Casualty: Crime Insurance & Bonds
All of the following are considered employees while performing consulting services
for the insured EXCEPT: - ANS-A: Paul, an independent contractor
Arlene, a former employee of the insured
Josie, a former partner of the insured
Matthew, a former manager in the insured's company
\Although open perils commercial property policies typically cover theft of covered
property, most businesses need crime insurance to cover two key exposures not
typically covered by commercial property open or named perils policies. What are
these two exposures? - ANS-A: employee dishonesty and loss of money and
securities
theft of autos and identity theft
identity theft and government confiscation of property
employee dishonesty and theft of autos
\Carlos has a Lessees of Safe Deposit Boxes endorsement on his commercial crime
policy to cover insured property kept in a bank safe deposit box. He does NOT need
to show which of the following to prove a burglary within the definition of this
endorsement? - ANS-The safe deposit box was locked.
The safe deposit box was kept in a locked vault.
A: A guard was on duty at all times.
There are signs of forcible entry on the exterior of the vault and the box.
\Conditions and restrictions on crime coverage under the Extortion--Commercial
Entities (CR 04 03) endorsement include all of the following EXCEPT: - ANS-A
reasonable effort must be made to report the extortionist's demands to an associate
and local law enforcement authorities.
The threat must be received during the policy period.
Ransom payments made after expiration of the policy period may be covered if
made in response to a threat to the named insured before the expiration date.
A: The captivity giving rise to the extortion threat must occur only within the U.S.
\Eamon's Clothing Store has commercial crime coverage in the form of inside
premises -- theft of money and securities. The manager hires Russell who was fired
from a previous job for stealing merchandise. Nevertheless, the manager trusts that
Russell has changed his ways. A month later, Russell is found to have stolen cash
from the register and is fired. Eamon's files a claim with the store's insurer. Is the
loss covered? - ANS-A: No, because the manager knew of Russell's criminal
background.
Yes, because Russell was fired immediately after the loss was discovered.
No, because the manager's own liability policy will cover the loss.
Yes, because the loss occurred during the policy period.
\Genevieve's Boutique was burglarized on August 1 last year. Fortunately, she had a
commercial crime policy at the time, which she allowed to expire on December 31
, last year. On May 1 of this year she realized that a sapphire ring was also missing
and presumed stolen in the burglary, though she had not reported it until May 1. The
claim for the ring will NOT be paid if she had: - ANS-loss sustained coverage
A: discovery-based coverage
retroactive coverage
comprehensive coverage
\Janet, a local tax collector, used tax receipts to buy a lake home. She is prosecuted
for embezzling these funds and converting them her personal use. Though she is
covered by a public official bond, what must happen before the bond will pay for the
loss? - ANS-Janet must be found guilty in a criminal trial.
Janet must admit to the theft of tax receipts.
A: Janet must repay as much of the loss as she is financially able.
Janet must be discharged from her official duties.
\Mark has arranged for ABC Insurance Company to financially guarantee that Quality
Construction Co. will build an addition to Mark's house in accordance with the
construction contract between Mark and Quality. This arrangement is called: -
ANS-A: suretyship
bonded
obligation insurance
fiduciary responsibility
\Meerbaum Retail Outlet carries employee theft coverage in its crime policy. Its
employee theft insurance covers all employees in the retail operation. What type of
employee theft coverage does Meerbaum carry? - ANS-scheduled coverage
named only employee coverage
A: blanket coverage
cause of loss coverage
\Monument Farms Grocery submits a claim under its commercial crime policy
because several items of stock are missing. How does the policy respond? - ANS-It
pays the claim under Employee Theft coverage.
It pays the claim under Other Property coverage.
It denies the claim under the Warehouse Receipts exclusion.
A: It denies the claim under the Inventory Shortages exclusion.
