Unit 16

This form covers money, securities, and other property owned by hotel guests while:

-on the insured's premises -In the insured's possession; or -in a safe-deposit box on the insured's premises

Insurance contracts include two parties: the insured and the insurance company. Bonds are contracts between three parties:

-principal -surety -Obligee

Insurance contracts include 2 parties: the insured and the insurance company. Bonds are contracts between _____ parties

3 parties

what type of property is protected under computer fraud coverage? A) all of these B) securities C) other property D) money

A) all of these

Forgery or alteration coverage covers all of these EXCEPT A) forgery of promissory notes B) employee acts of dishonesty C) forgery of checks D) alteration of checks

B) employee acts of dishonesty

The crime coverage forms include all of the following EXCEPT A) guests' property B) slander of an employee C) employee theft D) forgery or alteration

B) slander of an employee

Loss sustained form:

Covers losses that are sustained during the policy period and discovered either during the policy period or up to one year after the policy expires -occurs during the policy period --- Discovered during the policy ---Or within one year of expiration

Crime coverage can be provided as a ________ policy or as part of a ___________ policy.

Crime coverage can be provided as a 'monoline' policy or as part of a 'commercial package' policy.

Armed individuals tie up convenience store workers and lock them in a back room. The individuals then load up on money, lottery tickets, cigarettes, and liquor, then leave the premises. This is an example of

Robbery (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 witnesses by the person being robbed.)

business purchase crime insurance to protect against

a variety of losses that can occur due to crime involving the loss of property or money and securities

bid bonds (contract surety bonds)-

awarded to the lowest bidder and guarantee that if the contractor's bid is accepted, the contractor will enter into the contract at the price quoted

Discover form:

covers losses that are sustained at any time and discovered either during the policy period or up to 60 days after he policy expires -occurs at any time --- discovered during the policy --- Or within 60 days of expiration

If the insured owns the premises or is liable for damage to it, 'robbery or safe burglary of other property', also covers

damage to the interior or exterior of the premises that results from actual or attempted robbery or safe burglary

'Fidelity (faithfulness) bonds' generally cover

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

supply bonds (contract surety bonds)-

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

performance bonds(contract surety 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

Payment bonds (contract surety bonds)-

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

Fidelity bonds guarantee an employee's

honest discharge of duty and are written to protect an obligee against dishonest acts by employees.

The extortion-commercial entities pays for

loss of money, securities, and other property resulting from extortion (the practice of obtaining something, especially money, through force or threats)

Computer fraud coverage covers

loss of or damage to money, securities, and other property due to the use of a computer to fraudulent transfer that property from inside the premises or banking premises to a place or person (other than a messenger) outside the premises. -proof of loss may not be based on an inventory shortage or profit and loss computation. -Coverage is provided worldwide

Employee theft (AKA employee dishonesty) coverage pays for

loss of or damage to money, securities, and other property resulting from theft or forgery committed by an employee, either acting alone or in collusion with others. Proof of loss may not be based on an inventory shortage or profit and loss computation.

Forgery or alteration 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. - includes documents that are forged or altered with a mechanically reproduced facsimile signature -Coverage is provided worldwide. -Forgery or alteration excludes employee acts of dishonesty as this would be covered under employee theft.

'Commercial blanket bonds' cover

losses arising from the dishonesty of one or more employees acting separately or together (in collusion). Neither the employees nor their positions are specifically named. The bond's penalty applies separately to each loss, regardless of the number of employees involved in a single loss.

Crime insurance written under a 'loss sustained form; covers

losses that are SUSTAINED during the policy period and discovered either during the policy period or up to one year after the policy expires. -This one-year discovery period terminates immediately when the insured obtains other commercial crime insurance

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 60 days after the policy expires (up to one year for losses related to employee benefit plans)

Money orders and counterfeit paper money covers

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

the contractor is the principal who

make the promise to the obligee (a person to whom another is bound by contract).

