Summary: Category 04 of crime forms in the ISO program lists sixteen optional crime and fidelity insuring agreement endorsements. Many of these endorsements have been updated in the past two years. The endorsements amend the commercial crime policy and coverage form and/or the government crime policy and coverage form by adding various insuring agreements. The changes to these endorsements are the subject of this treatment.

Each endorsement contains language stating that the provisions of the form or policy that the endorsement is attached to apply unless the endorsement modifies those provisions. This is to clarify that all other policy provisions apply unless specified. This article is broken into three sections as follows:

This endorsement limits employee theft coverage, including forgery, to those employees who can be identified, whether by name or by position. While the crime policy allows coverage for identified or unidentified employees, this endorsement specifies that the employee must be identified. The employee may be acting alone or in collusion with others. 

The limit of liability in the crime policy is straightforward. The policy says that the most it will pay for all loss resulting from an occurrence is what is shown on the declarations. The endorsement provides for the employees to be scheduled by name or position.

Since the "name schedule" specifies employees who are covered, the endorsement limits coverage for any named employee to the applicable limit of that employee. The Schedule provides a limit, and a deductible for each employee. 

When written on a "position schedule" the endorsement says that even if an employee serves in more than one position, the most payable is the largest amount that applies to any one position at the time of the loss. When writing a "position schedule" policy, the agent must specify the number of employees serving in each position. If more employees are serving in a position than are indicated on the endorsement, the limit of insurance is reduced. The formula is similar to the co-insurance formula in a property policy—number of employees shown divided by actual number of employees times the limit of liability.

For example: the endorsement shows 5 employees for a position when there are really 10. The limit of liability is $100,000. The limit of liability for any loss would be reduced to $50,000—5 divided by 10 times $100,000.

The deductible clause states that the insurer is liable in excess of the deductible up to the limit of coverage for an insured occurrence. The endorsement makes no mention of more than one deductible applying.

The endorsement makes some editorial changes to existing exclusions and conditions. The "additional premises or employees" condition is removed from the conditions section. The endorsement also removes the "consolidation – merger – acquisition" condition. Thus, if the insured acquires new employees in a merger, it does not have to report them to the insurer. Under the "duties in the event of loss" condition, if the insured has any reason to believe that a loss involves a violation of the law, they must notify the local law enforcement authorities. The 2022 revision of this endorsement removes the "termination as to any employee" condition as it is now part of the base crime and fidelity policies. 

This endorsement can be used with the Commercial Crime Coverage Form, the Commercial Crime Policy, the Commercial Fidelity and Forgery Policy, the Government Crime Coverage Form, the Government Crime Policy, and the Government Fidelity and Forgery Policy. 

This endorsement adds an insuring agreement covering "securities" while they are in a safe deposit box or vault. The securities are covered for the perils of theft, disappearance, or destruction. The depository where the box or vault is located must be shown on the endorsement. The securities are also covered if they are temporarily in another location inside the "depository premises", while the named insured is adding to the box/vault or removing from it. The limit and deductible per occurrence are also shown in the Schedule.

The endorsement adds three definitions for this insuring agreement:

  1. Burglary—is the unlawful taking of property from a box/vault inside the "depository premises" shown on the schedule by a person unlawfully entering the box and vault. Evidence of forcible entry must exist on the exterior of the box and vault.
  2. Depository—as indicated on the schedule.
  3. Depository premises—the interior portion at the address indicated.

The endorsement also covers "other property" in a box/vault. Again, the name and location of the depository must be shown, as well as the limit of liability and the deductible. "Other property" is covered for the perils of actual or attempted burglary, robbery, or vandalism.

The crime policy excludes loss from theft committed by the insured's "employees, ERISA plan officials, managers, directors, trustees, or representatives" other than as specified in the insuring agreement. The endorsement specifies that the named "depository" is not an authorized representative of the insured within the meaning of this exclusion.The addition of ERISA plan officials is new with the 2022 update. 

 The endorsement specifies that the following exclusions apply to this insuring agreement:

  1. Giving or surrendering of property in any exchange or purchase.
  2. Loss to "other property" from fire.
  3. Loss or damage to property owned by the depository.
  4. Loss or damage to property held by the depository as collateral or in trust for more than thirty days.
  5. Loss resulting from the insured being induced by any fraudulent or dishonest act to voluntarily part with property. 

The 2022 revision of this endorsement deletes the Transfer or Surrender of Property exclusion in favor of the new Kidnap, Random, Extortion and other Unlawful Demands Exclusion included in the base crime form and policy.

This endorsement can be used with the Commercial Crime Coverage Form and the Commercial Crime Policy.

This endorsement adds coverage for securities that the insured has deposited with others—other than in a safe deposit box or vault. As with endorsement CR 04 09, the name and address of the depository must be shown. The name of the custodian must also be shown. The securities are covered for theft, disappearance, or destruction and must be on the custodian's premises; being conveyed by the custodian off the premises; or on deposit with the custodian for safe-keeping in a depository.

 The endorsement adds the following definitions:

  1. Custodian—means the custodian shown in the schedule.
  2. Custodian's premises—the interior of the portion of any building at the address shown in the Schedule that is occupied by the custodian or depository.
  3. Depository—means the depository shown in the schedule.

As form CR 04 09 specifies that the named "depository" is not an authorized representative of the insured, form CR 04 10 does also and it adds "custodian" as not being an authorized representative of the insured.

The endorsement specifies that the following exclusions apply to this insuring agreement:

  1. Giving or surrendering of property in any exchange or purchase.
  2. Loss in any premises the named insured occupies.
  3. Loss to securities owned by the custodian or depository.
  4. Loss to securities held by the custodian or depository as collateral or in trust for more than thirty days.
  5. Loss resulting from the insured being induced by any fraudulent or dishonest act to voluntarily part with property.

