Analysis

“Other property” is the focus of this insuring agreement. This defined term includes just about any tangible property other than money or securities that has intrinsic value. As an example, if the insured has a diamond ring in his safe at work and someone breaks into the safe and steals the ring, CR 00 20 will provide coverage for the loss. And, if the “other property” is being carried around inside the insured's premises by a “custodian” and that person is robbed, CR 00 20 provides coverage for the loss. “Custodian” is a defined term and it includes the named insured and his employees, but not a watchperson or janitor.

Analysis

This agreement applies to loss of money and securities and other tangible property that has intrinsic value when the loss occurs outside the insured's premises. The property must be in the custody of a messenger who can be the named insured, or a relative, partner, or employee of the named insured. Loss of money and securities is covered if due to theft, disappearance, or destruction; the loss to “other property” has to be from an actual or attempted robbery. Note the difference.

Loss of money is covered regardless of the circumstances of the loss; loss of “other property” is covered only under certain circumstances. If an employee is carrying money to be deposited into the insured's bank account and he is robbed, the loss is covered; if the employee somehow loses the money along the way, the loss is covered. Now, if the insured tells his employee to take a diamond ring from the safe to the bank and the employee is held up on the way to the bank by a robber, CR 00 20 will respond to the loss. But on the other hand, if the employee loses the ring or accidentally drops it in the river, CR 00 20 will not apply to that type of loss.

The same can be said of the armored truck situation. If the truck is carrying the insured's payroll, the loss of that money by a robbery or because of an auto accident is covered by CR 00 20. If the truck is carrying a diamond ring, there must be an actual or attempted robbery for coverage to be applicable; if the armored truck is involved in an auto accident and the ring disappears, CR 00 20 offers no coverage to the insured for his loss.

Analysis

Many movies and books today show money being transferred by computer from a bank or a company headquarters to a bank or an individual in the Bahamas or in Switzerland. If these computer transfers are fraudulent and cause the insured to suffer a loss of money, securities, or other property, CR 00 20 is there to cover such a loss.

Analysis

This coverage was previously available as an endorsement (CR 04 02 03 00) to the crime policy. It provides coverage for loss due to fraudulent transfer of funds.

Analysis

This is fairly straightforward. If the insured accepts counterfeit money orders or currency in exchange for merchandise or services that he or she provides, the insured has suffered a loss due to a crime. CR 00 20 covers such a loss.

Analysis

These clauses refer the reader to the declarations page. Remember that if the insured wants a particular insuring agreement to be in effect, he must have a limit of insurance and a deductible amount listed on the declarations page next to the insuring agreement.

Note that the insurer promises to “pay the amount of loss in excess of the deductible”. In other words, the deductible applies to the total amount of loss, not to the amount of insurance available. As an example, say the insured suffered a counterfeit loss of $200,000, and had a $100,000 limit of insurance for that type of loss with a $1,000 deductible. The deductible is applied to the total loss of $200,000, leaving a total loss of $199,000. The insured is then paid his limit of $100,000.

Analysis

The first two exclusions clarify that this insurance does not apply to dishonest acts committed by the named insured or any of those close to the named insured in his or her business, such as partners, managers, trustees, or employees. This is common sense; after all, if the insured is going to steal from himself or collude with those close to him to unlawfully take money or securities or other property from his business, that is not an insurable act. The exclusions do make an exception for coverage for loss due to theft committed by an employee if the named insured has selected such coverage (insuring agreement A.1.) and paid the appropriate premium. And, note that there is no exclusion for theft by family members of the named insured. For example, Mr. Smith owns his company but his family members are not employed by the company or have any connection with it. Mr. Smith's son visits the company premises often on social calls and helps himself to company money when no one is looking. Such a loss would be covered by CR 00 20 as theft of money inside the premises, and there is no exclusion that would apply just because the son is related to the named insured.

The governmental action, nuclear, and war exclusions are standard property policy exclusions. For a discussion of these exclusions, see Causes of Loss.

