CHAPTER 11
Securities
Negotiable and non-negotiable instruments or contracts representing money or other property, including tokens, tickets, revenue stamps, and other stamps in current use, and evidences of debt in connection with charge or credit cards.
Employee
A person in the insured's service, whom the insured compensates and has the right to direct. A person remains an employee for a period of 30 days after termination.
After Company B's computer network is damaged during an intrusion by hackers, which coverage would indemnify the loss? A Computer fraud B No crime coverage is available for this loss C Fund transfer fraud D Inside the premises: Robbery or safe burglary coverage
B
The Commercial Crime Coverage form offers how many types of insuring agreements? A 4 B 2 C 8 D 6
C
Which of the following is not covered by the Robbery or Safe Burglary of Other Property insuring agreement? A A credit union held up at gunpoint B A burglary C An ATM hacked so that it dispenses money to the hacker D Shoplifting by a customer
C
insuring agreement or endorsement would pay for this loss? A Guest Property B Inside the Premises Theft of Money and Securities C The insured would need to file a claim for this loss under their commercial property or businessowners policy D Inside the Premises: Robbery or Safe Bur
C
Loss-Sustained Form
The Loss-Sustained Form provides coverage for losses that both took place and were discovered during the policy period OR that took place within the policy period and were discovered within one year of the termination of the policy period.
Theft
The broadest of the crime coverages, theft includes any act of stealing. Example: A shoplifter steals items while a store is open. Coverage includes losses by burglary or robbery.
Custodian
The insured or any of the insured's partners or employees, while having care and custody of covered property while inside the premises, excluding any person while acting as a watchperson or janitor.
Messenger
The insured, or any of the insured's partners or employees, while having care and custody of covered property while outside the premises.
Premises
The interior of that portion of a building occupied by the insured. The burglar does not have the owner's permission to be on the premises. Visible signs of forced entry or exit must also exist. Most burglaries occur when a premises is unoccupied.
What is required if the insured adds the Extortion endorsement to the Commercial Crime form and wants coverage for a kidnapping? A Immediately contact a newspaper or TV for help in identifying the kidnapper B Agree to a personal background check when requested by the underwriter C Name the persons to be covered by the endorsement D Contact a law enforcement agency
d An exclusion will apply if the insured fails to report the extortionist's demands to an associate, local law enforcement, or the FBI before the loss occurs.
Under a Commercial Crime policy, the definition of securities includes all of the following, except: A Revenue stamps B Evidences of debt C Tokens D Bank notes
d Securities include Negotiable and non-negotiable instruments or contracts representing money or other property, including tokens, tickets, revenue stamps, and other stamps in current use, and evidences of debt in connection with charge or credit cards. Bank notes are included in the definition of money.
All of the following are examples of theft, except: A Securities are found to be missing from a safe, though no signs of forcible entry are visible, and no one with access to the safe is suspected. B Burglary of a business safe when the business is closed C Leaving the store premises without paying for merchandise taken D Robbery of an employee taking the stores receipts to the bank
A
An insured's employee who has custody and care of property inside the premises is called a: A Custodian B Watchperson C Janitor D Messenger
A
Which of the following is a necessary element of robbery? A A face to face confrontation B Theft from a messenger C Shoplifting D Taking of property from a person by someone who caused them injury
A
Which of the following terms best describes the crime of taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry? A Burglary B Shoplifting C Robbery D Theft
A
Which of the following types of property would be covered by the Guests' Property endorsement to a commercial crime policy? A Property stored in a hotel safety deposit box by someone renting a room B The funds of credit union members stolen during a robbery of the credit union C Client property destroyed in a fire D Customer property stored in a bank safety deposit box
A
Which of the following is not considered a theft loss? A Mysterious disappearance B Robbery C Attempted theft D Burglary
A Mysterious disappearance is the loss of property when the cause of loss cannot be determined.
The Employee Theft insuring agreement would cover: A A cashier taking money from the insured's cash register B The theft of money from the insured's sales employee by a customer C An attempt to extort money by kidnapping an employee D A messenger robbed while transporting company funds
A This insuring agreement covers losses stemming from crimes perpetrated by employees, not from crimes perpetrated against employees. The Theft Disappearance or Destruction of Money and Securities insuring agreement covers non-employee theft which occurs on the insured premises.
