Ch. 11 Commerical Crime

The Crime Coverage Form offers how many optional insuring agreements? A 8 B 2 C 4 D 1

A 8 The insured may choose one, several, or all of the coverages, and none are mandatory.

On his way to work, Employee G carries the cash needed for the operational needs of his company's retail outlet. At the point where G enters the store and meets with the onsite manager, G would be considered a: A Custodian B Messenger C Watchperson D Superintendent

A Custodian While en route to the bank, G would be considered a messenger. Once arrived at the premises, G would be considered a custodian.

The day after Employee Z was terminated from a job at a local community bank, Z was still able to use access codes to initiate a series of unauthorized transfers to Z's personal accounts. Which of the following insuring agreements would this loss be covered under? A Employee Theft or Dishonesty B Outside the Premises C Computer Fraud D Burglary

A Employee Theft or Dishonesty Z is still considered an employee for 30 days following her termination.

During an inventory check, Company RST discovers a shortage of product and materials. No evidence of a crime is found either at the warehouse or in the electronic record. Which of the following describes Company RST's likely course of action? A It has to absorb the loss, since no evidence of a crime existed B It files a claim with its insurance company seeking coverage under the mysterious disappearance clause of their burglary coverage C It files a computer fraud claim on the assumption that the computer system was flawed D It files a claim under the employee theft insuring agreement

A It has to absorb the loss, since no evidence of a crime existed Since there is no evidence of a crime leading to the loss, Company RST would have to absorb it. Mysterious disappearance is not covered by any of the standard crime coverage forms.

A commercial crime policy form written with the Robbery or Safe Burglary of Other Property insuring agreement would cover which of the following? A Jewelry store windows and glass display cases are destroyed during a burglary B An employee breaks into the company safe and steals precious metal C A masked gunman confronts a cashier and demands money D A messenger is robbed while transporting high end computer components

A Jewelry store windows and glass display cases are destroyed during a burglary The Robbery or Safe Burglary of Other Property insuring agreement does not cover cash, or losses outside the insured premises. Employee theft of any kind would be covered under the Employee Theft and Dishonesty insuring agreement.

Which of the following describes the person that has care and custody of insured property outside the insured premises? A Messenger B Custodian C Watchperson D Employee

A Messenger

Employee M was hired by ABC Jewelers to guard and protect store property during its hours of operation. Under the terms of the Commercial Crime policy, Employee M would be known as a(n): A Watchperson B Messenger C Janitor D Custodian

A Watchperson A watchperson is defined as any person the insured retains specifically for the purpose of having care and custody of property inside the premises, and who has no other duties.

A crime insurance policy written with a discovery form will cover which of the following losses? A A loss that occurred and was discovered during the policy period B A loss that occurred and was discovered prior to the policy period C A loss that took place during the policy period and was discovered within one year after the termination of the policy period D A loss discovered after the policy termination

A loss that occurred and was discovered during the policy period The discovery form provides coverage for losses discovered during the policy period if the loss occurred between the policy's retroactive date and the policy termination.

Which term describes an insured, a partner or an employee with custody of insured property outside the insured premises? A Custodian B Messenger C Watchperson D Employee

B Messenger The term messenger is used to describe a person who has custody of property outside the premises.

All the following terms describe a loss covered by a commercial crime policy, except: A Theft B Alteration C Mysterious disappearance D Burglary

B Alteration The term of mysterious disappearance indicates the loss of an item without evidence of a crime. Alteration on the other hand, is a criminal act involving unauthorized changes to checks or other documents in order to secure or money or other valuable property or rights.

In the Commercial Crime forms, new employees and additional premises obtained through a consolidation or merger: A Are automatically included, the new employees are covered immediately and the additional premises are added 10 days later B Are automatically covered for 90 days C Would be covered by adding a merger coverage endorsement D Cannot be covered on the current policy at all

B Are automatically covered for 90 days Coverage is automatically covered for the first 90 days, by which time the insurer would be notified and the insured would pay any additional premium required.

