P&C Chapter 11 - Commercial Crime Coverage

Surety Bonds; Define the following: A: Principal (Obligor) B: Surety (Guarantor) C: Obligee

A: Party owing the duty, performance, or honesty (usually buys the bond) B: Party guaranteeing the duty, performance, or honesty (insurer) C: Party paid by the Surety if the Principal fails to meet its obligation (party harmed by the principal's failure to perform)

An employee who has custody of an insured's property off the premises is called a(n): A: Messenger B: Custodian C: Agent D: Watchperson

A: Messenger A Messenger is the insured, or any of the insured's partners or employees, while having care and custody of the property while outside the premises

Choose the correct statement regarding crime coverages. A: A Robbery Policy includes theft in the presence of an employee B: Crime Coverage Form C provides coverage on money and securities only when the loss occurs inside the premises C: Under the Employee Dishonesty Coverage Form A, written on a blanket basis, each employee must be named in the policy D: A Burglary Policy would provide coverage when someone forced the storeowner to open a locked safe

A: A Robbery Policy includes theft in the presence of an employee

Which of the following would be covered under the definition of Burglary? A: A thief breaks down a door to enter store and steal merchandise B: A customer shoplifts merchandise from a store C: A cashier steals money from the cash drawer D: A robber threatens the cashier with a gun and leaves with the money from the cash drawer

A: A thief breaks down a door to enter store and steal merchandise The act of breaking and entering classifies the crime under the definition of Burglary

An employee who has custody of an insured's property on the premises is called a(n): A: Custodian B: Agent C: Watchperson D: Messenger

A: Custodian A custodian is the insured or any of the insured's partners or employees, while having care and custody of the property while inside the premises, excluding any person while acting as a watchperson or janitor

Under Commercial Crime Coverage, which of the following is not included in the definition of Money? A: Evidence of Debt B: Travelers Checks C: Bank Notes D: Currency

A: Evidence of Debt Money includes coins, currency, bank notes in current use, traveler's checks and money orders, and registered checks held for sale to the public. Evidences of debt are not negotiable items and are not included in the definition of money.

Which type of bonds guarantee that an obligation will be fulfilled? A: Surety B: Blanket C: Fidelity D: Honesty

A: Surety If the principal defaults, the surety must perform the contract, duty, or obligation of the principal, or indemnify the obligee for actual loss. Consequently, before accepting a risk, the surety considers the principals ability to perform, financial capability, and previous contracts completed.

All of the following are false, except: A: Theft includes any act of stealing, including burglary and robbery B: Employee Dishonesty Coverage Form A covers extortion C: Under the Commercial Crime Program, money includes evidence of debt D: In order to constitute burglary for insurance purposes; there must be use of force or threat of force

A: Theft includes any act of stealing, including burglary and robbery

Breaking and entering is a required element of: A: Robbery B: Burglary C: Theft D: Larceny

B: Burglary Burglary is the forcible entry (or exit) of a premises with the intent to commit a crime

When the Crime Coverage Part is written as a monoline policy, which of the following Declarations form is used? A: Crime Declaration Form C B: Crime Declaration Form A C: Crime Declaration Form D D: Crime Declaration Form B

B: Crime Declaration Form A When coverage is written as a monoline policy, the Common Policy Declarations is not necessary. In this instance, the Common Policy Conditions are accompanied by a Crime Declarations Form A, which contains the information that would ordinarily appear on the Common Policy Declarations

Which type of crime form provides coverage for losses that did not necessarily occur during the policy period? A: Both discovery and loss sustained B: Discovery C: Loss Sustained D: Neither discovery nor loss sustained

B: Discovery The Discovery form provides coverage for losses that are discovered during the policy period, but did not necessarily occur during the policy period. Typically requires the use of a Retroactive Date (not always)

Bonds that protect an employer from Employee Theft are called: A: Fiduciary B: Fidelity C: Litigation D: Contract

B: Fidelity Fidelity bonds are designed to cover an employer from direct loss due to fraudulent and dishonest acts (namely theft) by their employees, and are therefore commonly referred to as "dishonesty insurance".

What are bonds that are used in court proceedings called? A: Tax Bonds B: Judicial Bonds C: Performance Bonds D: Permit Bonds

B: Judicial Bonds Judicial bonds include bonds on executors, administrators and guardians of estates; and appeal, injunction and attachment bonds

Which of the following is not a type of Surety bond? A: Fiduciary Bond B: Name Schedule Bond C: Contract Bond D: Litigation Bond

B: Name Schedule Bond A Name Schedule Bond is a type of Fidelity Bond

The party most similar to the insured is the: A: Surety B: Obligee C: Principal D: None of the answers listed

B: Obligee

Which of the following is the broadest crime definition? A: Robbery B: Theft C: Larceny D: Burglary

B: Theft Theft, which includes any act of stealing, including burglary and robbery, the broadest of these definitions