Extortion (CR 04 03)
Another type of commercial crime coverage is Extortion, and coverage can be added by endorsement to the Commercial Crime coverage form or policy. If a loss of money, securities, or property occurs because a threat was made to the insured to do either of the following: Cause bodily harm to any of the following persons who were kidnapped, or allegedly kidnapped: Director, trustee, partner, member, manager. Employee or a relative or guest of any of these. Cause damage to the insured premises or property inside the insured premises.
Watchperson
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.
Property Other Than Money & Securities
Any tangible property, other than money and securities, which has intrinsic value.
An employee carrying documents detailing his employer's trade secrets is assaulted and robbed of the documents on his way to a meeting. Which Commercial Crime insuring agreement would cover the loss? A Forgery or Alteration B Outside the Premises C Inside The Premises: Robbery or Safe Robbery D Employee Theft
B
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 Custodian B Watchperson C Messenger D Janitor
B
The Inside the Premises: Theft of Money and Securities insuring agreement covers each of the following types of loss, except: A Theft of money inside the insured's premises committed by a person present on the premises B Accounting errors C Damage to a locked safe, vault, cash register, box, or draw caused by a theft or attempted theft D Damage to the insured's premises or its exterior caused by a theft or attempted theft
B
Which of the following crime forms covers a loss of money that occurs because a threat to cause bodily harm was made to the uninsured who was kidnapped? A Outside the Premises B Extortion C Theft or Dishonesty D Forgery or Alteration
B
Which of the following crime forms requires the use of a Retroactive Date? A Loss Sustained Form B Discovery Form C Occurrence Form D Claims-made form
B
Which of the following losses would be covered by a commercial crime policy? A The mysterious disappearance of important papers previously stored in a safe B Vandalism occurring in the course of a burglary C Damage to company computers due to an act of vandalism D A fire resulting from the aftermath of a robbery
B
The Discovery Form covers losses that are: A Discovered within 12 months of the loss B Discovered during the policy period, regardless of when they occurred C Discovered to have occurred during the policy period D Discovered within 12 month of the policy period termination
B Like a claims-made form, coverage depends on discovery (the claim) being made during the policy period, even if the actual crime (occurrence) happened at an earlier date, as long as the occurrence happened on or after the retroactive date.
Each of the following is true of a Discovery crime coverage form, except: A Might require the use of a Retroactive Date B Covers a loss that was discovered within one year of the termination of the policy period C Covers a loss that did not necessarily occur during the policy period D Covers a loss that was discovered during the policy period
B The Loss Sustained form provides coverage for a loss that both occurred and was discovered during the policy period or was discovered within one year of the termination of the policy period.
A manager started receiving anonymous messages threatening damage to the company's facilities unless it changed its hiring practices. The manager chose not to report the threats to the insurer to minimize publicity and dealt the problem privately until the threats escalated to an incident of vandalism that caused significant damage to the company premises. How would the insurer respond to this loss? A The damage would be excluded because vandalism related to a prior crime is not covered B The damage would be excluded because the insured did not report the extortionist's demands C The damage would be excluded because no one was kidnapped D The damage would be covered under the extortion endorsement of the company's commercial crime insurance policy Check Answer
B The damage suffered by the company was generally covered under the extortion endorsement; however because the manager did not report the demands to anyone, the claim would likely be denied, even though both vandalism related to crime and the threat of damage to facilities both fall within the framework of the extortion coverage.