The insuring agreements of CR 00 20 are fond of using the phrase “loss … resulting directly from….” The point is that this insurance coverage is meant for loss that the insured suffers as a result of a close causal and straightforward event. To fortify this “direct loss” coverage, CR 00 20 has an exclusion that pertains to indirect loss. As an example: the insured's employee is carrying a huge amount of money to a business meeting to make a down payment on a contract that will result in the insured's company winning a bid to build a costly sports stadium. Along the way, the employee is held up and the money is taken. The employee goes to the meeting and explains the problem, but the delay in payment results in the insured's company losing the contract and the income that the stadium project would have brought to the insured. CR 00 20 will cover the money that was stolen, but the insured can not expect CR 00 20 to pay for the loss of income that resulted from the theft of the money.

Also excluded by this indirect loss exclusion is payment of costs and other expenses that the named insured incurs in establishing that a loss (and the amount of that loss) actually occurred. So, if the insured has to hire auditors or investigators to show he suffered a counterfeit loss or a computer fraud, CR 00 20 will not cover the expenses. Once again, CR 00 20 is for direct loss and not the indirect consequences of that direct loss.

The indirect loss exclusion also deals with costs that the insured may have as a result of legal actions. CR 00 20 excludes as an indirect loss, payment of damages of any type for which the named insured is legally liable; an exception is made for compensatory damages arising directly from a covered loss. As an example: the insured receives a forged check in the amount of $2,000 made against the account of Mr. Jones. The insured pays the amount and draws the $2,000 out of Mr. Jones” account. As a result of the loss of the $2,000, Mr. Jones bounces a check to a contractor he had hired to build a deck onto Mr. Jones” house. The contractor files a mechanic's lien against Mr. Jones who then sues the named insured, seeking reimbursement for damages. CR 00 20 will pay the $2,000 as a covered loss and as compensatory damages that Mr. Jones suffered; that is, damages, that when paid, compensate the injured party for the loss sustained—it makes good the loss caused by the named insured. CR 00 20 will not pay for any other type of damages, such as emotional injury to Mr. Jones or legal fees to have the mechanic's lien lifted.

Another exclusion dealing with legal matters is the legal expenses exclusion. CR 00 20 will not pay for expenses related to any legal action, except for those covered under insuring agreement A.2. Using the above example of the forged $2,000 check, CR 00 20 will not pay for the named insured's legal expenses defending against Mr. Jones” lawsuit. The exception to not paying legal expenses is only when the named insured is sued for refusing to pay any instrument covered in insuring agreement A.2. If the $2,000 check had been legitimate but the named insured chose not to honor it because of fears that it was forged, a resultant lawsuit against the insured would have CR 00 20 paying the defense costs of the named insured.

Analysis

Note that this set of exclusions applies only to insuring agreement A.1., employee theft coverage. The first exclusion is an admission that the insurer does not want to provide insurance coverage in a situation where a certain employee has already been excluded from coverage once before (probably due to either a proven or alleged charge of prior theft) and has not been reinstated; there is a lack of trust in such a situation.

Also excluded from employee theft coverage is an inventory shortage. If the annual inventory turns up a shortage, it is a reasonable assumption that an employee may have been responsible; a reasonable assumption, but a difficult one to prove and, thus prevent from happening again. Besides, the shortage may be the result of employee theft or it may be a miscount or a mistake in the paperwork or an outright fraud. No matter what the cause, this is one mysterious disappearance that CR 00 20 is not meant to cover.

The threat of employee theft and the difficulty in proving it or preventing it is also the reason behind the trading and warehouse receipts exclusions.

Analysis

This set of exclusions applies to insuring agreements A.3., A.4., and A.5., inside the premises theft, inside the premise robbery or safe burglary, and outside the premises loss respectively.

The accounting exclusion is akin to the inventory shortage exclusion that applies to insuring agreement A.1. There is simply too great a threat of fraud, simple mistakes, and a lack of preventable measures to allow coverage for accounting or arithmetical errors or omissions.

The exchange or purchase exclusion applies when the insured has suffered a loss due to the failure to recognize the true value of an item. For example, if the insured buys an item from a customer on the business premises and pays $500 for an item that is actually worthless, the insured can not call that a theft or a disappearance of money. It may have been a fraud perpetrated on the insured or simply a bad business judgment, but either way, CR 00 20 will not reimburse the insured for his mistake.