For the purposes of crime insurance, a person remains an employee for how many days after termination? A: 10 B: 20 C: 30 D: 0

C: 30

In bonding, the surety is also known as the: A: Obligor B: Principal C: Guarantor D: Obligee

C: Guarantor The party that guarantees fulfillment of the obligation is the surety or guarantor

Which of the following are true about the Theft Inside The Premises insuring agreement? A: It does not cover damage to the exterior of the premises B: It covers money and securities outside the premises, when in the custody of a messenger C: It covers loss to safes on the premises D: It covers money and securities outside the premises, while in the custody of an armored vehicle company

C: It covers loss to safes on the premises Theft Inside the Premises covers money and securities only inside the premises; and it does cover damage to the exterior of the premises

Which of the following is the taking of property from the care and custody of a person by one who has caused or threatened bodily harm to that person. A: Assault B: Theft C: Robbery D: Burglary

C: Robbery Robbery is most often committed with a gun, but is properly defined as the felonious taking of personal property by means of force or fear

In surety bonding, what is the term for the party whose obligation is guaranteed? A: The Guarantor B: The Surety C: The Principal D: The Obligee

C: The Principal The Principal might be a contractor, an administrator, a guardian, or a business.

Shoplifting is a form of: A: Robbery B: Mysterious Disappearance C: Theft D: Burglary

C: Theft Theft includes any act of stealing. This coverage includes losses by burglary or robbery. (Broadest)

Which of the following is true regarding the Commercial Crime Coverage Part to the Commercial Package Policy? A: The Special Causes of Loss Form applies to all Commercial Crime Coverage Forms B: The Basic Causes of Loss Form applies to all Commercial Crime Coverage Forms C: The Broad Causes of Loss Form applies to all Commercial Crime Coverage Forms D: A Cause of Loss Form is not needed

D: A Cause of Loss Form is not needed Each of the Commercial Crime Coverage forms contains its own insuring agreement and conditions; therefore, a Cause of Loss form is not necessary

An employee with custody of the insured's property inside the premises is a: A: Messenger B: Watchperson C: Janitor D: Custodian

D: Custodian A custodian is the insured or any of the insured's partners or employees, while having care and custody of the property while inside the premises, excluding any person while acting as a watchperson or janitor

A bond that covers an employee in a position of private trust and that protects an employer against loss caused by the employee's dishonesty is called a(n): A: License bond B: Lender's bond C: Performance bond D: Fidelity bond

D: Fidelity bond Fidelity bonds cover the dishonesty of employees

Which of the following forms covers a loss that both took place and was reported during the policy period? A: Occurrence Form B: Discovery Form C: Commercial Crime Form D: Loss Sustained Form

D: Loss Sustained Form

Which of the following is true regarding the General Conditions of Commercial Crime Coverage Part to the Commercial Package Policy? A: Losses covered by other insurance are paid are paid in proportion that the limit of crime insurance bears to the limit of all insurance covering the same loss B: Property covered is limited only to property that the insured owns C: Losses to property other than money and securities are paid on a replacement cost basis D: Losses are subject to a discovery period, which means that the loss will be covered if it is discovered up to one year after the end of the policy period

D: Losses are subject to a discovery period, which means that the loss will be covered if it is discovered up to one year after the end of the policy period Oftentimes the insured discovers a portion of a crime loss, not at the time of the crime, but later, when infrequently used property is searched for and found missing. The discovery period allows up to one year to make a claim for this property

Which term describes the insured, partners or employees that have care and custody of insured property outside the insured premises? A: Custodian B: Watchperson C: Employee D: Messenger

D: Messenger Person who has custody of property outside the premises

Under a surety bond, the person whose responsibility it is to fulfill the obligation is the: A: Obligee B: Surety C: Insurance Company D: Principal

D: Principal The principal's obligations are covered by a surety bond

Judicial bonds are which type of bond? A: Fidelity B: Honesty C: Contract D: Surety

D: Surety Surety bonds are divided into 3 categories: Contract bonds, Court bonds, and License bonds

Which of the following relationships most closely resembles the insurer/insured relationship? A: Principal/Surety B: Obligor/Principal C: Obligee/Principal D: Surety/Obligee

D: Surety/Obligee When comparing an insurance contract to a bond, the insurer/insured relationship in insurance is similar to the surety/obligee relationship in a bond. Principal and Obligor are two words for the same party

Which of the following is not a claim covered by crime insurance? A: Computer Fraud B: Safe burglary C: Embezzlement D: The mysterious disappearance of property

D: The mysterious disappearance of property Mysterious disappearance is the loss of property when the cause of loss is not known to be due to a crime

Under the Crime Coverage Part to the Commercial Package Policy, which of the following is the broadest and most inclusive? A: Fraud B: Robbery C: Burglary D: Theft

D: Theft Theft is the broadest definition of a crime and includes robbery and burglary