'Position schedule bonds' lists

positions in the company that are covered, rather than the individual who fills these positions. -a new employee hired in a scheduled position is automatically covered

Mysterious disappearance is defined as

property of the insured which ahs vanished with no explanation. doesn't involve theft. -the item is just gone with no explanation as to where it is

Public official bonds which are required by law, guarantee that

public officials will handle public money correctly and otherwise perform their duties faithfully and honestly.

Samuel Jones is employed as a shipping clerk. As he is stacking boxes In the storage room, he is surprised by two men carrying guns. The men proceed to empty the warehouse of boxes. This is an example of

robbery

Forgery is

signing the name of another person or organization with the intent to deceive

A watchperson is

someone retained specifically by the insured whose sole duty is to have care an custody of property inside the premises

A messenger 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 an employee. A messenger is acting on behalf of the insured/business

A custodian is

someone who has care or custody of property INSIDE the premises. -includes insured, insured partners or members, or an employee -doesn't include a watchperson or janitor

which type of bond is used to guarantee that supplies will be furnished at an agreed-upon price and time

supply bond

the 'discovery crime form' covers losses that are

sustained at any time and discovered either during the policy period or up to 60 days after the policy expires

fidelity bonds are continuous and do not have expiration dates, although they may be

terminated by the parties to the bond.

Who would be the principal in a contract bond?

the contractor

An individual who has the care or custody of property inside the premises, including the insured, insured's partners, or employees is called

the custodian

The period during which the insured may still be indemnified for losses that occurred during the term of the fidelity bond but were not discovered until after its termination is called

the cut-off period

contract bonds guarantee

the fulfillment of contractual obligations.

The extended period to discover losses terminates immediately when

the insurance obtains other commercial crime insurance

a bond is a

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

Signing another person's name with the intent to deceive is known as

forgery

'Funds transfer fraud' 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.

A commercial auto policy must contain the following:

- common policy declarations - common policy conditions - one of five separate coverage forms: business auto, business auto physical damage, garage, truckers, or motor carrier - appropriate declarations for coverage form selected

each crime form is available in two versions:

- the loss sustained form; and - the discovery form --- The difference between the forms is what triggers the coverage

the commercial crime forms include:

-Employee theft -Forgery or alteration -Inside the premises- theft or money and securities -Inside the premises- robbery or safe burglary of other property -Outside the premises -Computer fraud -Money orders and counterfeit paper money -Funds transfer fraud -Extortion-commercial entities -Guests' property

There are two basic types of bonds:

-Fidelity bonds; and -surety bonds

Inside the premises- robbery or safe burglary of other property has two primary coverages:

-Loss of other property (not money or securities) while inside the premises from actual or attempted robbery of the insured, the insured's partners or members, or any employee -Loss of other property from a safe or vault inside the premises from actual or attempted safe burglary -Also covers damage of building

Different types of fidelity bonds:

-Name schedule bonds -Position schedule bonds -Commercial blanker bonds -Blanket position bonds

There are three ways a business can cover employees for theft:

-Name scheduled- Employees are listed by name - Position scheduled- only jobs listed within the business are covered, such as branch manager, accountant, et cetera. Employees occupying the covered positions are not listed - Blanket- All employees are covered.

Outside the premises provides two types of coverage:

-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 -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

with 'Employee theft', there is no coverage for

-an employee who has previously had similar insurance canceled and not reinstated -loss resulting from trading, either in the insured's name or in a genuine or fictitious account; or -loss resulting from fraudulent or dishonest use of warehouse receipts

common among contract bonds are:

-bid bonds -performance bonds -payment bonds -supply bonds

Fiduciary bonds

-ensure the person appointed by the court to handle the financial affairs of another will carry out his/her duties and comply with court orders. commonly used to bond guardians, administrators, trustees, and executions, all of whom are fiduciaries, or persons appointed by a court of law to manage the property of others

two examples of court bonds are

-fiduciary bonds; and -Judicial bonds

a loss is discovered when the insured:

-first becomes aware that a loss has occurred or will occur, even if the actual amount of loss or details concerning the loss are not known; or -gives notice of an actual or potential claim for a covered loss

the business auto coverage form includes:

-liability coverage; and -physical damage coverage

Judicial bonds

-may be required for wither defendant and/or plaintiffs to provide guarantees concerning litigation. used to protect individuals from possible losses pending civil court proceedings and can be issued to either the plaintiffs or defendants

Theft includes all of the following EXCEPT a) Burglary b) safe burglary c) mysterious disappearance d) robbery

C) mysterious disappearance

What general surety bond category guarantees that the principal will fulfill certain obligations set forth by law?