Loss by fire is covered by a standard property policy in just about any circumstances. CR 00 20 does not wish to duplicate that coverage, so the fire exclusion is part of CR 00 20. The following exceptions to this exclusion apply: when a fire damages covered property during an employee theft; when fire damages covered property during a robbery or safe burglary; and if there is fire damage to covered property when in the custody of a messenger off the premises, under insuring agreements A.3., A.4, or A.5. Previously, the exception applied only to insuring agreement A.3. By adding A.4 and A.5, the current version broadens this coverage.

The safe or vault exception is made because the insuring agreements cover damage to safes and vaults done in the process of an actual or attempted theft or burglary, and it is possible that a fire may be used in the attempt to break into the safe or vault; so, rather than allow disputes with the insured over what the purpose of the fire was, the insurer covers the fire damage. As for the money and securities exception, the standard property policy does not consider money or securities as covered property; so, CR 00 20 does extend coverage to these items, at least for a loss by fire.

The money operated device exclusion is on the coverage form due to the ease of theft or fraud when it comes to these types of machines, and the resulting difficulty of insuring against such actions. The motor vehicle exclusion is self-explanatory. The voluntary parting exclusion is akin to the false pretense exclusion found on the garage coverage form; for more information on this type of exclusion, see False Pretense Insurance.

The vandalism exclusion is one that is difficult to enforce. As was noted before, insuring agreements A.3. and A.4. cover damage to safes, vaults, cash registers, and cash boxes if someone does the damage while trying to steal money or property from the insured. Where is the bright line separating damage done in an attempted theft from damage done in an act of vandalism?

The transfer or surrender of property exclusion can be used to deny coverage for loss of money paid to an extortionist. For example, if the insured is threatened with bodily injury unless $500,000 is delivered to an unknown person at a location off the business premises, and that payoff is lost or damaged during or after delivery, CR 00 20 will not cover that type of loss. This exclusion is meant to prevent insurance monies from being used to aid or reward such criminal activities. Besides, fraud on the part of an insured is a real possibility when it comes to extortion threats, and this exclusion aims to fight that possibility.

Analysis

The current form expands this exclusion from only addressing the issue of inventory shortage. Now, in addition to not covering losses that can be proven only through an inventory computation, agreement A.6., computer fraud, does not cover loss from: the purchasing or exchanging of property; fraudulent transfer of funds; and voluntary parting with property.

Loss due to computer fraud is covered under CR 00 20, but not if the loss results from or can only be proven by one of the above four methods.

Analysis

The current form adds this exclusion that applies to insuring agreement A.7. It clarifies that computer fraud and funds transfer fraud are different.

Analysis

The conditions section of the policy is where the differences between CR 00 20 and CR 00 21 come out. These will be noted in the analysis of each part of the conditions.

The first condition addresses the issue of the dishonest employee. The insurer cancels the insurance as to any employee when it is discovered that that employee has committed a theft or any dishonest act; this cancellation is immediate. Now, if an employee is discovered to have committed a theft from the insured, it makes sense to cancel his coverage before he has the chance to steal from the insured again. However, there are problems with this condition.

The condition speaks of “discovery of theft”, but it makes no distinction between a suspicion of theft and confirmation of that theft. If an employee is accused of theft that does not necessarily make him guilty. Under the wording of the condition, the insurance as to him could be considered cancelled by the insurer. Also, the condition says if the employed is discovered to have committed “any other dishonest act”, the insurance is cancelled as to him. That term is not defined, so just what does it include? Anything the insurer considers to be a dishonest act? What state statutes consider criminal? Is a lie a dishonest act? Finally, the condition comes into play whether the theft or dishonest act is committed by the employee before or after becoming employed by the named insured. So, if a valued employee who has worked for the insured for ten years is discovered to have committed a petty theft when he was fifteen years old, the condition's terms would cancel insurance as to that employee immediately. Such a draconian measure may sound sensible to an insurer, but it could lead to many problems for and with the insured.

The other part of this condition calls for 30 days notice to the named insured of cancellation of insurance for an employee for any reason other than theft or dishonest act.

The concealment, misrepresentation, or fraud condition is a normal one found in most property forms. For more information on this condition (and other conditions in a property coverage form), see Commercial Property Conditions.

The consolidation/merger condition gives coverage under CR 00 20 for any employees or premises that the named insured acquires for ninety days. By then, for the coverage to continue, the insured must notify the insurer of the consolidation or merger. The insurer may then charge an additional premium to extend the coverage.