What is the difference between the policy forms covering 'computer fraud' and 'fund transfer fraud'? A Computer fraud coverage applies to losses due to dishonest IT employees; fund transfer fraud coverage does not B Computer fraud applies when a computer is used to illegally transfer money, and fund transfer fraud applies when a computer generates a fraudulent funds transfer order C Computer fraud coverage applies when a computer is used to falsely instruct a bank to transfer of funds, whereas funds transfer fraud does not involve computers D Computer fraud coverage applies to damage to computers due to criminal activity, and fund transfer fraud coverage applies to the loss of funds

B Computer fraud applies when a computer is used to illegally transfer money, and fund transfer fraud applies when a computer generates a fraudulent funds transfer order Computer fraud coverage applies when a computer is the direct instrument used for a crime. Fund transfer fraud coverage applies when instructions cause a fraudulent transfer to occur, regardless of the means by which the instructions are received. Neither covers losses due to dishonest employees.

Which crime coverage form would protect a bank in the event a couple of its employees execute a plan to rob money from a bank cash drawer? A Robbery or Safe Burglary B Employee Theft or Dishonesty C Theft Collusion by Employees D Theft of Money and Securities

B Employee Theft or Dishonesty The Employee Theft or Dishonesty form covers loss of property by theft committed by the insured's employee.

After noticing the disappearance of office supplies from within a private office facility, which coverage might an insured add to a commercial crime policy? A Theft of money and securities B Employee theft or dishonesty C Robbery or safe burglary D Mysterious disappearance

B Employee theft or dishonesty Employee Theft covers acts of theft by an employee that result in loss of, or damage to, money, securities, and other property. It can safely be assumed that office supplies are being stolen by employees.

Which of the following could be a 'custodian' under the terms of a commercial crime property policy? A Janitor B Partner C Messenger D Watchperson

B Partner A custodian is someone who has possession of insured property on the insured premises. The insured, insured's partner, or employees are considered custodians. The policy form specifically excludes anyone acting as watch person or a janitor from the definition of 'custodian.' A messenger has possession of the insured's property away from the insured premises.

Under a Commercial Crime policy written on a Loss Sustained Form, what is the latest date a covered loss can occur? A 1 year following policy expiration B The policy expiration date C 2 years following policy expiration D The retroactive date

B The policy expiration date The Loss Sustained Form provides coverage only during the policy period so the latest a covered loss can occur is the policy expiration date. The loss can be discovered up to 1 year after the expiration, but it must have occurred during the policy period. The Loss Sustained Form does not have a retroactive date.

Under a Commercial Crime policy written on a discovery form, what is the latest date that a covered loss can be discovered? A 2 years following policy expiration B The policy expiration date C 1 year following policy expiration D 5 years following policy expiration

B The policy expiration date The discovery form provides coverage for losses are discovered during the policy period.

Which of the following losses would be covered by a commercial crime policy? A A fire resulting from the aftermath of a robbery B Vandalism occurring in the course of a burglary C The mysterious disappearance of important papers previously stored in a safe D Damage to company computers due to an act of vandalism

B Vandalism occurring in the course of a burglary Commercial crime insuring agreements provide coverage for property damage associated with a theft, robbery, or burglary. Vandalism not associated with a theft is not covered. Fire losses are excluded, even when resulting directly from a covered theft.

Which of the following is not included in the definition of Money under Commercial Crime Coverage? A Currency B Travelers checks C Evidence of debt D Bank notes

C Evidence of debt Money includes coins, currency, bank notes, travelers checks and money orders. Evidences of debt are not negotiable items.

Which of the following crime coverages is not one of the 8 insuring agreements provided by the standard Commercial Crime Coverage Form? A Computer Fraud B Forgery or Alteration C Extortion D Money Orders and Counterfeit Money

C Extortion Extortion coverage can be added by endorsement to the Commercial Crime coverage form.

Which Commercial Crime insuring agreement includes coverage for defense costs? A Theft, Disappearance and Destruction B All of the answers listed C Forgery or Alteration D Employee Theft Oops! Under Forgery or Alteration, if the insured is sued for refusing to pay a forged or altered instrument and obtains the insurer's written permission to defend the suit, the insurer will pay reasonable defense costs incurred by the insured in addition to the limits of liability. The other choices do not provide this coverage.