\Mrs. and Mrs. Urquhart hired Vozzella Construction to add an addition to their home
and each party signed a contract. They required Vozzella Construction to obtain
what kind of bond to protect them in the event the company fails to meet its
contractual obligations? - ANS-bid bond
A: performance bond
fidelity bond
payment bond
\Mrs. Olson is flying from Boston to Los Angeles when she is held against her will on
the airline. Under what insuring agreement on the Kidnap/Ransom forms of her
commercial crime policy will coverage be provided for the expenses related to her
confinement? - ANS-political or military activity
in transit delivery
All of the following are considered employees while performing consulting services
for the insured EXCEPT: - ANS-A: Paul, an independent contractor
Arlene, a former employee of the insured
Josie, a former partner of the insured
Matthew, a former manager in the insured's company
\Although open perils commercial property policies typically cover theft of covered
property, most businesses need crime insurance to cover two key exposures not
typically covered by commercial property open or named perils policies. What are
these two exposures? - ANS-A: employee dishonesty and loss of money and
securities
theft of autos and identity theft
identity theft and government confiscation of property
employee dishonesty and theft of autos
\Carlos has a Lessees of Safe Deposit Boxes endorsement on his commercial crime
policy to cover insured property kept in a bank safe deposit box. He does NOT need
to show which of the following to prove a burglary within the definition of this
endorsement? - ANS-The safe deposit box was locked.
The safe deposit box was kept in a locked vault.
A: A guard was on duty at all times.
There are signs of forcible entry on the exterior of the vault and the box.
\Conditions and restrictions on crime coverage under the Extortion--Commercial
Entities (CR 04 03) endorsement include all of the following EXCEPT: - ANS-A
reasonable effort must be made to report the extortionist's demands to an associate
and local law enforcement authorities.
The threat must be received during the policy period.
Ransom payments made after expiration of the policy period may be covered if
made in response to a threat to the named insured before the expiration date.
A: The captivity giving rise to the extortion threat must occur only within the U.S.
\Eamon's Clothing Store has commercial crime coverage in the form of inside
premises -- theft of money and securities. The manager hires Russell who was fired
from a previous job for stealing merchandise. Nevertheless, the manager trusts that
Russell has changed his ways. A month later, Russell is found to have stolen cash
from the register and is fired. Eamon's files a claim with the store's insurer. Is the
loss covered? - ANS-A: No, because the manager knew of Russell's criminal
background.
Yes, because Russell was fired immediately after the loss was discovered.
No, because the manager's own liability policy will cover the loss.
Yes, because the loss occurred during the policy period.
\Genevieve's Boutique was burglarized on August 1 last year. Fortunately, she had a
commercial crime policy at the time, which she allowed to expire on December 31
, last year. On May 1 of this year she realized that a sapphire ring was also missing
and presumed stolen in the burglary, though she had not reported it until May 1. The
claim for the ring will NOT be paid if she had: - ANS-loss sustained coverage
A: discovery-based coverage
retroactive coverage
comprehensive coverage
\Janet, a local tax collector, used tax receipts to buy a lake home. She is prosecuted
for embezzling these funds and converting them her personal use. Though she is
covered by a public official bond, what must happen before the bond will pay for the
loss? - ANS-Janet must be found guilty in a criminal trial.
Janet must admit to the theft of tax receipts.
A: Janet must repay as much of the loss as she is financially able.
Janet must be discharged from her official duties.
\Mark has arranged for ABC Insurance Company to financially guarantee that Quality
Construction Co. will build an addition to Mark's house in accordance with the
construction contract between Mark and Quality. This arrangement is called: -
ANS-A: suretyship
bonded
obligation insurance
fiduciary responsibility
\Meerbaum Retail Outlet carries employee theft coverage in its crime policy. Its
employee theft insurance covers all employees in the retail operation. What type of
employee theft coverage does Meerbaum carry? - ANS-scheduled coverage
named only employee coverage
A: blanket coverage
cause of loss coverage
\Monument Farms Grocery submits a claim under its commercial crime policy
because several items of stock are missing. How does the policy respond? - ANS-It
pays the claim under Employee Theft coverage.
It pays the claim under Other Property coverage.
It denies the claim under the Warehouse Receipts exclusion.
A: It denies the claim under the Inventory Shortages exclusion.
\Mrs. and Mrs. Urquhart hired Vozzella Construction to add an addition to their home
and each party signed a contract. They required Vozzella Construction to obtain
what kind of bond to protect them in the event the company fails to meet its
contractual obligations? - ANS-bid bond
A: performance bond
fidelity bond
payment bond
\Mrs. Olson is flying from Boston to Los Angeles when she is held against her will on
the airline. Under what insuring agreement on the Kidnap/Ransom forms of her
commercial crime policy will coverage be provided for the expenses related to her
confinement? - ANS-political or military activity
in transit delivery