The discovery condition is the first distinction between CR 00 20 and CR 00 21; CR 00 21 does not have such a condition. This condition is worded in such a way to make things confusing. The clause commits the insurer to pay for a loss that the named insured sustains through acts committed or events occurring “at any time and discovered by you during the policy period….” Does this mean the acts or events can occur at any time—even before the policy's inception date—and coverage exists as long as the named insured discovers the loss during the policy period? Or, does it mean the acts or events must occur during the policy period and be discovered during that period before coverage exists? It may help to note that CR 00 21 has a clause (discussed below) that also deals with discovery, but it states that the insurer “will pay for loss that the named insured sustains through acts committed or events occurring during the policy period … an discovered by the named insured during the policy period”. This is clearer in that CR 00 21 definitely applies to loss due to acts or events that occur during the policy period. It can be presumed then that CR 00 20 can apply to loss due to acts or events that occur at any time (even prior to policy inception) as long as the insured discovers the loss during the policy period.

Condition f. makes the employee benefit plan an insured for insuring agreement A.1.—employee theft—if named on the dec page. The employee benefit plan is a defined term on CR 00 20, meaning any welfare or pension benefit plan that is subject to ERISA. The condition changes insuring agreement A.1. with respect to any losses to the benefit plan so that the agreement reflects coverage for loss to the employee benefit funds due to a fraudulent or dishonest act committed by an employee. Note that the loss is not by “theft”, but by “any fraudulent or dishonest acts”; this wording is more in tune with the type of loss that an employee benefit plan would suffer. Also note, the deductible amount applicable to insuring agreement A.1. does not apply to a loss sustained by an employee benefit plan.

The extended period to discover loss clause is in both CR 00 20 and CR 00 21, but there is a difference. CR 00 20 gives the insured 60 days from the date of termination or cancellation to discover a loss in order for that loss to be covered. CR 00 21 gives the insured one year to discover the loss. Both policies state that the loss sustained must be prior to the effective date of termination or cancellation; only the time to discover the loss is extended. Furthermore, the extended period to discover loss terminates immediately if the insured gets another policy to replace the one that is cancelled or terminated, a condition that fairly well eliminates the desire of the insured to rush out and find a replacement policy. Note that the discovery period under CR 00 20 for a loss with respect to any employee benefit plan is one year as opposed to the 60 day limit for any other type of loss.

The joint insured condition describes the relationships between the insurer and insureds and between insureds under the coverage form. If more than one entity is named as an insured, care must be taken in setting up the arrangement for the first named insured will act for itself and every other insured for all purposes of the insurance. (If the first named insured ceases to be covered, the next named insured becomes the first named insured.) If any insured or partner or member or officer of any insured has knowledge of information relevant to coverage, that knowledge is considered to be knowledge of every insured; insureds should be aware of this and make a habit of conferring with one another. Employees of any insured are considered employees of every insured and this could be quite significant if an employee theft occurs. With respect to any one insured, if the policy or any of its coverage parts is cancelled as to that insured, loss sustained by that insured is covered only if discovered within the time periods as described in the extended period to discover loss clause. Finally, the insurer will not pay more for loss sustained by more than one insured than the amount recoverable had the whole loss been sustained by one insured; in other words, if four insureds suffer a loss under insuring agreement A.2. (forgery or alteration), the most the insurer will pay is the limit of insurance stated on the dec page—not four times that amount.

The legal action condition requires that, if a legal action against the insurer is planned by the named insured, it must be predicated upon the insured's full compliance with all the terms of the policy. Further, suit cannot be brought until ninety days after the insured has filed proof of loss with the insurer, and must be brought within two years of the date of loss discovery. Of course, if state law requires different time periods than the ninety days or two years, the law prevails.

Analysis

If a form change is made that provides broadened coverage, but does not involve an additional premium, the broadened coverage applies. The change must have been made within forty-five days prior to the policy period, or within it.

The loss covered condition applies to coverages within the same policy, and was developed to prevent recovery in excess of the loss sustained in the event that two or more insuring agreements in a policy apply to the same loss. In this situation, the insurer is liable for the lesser of the actual amount of loss or the sum of the limits of insurance applicable to those agreements.