As with CR 04 09, seen above, the 2022 revision of this endorsement deletes the Transfer or Surrender of Property exclusion in favor of the new Kidnap, Ransom, Extortion and other Unlawful Demands Exclusion included in the base crime form and policy.

The endorsement adds one condition. If the custodian changes depositories, the insurance applies to the new depository if the named insured notifies the insurer within thirty days. 

This endorsement can be used with the Commercial Crime Coverage Form, the Commercial Crime Policy, the  Government Crime Coverage Form, and the Government Crime Policy. 

This endorsement is intended for any insured that has guests staying on its premises—such as a hotel, motel, or nursing home.

The first section adds the two insuring agreements to the commercial crime coverage forms. Both state that the insurer will pay as damages those sums the insured becomes legally obligated to pay. The first covers "guests' property" in a safe deposit box inside the premises; while the second covers the same property while it is inside the "premises" or in the named insured's possession. The endorsement also promises to provide the insured with a defense if he or she is sued for refusal to pay for loss or damage to guests' property. The amount the insurer will pay is in addition to the applicable limit shown in the Schedule. The Schedule on this endorsement provides for the insured to select coverage for guests' property in safe deposit boxes and/or inside the premises, along with corresponding limits and deductibles.

The guests' property endorsement adds one definition and changes one. The additional one defines the covered property—"guests' property." Just as the crime policy covers "money," "securities," and "other property" that belongs to the named insured, this endorsement covers the same items belonging to a guest.

The crime policy defines "premises" as the interior of any building that the named insured occupies for the conduct of his or her business. This endorsement limits "premises" to the interior of the building that is shown on the schedule.

The guests' property endorsement provides coverage for theft of guests' property by employees, ERISA plan officials, managers, directors, trustees, or representatives; and legal fees, costs, and expenses. It accomplishes this by removing those exclusions from the crime policy and form.

This endorsement also adds several exclusions:

  1. Liability assumed under a contract. However, it makes an exception for property inside the premises if the named insured enters into a written agreement with a guest prior to an occurrence.
  2. Loss or damage from fire.
  3. Guests' property is not covered for loss or damage that is caused by the spilling, upsetting, or leaking of any food or drink.
  4. Loss or damage caused by insects is not covered. The endorsement also excludes damage from animals, wear and tear, gradual deterioration, and inherent vice.
  5. Even though the endorsement covers guests' property in the insured's care, it specifically excludes damage to the property that the insured causes by laundering or dry cleaning it.
  6. If the named insured releases another party from liability and that causes a loss, there is no coverage.
  7. Again, although the endorsement is intended to cover guests' property, it specifies no coverage for items the guest holds for sale or as samples.
  8. The final exclusion emphasizes that the endorsement does not cover motor vehicles, their equipment and accessories, or anything inside a vehicle.

The guests' property endorsement removes one condition found in the crime policy, adds one, and changes one. It specifies that the "records" condition does not apply. That condition requires the insured to keep records about the covered property. Since the property covered by this endorsement does not belong to the named insured, it would be impossible to keep such records.

The first added condition is "bankruptcy." Since this policy now involves liability to a third party, the condition clarifies that even if the named insured declares bankruptcy, the insurer is not relieved of its obligations.

The crime policy limits covered property to property that the insured owns or for which the insured is legally responsible. This endorsement changes that condition so that it limits coverage to the property of guests in a safe deposit box, inside the premises, or in the named insured's possession. The endorsement retains the wording that the insurance is for the benefit of the named insured only. It emphasizes that no one else—including your guest—has any rights under the endorsement. In order for a loss to be paid, the claim must be brought by the named insured.

This endorsement can be used with the Commercial Crime Coverage Form and the Commercial Crime Policy.

This endorsement provides the named insured with bailees' coverage for "customers' property". The first insuring agreement provides the insured with legal liability coverage for customers' property in a safe deposit box, a vault, or temporarily elsewhere on the insured's premises during the course of deposit or removal from the safe deposit box or vault. It also promises to provide a defense to the insured if he or she is sued by a customer for damage to that customer's property. It covers loss or damage to the property.

The second insuring agreement provides more limited coverage. It covers the customer's property only for the perils of robbery, burglary, destruction, or damage. This is direct damage coverage—there is no legal liability requirement. The agreement covers damage to the premises done during an actual or attempted robbery or burglary. Finally, it also covers damage to any locked safe, vault, or safe deposit box suffered during an actual or attempted robbery or burglary.

Burglary involves the unlawful taking of the property from a locked box or safe. If the property is not in a locked box, then there must be signs of forcible entry. Customers' property is defined as money, securities, and other property under the first insuring agreement, and as securities and other property under the second insuring agreement.

The acts committed by your employees, ERISA plan officials, managers, directors, trustees, or representatives exclusion does not apply to the first insuring agreement.

The endorsement adds one exclusion to the first insuring agreement: liability assumed in a written contract is not covered.

It also adds two exclusions to the second insuring agreement:

  1. Loss of or damage to property caused by fire, other than damage to a safe deposit box, safe, or vault, is not covered.
  2. Loss of or damage to property resulting from animals, insects, wear and tear, gradual deterioration, and inherent vice are not covered.

The endorsement removes one condition, adds one, and changes one. It removes the "records" condition, meaning the insured does not have to keep records of any property covered under this insurance. It adds that the bankruptcy of the named insured does not relieve the insurer of its obligations. The "ownership of property; interests covered" condition is changed so that it applies only to property belonging to the named insured's customers, and not the insured's own property.

This endorsement can be used with the Commercial Crime Coverage Form and the Commercial Crime Policy.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.