Are employees hired to perform administrative duties considered the insured's "employees" under the insured's commercial policy? (Photo: Shutterstock) Are employees hired to performadministrative duties considered the insured's "employees" underthe insured's commercial policy? (Photo: Shutterstock)

|

Analysis brought to you by FC&S Expert CoverageInterpretation, the recognized authority on insurance coverageinterpretation and analysis for the P&C industry. To find outmore — or to learn how to find answers to YOUR coverage questions— click here!

|

Question: Theinsured, a condominium association, retained an administrationcompany to perform duties related to the administration andmanagement of the condominium. 

|

It was discovered that some ofthe employees of the administration company committed theft and forged checks of theinsured. Theinsured only has coverage for employee theft under a Commercial CrimeCoverage Form (Loss Sustained Form), CR 00 21 11 15. I have twoquestions related to theinsured's coverage:

|

Question one: Should theadministration company, retained by the insured, be considered an"employee" as defined under the Commercial Crime Coverage Form, CR00 21 11 15? Some believe that the administration company shouldnot be considered as an employee as defined under the policy sinceit is not a natural person.

|

Question two: Should theemployees of the administration company be considered "employees"as defined under the Commercial Crime Coverage Form, CR 00 21 1115? Some believe that the employees of the administration companyshould also not be considered as "employees" as defined under thepolicy since the insured did not directly retain them nor paystheir wages or salary, and they don't fall under any of thedefinition of "employees" in the form.

|

— Puerto Rico Subscriber

|

Answer: The answer to both questions is no; theadministration company and its employees are not employees of theinsured. The administration is not a natural person, as is requiredby the policy definition of employee. The administration'semployees are not direct hires of the insured nor are they fillingin temporarily for the insured's employees or from a labor leasingfirm. There is no coverage under the employee theft section of thepolicy. Depending on the actual details, there may be coverageunder forgery or alteration since you indicate checks of theinsured were forged.

|

Related: 

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.