C Forgery or Alteration Under Forgery or Alteration, if the insured is sued for refusing to pay a forged or altered instrument and obtains the insurer's written permission to defend the suit, the insurer will pay reasonable defense costs incurred by the insured in addition to the limits of liability. The other choices do not provide this coverage.

Loss of money due to a fraudulent instruction to a bank to pay funds would be covered under which crime insuring agreement? A Computer fraud B Fraud insurance C Fund Transfer Fraud D Computer insurance

C Fund Transfer Fraud The transfer of funds is fraudulently directed to the insured's transfer account from which electronic instructions come in to transfer or pay money.

Company D's cashier is robbed of $500 in currency. This loss would be covered under which insuring agreement? A Inside the premises: Robbery or safe burglary coverage B Outside the premises C Inside the premises: Theft of money and securities D Computer fraud

C Inside the premises: Theft of money and securities Theft of money and securities coverage covers theft, disappearance, or destruction of money and securities inside the insured's premises, or inside a banking premises, when committed by a person present on the premise. It also covers loss or damage to a locked safe, vault, cash register, cash box, or cash drawer that results from actual or attempted entry into such property.

A commercial crime policy form written with the Robbery or Safe Burglary of Other Property insuring agreement would cover which of the following? A A messenger is robbed while transporting high end computer components B A masked gunman confronts a cashier and demands money C Jewelry store windows and glass display cases are destroyed during a burglary D An employee breaks into the company safe and steals precious metal

C Jewelry store windows and glass display cases are destroyed during a burglary The Robbery or Safe Burglary of Other Property insuring agreement does not cover cash, or losses outside the insured premises. Employee theft of any kind would be covered under the Employee Theft and Dishonesty insuring agreement.

After Company B's computer network is damaged during an intrusion by hackers, which coverage would indemnify the loss? A Computer fraud B Fund transfer fraud C No crime coverage is available for this loss D Inside the premises: Robbery or safe burglary coverage

C No crime coverage is available for this loss Physical damage to a computer in the commission of a crime is a property damage loss, not a crime loss.

A wine store discovers that someone has vandalized their display shelves, causing $1,500 in damage to inventory. Further inspection reveals evidence of forcible entry to the store safe, causing another $500 in damage, and the loss of $5,000 in currency. How much will the store's crime policy pay under the Inside The Premises Theft of Money and Securities insuring agreement? A Zero B $5,500 C $5,000 D $7,000

D $7,000 All these losses would be covered. The Inside The Premises Theft of Money and Securities insuring agreement provides coverage for theft, disappearance, or destruction of money and securities inside the insured's premises, damage to the insured's premises when caused by an attempted or actual theft, and loss or damage to a locked safe, vault, cash register, cash box, or cash drawer that results from actual or attempted entry into such property.

Which of the following incidents is not covered under the Inside The Premises Theft of Money and Securities Form? A Damage to the bank itself caused during a theft B Damage to a locked safe C Disappearance of money by a customer D Attempted robbery of a custodian

D Attempted robbery of a custodian Attempted robbery of a custodian, would be covered under the Inside Robbery or Safe Burglary form.

Forgery or Alteration covers Commercial Crime losses that involve which of the following? A Both answers B Forgery or alteration of incoming checks C Neither answer D Forgery or alteration of outgoing checks

D Forgery or alteration of outgoing checks

During a company golf retreat, the property of several guests is stolen from the golf resort's safe deposit boxes. Under the resort's commercial crime policy, which insuring agreement or endorsement would pay for this loss? A Outside the premises B The guests would need to file a claim for this loss under their own homeowners policies C Inside the Premises: Robbery or Safe Burglary D Guests' Property

D Guests' Property The Guests' Property endorsement to the Commercial Crime Policy covers property of guests while it is in a safe deposit box on the premises of the insured, such as a hotel, motel, or lodging facility. If some of the resort's business property was also stolen in the same occurrence, this loss would be covered under the Inside the Premises: Robbery or Safe Burglary insuring agreement.

Which of the following commercial crime insuring agreements provides coverage if a company accountant steals money by signing a businessowner's name on a $1,000 check? A Theft of Money B Employee Theft C Money Orders and Counterfeit Money D Forgery or Alteration

Forgery or Alteration insures against the forgery or alteration of checks for money drawn by the insured or someone acting on behalf of the insured.