Judicial bond (used to protect individuals from possible losses pending civil court proceedings and can be issued to either the plaintiffs or defendants)

Suppose a pet supply store is insured under the loss sustained version of the crime policy. The policy period is Jan 1st 2016 to January 1 2017. A loss occurs on April 6, 2016, but is not discovered until September 7, 2017. Will the crime policy cover this loss?

The crime policy will cover this loss because the loss occurred during the policy period and was discovered within one year after the policy expiration date.

The extended periods to discover losses terminate when?

The extended periods to discover losses terminate immediately when the insured obtains other commercial crime insurance.

suppose a customer at the insured's clothing store uses cash to purchase $1,000 worth of merchandise. When the insured attempts to deposit the money, it is found to be counterfeit. will the money orders and counterfeit paper money coverage pay for this loss?

The money orders and counterfeit paper money coverage will pay for this loss

court bonds is

a general term used to describe bonds that can be required in court proceedings.

Someone who has care and custody of property while it is OUTSIDE the premises is called

a messenger

the commercial auto policy can be written as

a monoline policy or it can be included in the commercial package policy (CPP)

'Name schedule bonds' (fidelity bonds)

cover each employee named on the policy schedule for the amount listed in the schedule. -the limit of liability may be different for different employees on the list

What type of bond is used to schedule an amount of coverage applicable to each loss, regardless of the number of employees who are involved?

commercial blanket bond

'Blanket position bonds' are similar to

commercial blanket bonds in that employees or positions are not specifically listed. However, the bond's penalty applies separately to each employee involved in a loss

license and permit bonds guarantee that the person who posts the bond will

comply with all applicable laws pertaining to his activities.

Fraudulent (dishonest) instructions are defined as

instructions by someone who is impersonating an insured or an employee to transfer money without the insured's knowledge or consent.

commercial crime insurance

insurance designed to protect businesses and government entities against property loss resulting from such crimes as burglary, robbery, theft, and employee dishonesty.

Safe burglary

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

which bond is specifically used to protect individuals from possible losses pending civil court proceedings?

judicial bonds

Public official bonds are required by

law

unlike surety bonds, fidelity bonds are purchased by the

obligee

'The extortion- commercial entities' covers

payments made in response to threats of bodily harm to employees of the insured and relatives or invitees who are also captured in the covered territories.

license and permit bonds are sometimes required in connection with

the issuance (making known) of licenses by government agencies.

Surety

the party (often the insurance company) who is fiscally responsible (pays the penalty) if the principal defaults on the bond

Obligee-

the party to whom the principal makes the promise, and for whose protection the bond is being written

Principal

the party who promises to do (or not to do) a specific thing (i.e., the person or company required to post a bond) --the length of the bond period and the type of bond required will depend on the principal's obligations

extortion means

the surrender of property away from the premises as the result of a threat communicated to the insured to do bodily harm to the insured or to an employee or a relative of the insured who is being held captive.

Burglary is

the taking or attempt taking of property from inside the premises by a person unlawfully entering or leaving the premises.

Robbery 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 witnesses by the person being robbed.

Theft 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 (secrecy)

what term best describes the unlawful taking of property

theft

Inside the premises- theft of money and securities coverage pays for

theft, disappearance, or destruction of money and securities while 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.

'Surety bonds' are

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

The business auto coverage form is used

to insured the private passenger and commercial auto exposures of all business other than garages, truckers, and motor carriers.

Surety bonds promise

to pay if the principal defaults on his obligation. The obligee requires the principal to purchase a surety bond

The major difference between the discovery crime from and the loss sustained form is

what triggers the coverage