answer 21

1. Theft, disappearance, or destruction of money and securities while outside the premises and in the care and custody of a messenger, or an armored car company
2. Loss of other property by actual or attempted robbery while outside the premises and in the care and custody of a messenger or an armored car company

Question 22

____ coverage covers loss of or damage to money, securities, and other property due to the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than the messenger) outside the premises. Proof of loss may not be based on an inventory shortage or profit and loss computation.

Answer 22

Computer Fraud

Question 23

____ covers losses that result when the insured accepts invalid money orders or counterfeit money in good faith.

Answer 23

Money Orders and Counterfeit Paper Money

Question 24

____ covers losses resulting from fraudulent instructions to a financial institution to pay money from an insured’s account. Loss resulting from the use of a computer to fraudulently transfer money, securities, or other property is not covered. Fraudulent instructions are defined as instructions by who is impersonating an insured or an employee to transfer money without the insured’s knowledge or consent.

Answer 24

Computer and Funds Transfer Fraud

Question 25

The ____ endorsement pays for loss of money, securities, and other property resulting from extortion. This also covers payment made in response to threats of bodily harm to employees of the insured and relatives or invitees who are also captured in covered territories.

Answer 25

Extortion - Commercial Entities Endorsement

Question 26

____ covers money, securities, and other property owned by hotel guests while on the insured’s property, in the insured’s possession, or in a safe-deposit box on the insured’s premises.

Answer 26

Guest’s Property

Question 27

A ____ is a financial contract that promises to pay money (called a penalty) if a promise made by one party to another is broken.

Answer 27

Bond

Question 28

____ bonds generally cover employee dishonesty and are actually an insurance product, although they fall under the bond heading.

____ bonds are three-party agreements which are used in commercial, judicial, or construction contracts.

Answer 28

Fidelity, Surety

Question 29

Bonds
____ - the party who promises to do or not do a specific thing.
____ - the party (often the insurance company) who is fiscally responsible if the principal defaults.
____ - the party to whom the principal makes the promise, for whose protection the bond is being written.

Answer 29

Principal, Surety, Obligee

Question 30

____ bonds guarantee the fulfillment of contractual obligations. The contractor is the principal who makes the promise to the obligee. Four common types.

Answer 30

Contract Bonds

Question 31

____ bonds - awarded to the lowest bidder and guarantee that if the contractor’s bid is accepted, the contractor will enter in the contract at the price quoted

Answer 31

Bid Bonds

Question 32

____ bonds - guarantee that the contractor will complete the work as written in the contract, saving the obligee from financial loss if the contractor doesn’t finish the project

Answer 32

Performance Bonds

Question 33

____ bonds - guarantee the contractor will pay suppliers and subcontractors to keep the project free of liens

Answer 33

Payment Bonds

Question 34

____ bonds - guarantee materials will be available at an agreed upon price and time

Answer 34

Supply Bonds

Question 35

____ bonds guarantee that the principal will fulfill certain obligations set forth by law. There are two classes of these.

Answer 35

Judicial Bonds

Question 36

____ bonds - are commonly used to bond guardians, administrators, trustees, and executors, all of whom are fiduciaries, or persons appointed by a court of law to manage the property of others.

Answer 36

Fiduciary Bonds

Question 37

____ bonds - are used to settle legal arguments that do not involve monetary damages. Their primary purpose is to protect obligees against loss in case principals are not able to prove that they are legally entitled to the legal remedy they sought against the obligee.

Answer 37

Court Bonds

Question 38

____ bonds are required by law, guarantee that public officials will handle public money correctly and otherwise perform their duties faithfully and honestly.

Answer 38

Public Official Bonds

Question 39

____ bonds are sometimes required in connection with the issuance of licenses by government agencies. They guarantee that the person who posts the bond will comply with all applicable laws pertaining to his activities.

Answer 39

License and Permit Bonds

Question 40

____ bonds guarantee and employee’s honest discharge of duty and are written to protect an obligee against dishonest acts by employees.

Answer 40

Fidelity Bonds

Question 41

Name the 4 types of fidelity bonds

Answer 41

1. Name schedule bongs