With the non-cumulation clause, the insurer is telling the insured that the limits of insurance do not accumulate over the years or policy periods. As an example, the insured has $100,000 limits of insurance for insuring agreement A.6. (computer fraud); if the insured keeps the policy in force for 5 consecutive years, that limit of insurance does not automatically increase to $500,000. Each policy period stands on its own and if the insured wants an increased limit of insurance for agreement A.6. (or any other insuring agreement), he will have to notify the insurer and pay the increased premium.

Note that CR 00 21 does not have a non-cumulation clause. However, that form does have the same message about no accumulation of limits of insurance for the insured in an other condition. This condition and two other conditions that do not appear on CR 00 20 are now discussed.

Analysis

This first condition is on CR 00 21. It is an anti-stacking clause that reminds the insured that, if he has a loss that is covered partly by the current policy and partly by a prior cancelled or terminated policy, the most the insurer will pay is the larger of the recoverable amount under either policy. In other words, the insured can not look to both his current policy and a prior policy for coverage and expect to be paid under both policies. The cancelled or terminated policy had to have been issued by the current insurer or an affiliate. Also, this condition is the one on CR 00 21 that has the non-cumulation clause that was discussed previously from the analysis of conditions on CR 00 20.

The loss sustained clause is similar to the discovery clause from CR 00 20. Both clauses require the named insured to discover the loss during the policy period or the extended discovery period in order for the coverage to apply. However, CR 00 21 also requires the act or events that cause the loss to occur during the policy period; CR 00 20 does not have this requirement.

The loss sustained during prior insurance clause modifies the loss sustained condition. The loss sustained condition requires the acts or events that caused a loss to have occurred during the current policy period for coverage to exist. This clause states that if the insured had a loss during the prior policy, the current policy will pay for the loss. There are caveats: the loss has to be a covered one under both the previous policy and the current policy; and the reason the previous policy did not pay for the loss was that the time for the insured to discover the loss had expired; and the current policy has to be effective at the time of the cancellation or termination of the prior policy. The loss sustained during prior insurance clause effectively gives the insured coverage for a loss that occurred prior to the current policy period under certain circumstances. Note that the amount payable for the prior policy loss is part of the current limits of insurance, and not in addition to the current limits. Indeed, the insurer goes further and declares that it will only pay the lesser of the amount recoverable under either the current policy or the prior policy.

Analysis

The other insurance clause is not the usual “other insurance” clause in that it does not discuss primary versus excess insurance. The clause simply declares that the crime coverage insurance does not apply to a loss that is recoverable or recovered under other insurance. There is an air of excess coverage in that the clause states that the insurer will pay that amount of loss that is not covered by the other insurance; that is, if the other insurance is not sufficient to cover the entire amount of the loss, CR 00 20 will pick up the slack.

The ownership of property clause is something of a no benefit to bailee clause. This condition makes it clear that the property covered by the policy is limited to the named insured's property (owned or leased), property that the named insured holds for others, and property for which the named insured is legally liable. The insurance is for the benefit of the named insured only and confers no rights or benefits on anyone else. There is one exception noted in this clause: if the insured is legally liable for some property but that property is inside the premises of a client of the named insured, and that property is lost, CR 00 20 does not consider such property to be covered property; presumably, the client is going to be held responsible for the loss to the property since it was in his or her premises.

The records and the territory conditions are standard fare.

The recoveries condition sets out the pattern of disbursement should any property be recovered after settlement has been made. The named insured is made whole first for any loss that the named insured sustains in excess of the limit of insurance and the deductible. The insurer is then paid until it is reimbursed for the amount it paid out for the loss. Finally, if there is any amount left, the insured receives that to compensate for the deductible he or she has chosen.

The transfer of rights clause is the subrogation clause. The insured is to do nothing to impair the insurer's rights of recovery after a loss has occurred.