Neither the Computer Fraud nor Funds Transfer Fraud forms cover which of the following claims? A Loss of funds when a person directs a bank's online check system be transferred to him B An electronic request to the bank computer to transfer money from a bank to an illegal account C Damage to physical computer incurred while a customer is trying to illegally transfer money from the bank D Loss of money transferred from a computer by a person who confiscated another person's banking online I
C
Which of the following statements regarding crime coverages is correct? A A burglary policy would provide coverage when someone forced a storeowner to open a locked safe B Under employee theft coverage written on a blanket basis, each employee must be named in the policy C A robbery policy would cover theft in the presence of an employee D The Inside The Premises Money and Securities insuring agreement provides coverage only when a loss occurs inside the premises
C
Commercial Crime policies are written for which of the following commercial enterprises? A Government B Publicly held C Private D Volunteer
C The Commercial Crime Coverage Forms (both Loss-Sustained and Discovery) are designed for private businesses. The insuring agreements of these policies and forms contain one limit of insurance for all types of employee theft
Which of the following has the care and custody of the insured's property outside the premises? A Watchperson B Employee C Messenger D Custodian
C The messenger can be the insured or any of the insured's partners or employees.
Which of the following is covered under the Outside the Premises crime insuring agreement? A Armored car stolen during a robbery B Transfer of property without authorization C Money in the hands of a messenger D Vandalism
C This endorsement insures money and securities taken from a messenger or armored car service caused by theft, disappearance, or destruction; and the other choices are specifically excluded.
In order for a commercial crime loss to be covered under a Discovery Form, the loss must: A Occur during the policy period B Be discovered within 12 months of termination C Be discovered during the policy period D Occur before the retroactive date
C Under the discovery form, coverage applies to occurrences for which discovery (and any subsequent claim) is made while coverage is in force (during the policy period or subsequent tail). The covered occurrence must have occurred between the retroactive date and the end of the policy period.
Money
Coins, currency, bank notes in current use, travelers checks, money orders, and registered checks held for sale to the public. The definition of money does not include evidences of debt.
A crime insurance policy written with a discovery form will cover which of the following losses? A A loss that occurred and was discovered prior to the policy period B A loss discovered after the policy termination 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 that occurred and was discovered during the policy period
D
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 coverage applies when a computer is used to falsely instruct a bank to transfer of funds, whereas funds transfer fraud does not involve computers C Computer fraud coverage applies to damage to computers due to criminal activity, and fund transfer fraud coverage applies to the loss of funds D 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
D
Which of the following is true regarding commercial crime? A Burglary must include threat of violence B The Employee Dishonesty coverage form covers extortion C Money includes evidences of debt D Theft includes any act of stealing, including burglary and robbery
D
For the purposes of crime policies, how long is a person an employee after employment is terminated, regardless of the reason for termination? A 60 days B 15 days C 180 days D 30 days
D An employee is a person in the insured's service and compensated for that service for 30 days after termination.
Which of the following forms is not one of the 8 primary Commercial Crime policy forms? A Money Orders and Counterfeit Money B Forgery or Alteration C Fund Transfer Fraud D Extortion
D IT CAN BE ADDED ON
What is the taking of property from the care of a person by threatening bodily harm? A Attempted theft B Burglary C Mysterious disappearance D Robbery
D Robbery is a theft using threat of violence.
All the following terms describe a loss covered by a commercial crime policy, except: A Theft B Burglary C Alteration D Mysterious disappearance
D 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.
Commercial Enterprises
In addition to being written on two types of policy forms, crime coverage is written for 2 types of commercial enterprises. The Commercial Crime Coverage Forms (both Loss-Sustained and Discovery) are designed for private businesses. The insuring agreements of these policies and forms contain one limit of insurance for all types of employee theft. The Government Crime Coverage Forms (both Loss-Sustained and Discovery) are designed for government entities. They contain two different employee theft insuring agreements. One contains a separate loss limit that applies to each employee theft loss and the other contains its own loss limit for all losses occurring due to one employee.
Discovery Form
The Discovery Form provides coverage for losses that are discovered during the policy period, but that did not necessarily occur during the policy period. Discovery Forms typically, though not always, require the use of a Retroactive Date.
Mysterious Disappearance
The loss of property when the cause of loss is not known. This is NOT theft, burglary, or robbery.
Burglary
The taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry into, or exit from, the property of another while trespassing.
Robbery
The taking of property from the care and custody of a person by one who has: Caused or threatened bodily harm to that person Committed an obviously unlawful act witnessed by that person Robbery includes the taking of property in the presence of an employee.
