September-October 2016

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38 PalletCentral • September-October 2016 an you imagine waking up one day only to discover one of your most trusted, longest tenured employees has been stealing from you? He has been manipulating financial statements and forging checks for the past five years and you had no idea. You know you have crime coverage on your commercial insurance policy, but will this loss be covered or will you be stuck with the damage? The answer can be complex, and depends on how your crime coverage is structured. There are several different types of crime coverage on the crime insurance policy, such as: forgery or alteration coverage; money and securities coverage; computer fraud coverage; employee dishonesty coverage; and money orders and counterfeit money coverage. The Surety Association and Insurance Services Office (ISO) use specific policy language for insurance company use which should be taken into consideration when reading your insurance policies. With crime insurance, there are two commercial ISO crime forms that are commonly used to cover the crime exposures of a business, "Loss Sustained" and "Discovery" forms. There can be a lot of confusion with the differences between these, as well as what each means for your business when it comes to recovering losses due to fraud. Which Form Do You Need? • Loss Sustained Form: Under a loss sustained policy form, the loss must be sustained during the policy period or within one year after policy expiration, which is usually the period of time provided in the Extended Period to Discover Loss Condition that is written in the policy. The loss sustained form also covers losses that occurred under a prior crime policy if the policy and limits were in force at the time of the loss. Note particularly that the prior insurance must be continuous; even a one-day gap is enough to end coverage for prior losses. The loss would also have to be covered by the prior crime policy as well as the current crime policy. • Loss Discovered Form: Under a loss discovered policy form, the loss is covered regardless of when it occurred, as long as it is discovered during the policy period or within 60 days thereafter. Under this option, if the insured had prior continuous coverage, the limit of the current policy will apply, despite what coverage the insured had on the prior policy. Check Your Policy So as you can see, there are major differences in the way your company is covered for crime exposures, and the primary Crime Coverage Business Blog by Dennis Bilancia CPCU, CIC, AAI, AIS, LIC BUSINESS BLOG C Am I Covered for a Loss that Occurred 2 Years Ago? Am I Covered for a Loss that Occurred 2 Years Ago?

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