The valuation and settlement condition discusses the value of lost money, securities, and other property that CR 00 20 covers. Loss of money is settled only up to and including its face value; at the insurer's option, it may pay for loss of money issued by a country other than the United States either at the face value in the money issued by that country, or in the United States dollar equivalent at the rate of exchange on the day the loss is discovered. Since exchange rates can vary, the current version of the form specifies that the rate used will be the one published by The Wall Street Journal on the day of the loss. Securities are valued only up to and including their worth at the close of business on the day the loss is discovered. The insurer has the option to pay the value of securities or replace them in kind, or pay the cost of any “lost securities bond” required in connection with issuing duplicates of the securities. Loss of property other than money or securities or loss from damage to the premises is valued at the replacement cost of the property without a deduction for depreciation. Of course, the replacement cost valuation is based on the insured actually repairing or replacing the damaged property; if this is not done, the insurer pays on an actual cash value basis. In the case of property in a foreign country, other than “money,” the insurer has the option of paying for the loss in the money of the country where the loss occurs, or in the United States dollar equivalent—determined by the rate of exchange on the day the loss is discovered.

Analysis

Note that this condition is applicable only to insuring agreement A.1.—employee theft. So, if an employee is in Japan on a business trip and steals the insured company's money, CR 00 20 will provide coverage for the theft even though Japan is outside the stated territorial limits of the policy. The coverage is for ninety days and it can be assumed that the ninety day period is ninety consecutive days, not business days or some other variation on the counting of days.

Analysis

The forgery or alteration insuring agreement is modified by this condition. That insuring agreement allows for the payment by the insurer of any reasonable legal expenses that the named insured incurs in defense of a lawsuit over the insured's refusing to pay any instrument listed in insuring agreement A.2. This condition declares that the deductible amount applicable to the insuring agreement does not apply to the legal expenses that the insurer will pay.

This condition also notes that if the insured presents a loss under the forgery or alteration insuring agreement, the instrument involved in the loss has to be sent to the insurer. So, if the insured has received a forged check or promissory note and has made a claim, that check or note has to be sent to the insurer with the claim of loss so as to strengthen the proof of loss in the eyes of the insurer.

The territorial limits of CR 00 20 are lengthened to cover the whole world for insuring agreement A.2. There is no time limit on the coverage as there is with the previous condition that was applicable to insuring agreement A.1.

The insurer is notifying the insured in this condition that all signatures will be treated as handwritten—whether they are handwritten or reproduced mechanically or electronically. This is a convenience for the insured since so much business these days is handled by FAX and e-mail.

Analysis

The insuring agreements modified by this condition deal with inside the premises robbery or safe burglary and outside the premises loss. The insurer assumes that the insured has chosen a good risk management option and has a contract with the armored vehicle company that makes that company liable for losses that occur while the insured's property is in the care, custody, and control of the armored car company. Based on this, the insurer then declares that it will pay only the amount of loss that the named insured cannot recover from the armored car company.

The insurer then limits the coverage for certain enumerated property. The insurer will pay only up to $5,000 for pearls, furs, precious stones, etc. Such items are usually considered specialty type property that should be insured by special property floaters. This $5,000 limitation is in keeping with the manner in which such items are usually treated in property coverage forms, such as a homeowners policy.

Analysis

Insuring agreement A.6 deals with computer fraud. This condition extends the coverage worldwide and limits the amount paid for reconstructing or reproducing lost information that was on the insured's computer. Due to the worldwide reach of many businesses these days, and the increasing use of computers in that worldwide business, the extension of territorial limits makes sense. As for the $5,000 limitation this is in keeping with most commercial property forms.

Analysis

Many of the definitions on CR 00 20 are self-explanatory and need not be analyzed; some do deserve a discussion.

For example, counterfeit means an imitation of an actual valid original. That is not out of the ordinary, but the definition goes on to note that the counterfeit has to be an item that is intended to deceive and to be taken as the original; the intent to deceive is not always so easy to prove. If a customer of a bank unwittingly gets a bundle of counterfeit twenty dollar bills and then innocently passes them onto the insured bank, where is the intent to deceive? The customer did not intend to deceive the bank, but the bank surely can put in a claim for loss resulting from accepting counterfeit paper currency. More than likely, the insurer will presume that if the insured has accepted counterfeit currency, there was an intent to deceive on someone's part and pay the claim.

Custodian is a defined word that insureds need to know does not include a watchperson or a janitor. If a watchperson has possession of the insured's property (other than money or securities) and is robbed, that is not within the insuring agreement for robbery inside the premises; the robbery has to be from a custodian and that does not include the watchperson. Also, custodian does not include a family member of the named insured.

The definition of employee is rather long. The key points here are: the employee has to be a natural person—corporate entities may be legal persons, but they are not natural persons and so, can not be employees of the named insured; the employee is considered as such for thirty days after termination of service, so if the terminated employee somehow manages to steal from the insured after being fired, coverage could still exist under insuring agreement A.1., for awhile at least; the definition makes note of the right to control and direct the services of the worker which is usually accepted as the sign of employment; temporary workers are considered as employees of the insured; managers are insureds, but only while performing acts coming within the scope of their usual duties and not under all circumstances. The current form now extends employee status to leased employees, recognizing how common this arrangement has become. The current form also adds the following as employees, when working as a consultant for the named insured: former employees, directors, partners, members, managers, representatives, or trustees. The current form also gives employee status to guest students or interns, while they are on the premises.

One more point about “employee”: the status of executive officers is not clarified in this definition of employee. An officer of an employee benefit plan is considered an employee, but what about the president of the company or the secretary? The definition does not specifically exclude executive officers, but do they fit within the confines of the definition? They are natural persons; they can be in the service of the named insured; they certainly are compensated; but, are they subject to the control and direction of the named insured, especially if they set the named insured corporation's agenda?

Analysis

Forgery means the signing of another's name; a person can not forge his or her own signature under the terms of the definition. A messenger can include relatives of the named insured, so if the named insured is a person and has his spouse carry the business receipts to the bank, insuring agreement A.5. will respond if the spouse if robbed along the way. Note that “messenger” is the only defined term on CR 00 20 that directly includes a relative or family member of the named insured. As for the definition of “money”, note that it does not include bullion. Bullion does not have a face value and so, it does not come within the scope of the definition of money and is considered to be property other than money and securities.

The current form adds a rather lengthy definition of fraudulent instruction. Since the current version now covers funds that are transferred via fraudulent instruction, it is important to define fraudulent instruction. Such a fraudulent instruction may come from an employee or a non-employee. If the instruction to transfer funds is made without the insured's consent, then the claim is covered under this form. The fraudulent instruction may even be made the old-fashioned way – in writing. If the instruction is forged or altered, the crime form covers the loss.

The definitions of “occurrence” are important for the insured to know due to the deductible being applied on a per occurrence basis. The definition of “occurrence” is divided into sections based on the different insuring agreements. Insuring agreement A.1. applies to theft by an employee. Since, with respect to this agreement, “occurrence” means all loss caused by an employee, whether due to a single act or series of acts, if the employee has been stealing from the insured over a period of time—say, $100 here and $250 there—that is considered one occurrence. The deductible is on a per occurrence basis, so the deductible is applied to the total amount taken by the employee on a one time shot, and not to each and every time the employee took the money. The same is true of insuring agreement A.2.—the total loss caused by any person is considered one occurrence and not a series of occurrences, no matter how many forged or altered instruments are involved. Finally, with respect to the other insuring agreements, an occurrence is an act or series of related acts. This means that if the acts that cause the loss are numerous but related, CR 00 20 considers that to be one occurrence. For example, if the same person commits computer fraud over a period of several months, that is one occurrence.

Analysis

The “other property” definition is rather all encompassing, but there are limits to its scope. The insured should be aware of the fact that motor vehicles and accessories are specifically excluded. And, property such as diamonds or furs do have a special limit of insurance that applies in case of a loss. So, the entire policy has to be read to see if “other property” of the insured is covered and for how much.

The “premises” of the insured is the interior of the building, and not the entire area where the insured has his business. The insuring agreements make a distinction between inside the premises and outside, so this definition is meant to clarify those situations.

Note that safe burglary requires evidence of forced entry; an unlocked safe or vault will not meet the definition so as to activate insuring agreement A.4.

The final new definition is that of “transfer account.” Such an account exists to make it easier for the named insured to transfer money.

The definition of “watchperson” is included simply to make sure the distinction between custodian and watchperson is known. Both could have care and custody of property inside the insured's premises, but robbery of a watchperson is not included in insuring agreement A.4., while robbery of a custodian is a covered occurrence. The insured should know that a person hired to be a watchperson and who has no other duties is not considered to be a custodian covered under insuring agreement A.4. even if the insured calls the watchperson a custodian.