While adjusting a crime claim, the insurer asks the insured's chief financial officer to answer questions under oath. Under the policy conditions, this is:

Required only if fraud is suspected

June discovers that her cashier took $500 from the register over several weeks. Which crime insuring agreement covers the loss?

Inside the Premises – Robbery or Safe Burglary

Inside the Premises – Theft of Money and Securities

A charity wants theft by its unpaid volunteers who handle donations covered under its employee theft coverage. What is needed?

An endorsement adding volunteers

Nothing; volunteers are already employees

A town wants coverage for losses caused when its treasurer fails to perform duties faithfully, not only for theft. Which crime coverage fits?

Public officials liability coverage

Which act is an alteration rather than a forgery under a crime policy's forgery or alteration coverage?

Changing the amount on a check the owner signed

Taking cash from the register without permission

Endorsing a customer's check with a fake signature

Signing the owner's name to a company check

A store clerk accepts a counterfeit $100 bill in good faith in exchange for merchandise. Which commercial crime insuring agreement covers the loss?

Money orders and counterfeit money

Inside the premises – theft of money

Computer and funds transfer fraud

An employee makes unauthorized securities trades for the company, losing $80,000 of company funds, and gains nothing personally. Under the commercial crime policy, the loss is:

Covered as forgery or alteration

A hacker breaks into a retailer's online ordering system and causes $30,000 of merchandise to be shipped from its warehouse to a fake address. Which crime insuring agreement covers the loss?

Computer and funds transfer fraud

Inside the premises – other property

A small retailer insured under a businessowners policy wants employee theft protection without buying a separate crime policy. What can it do?

Add BOP optional employee dishonesty

Nothing; only a crime policy can cover it

Nothing; the BOP already includes it

Buy an inland marine floater instead

Coverage partCommercial lines

Share of general blockabout 2%our synthesis of state exam outlines

Drill15 items

Commercial crime on the P&C exam

Commercial crime insurance (ISO forms CR 00 20 and CR 00 21, 06 22 edition) covers money, securities and other property taken by employees, outsiders, forgers and computer fraud, through eight insuring agreements, sold on its own or as a coverage part of a commercial package policy. Each agreement carries its own limit, and the form comes in two versions with different time rules: discovery (CR 00 20) and loss sustained (CR 00 21).

Words the crime form defines

Money: Currency, coins, bank notes, traveler's checks, and money orders held for sale to the public.
Securities: Negotiable and non-negotiable instruments that represent money or other property, such as checks, tokens, tickets and revenue stamps.
Other property: Tangible property other than money and securities; stock, equipment and jewelry inventory fall here.
Employee: A person on the payroll whom the insured directs, kept as an employee for 30 days after termination unless fired for dishonesty. Independent contractors are not employees.
Designated person: The person named to receive knowledge of a loss. Discovery is measured from when that person first learns of it, and coverage for an employee ends once that person learns the employee was dishonest.

The eight insuring agreements, each with a sample loss

CR 00 20 / CR 00 21, 06 22 edition. Each agreement carries its own limit on the declarations, and a loss is paid only under an agreement that has a limit shown.
Insuring agreement	Covers	Sample loss
Employee theft (fidelity)	Theft by employees, ERISA plan dishonesty, employee theft of clients' property	A bookkeeper routes vendor payments to her own account
Forgery or alteration	Forged or altered checks and drafts drawn on the insured, including payment cards	A stolen company credit card is used with the owner's signature forged
Inside the premises: money and securities	Theft, disappearance or destruction of money and securities on premises	Checks waiting for deposit burn in an office fire
Inside the premises: robbery or safe burglary	Other property taken by robbery or safe burglary on premises	Watches taken from a safe whose door was pried open
Outside the premises	Money, securities and other property in the care of a messenger or armored car	A messenger is robbed on the way to the bank
Computer and funds transfer fraud	Property taken through fraudulent computer entry or fake transfer instructions to a bank	Forged payment instructions go straight to the bank
Fraudulent impersonation	Transfers made after someone poses as a vendor, client or executive	An employee wires funds after a fake email from a "supplier"
Money orders and counterfeit money	Bad money orders and counterfeit currency accepted in good faith	A money order taken as payment proves fraudulent

Discovery form vs loss sustained form

CR 00 20 (discovery) covers loss whenever it happened after any retroactive date, if discovered during the policy or within 60 days after it ends (one year for ERISA plans). CR 00 21 (loss sustained) covers loss that happens during the policy and is discovered within one year after it ends.

Sorting a crime loss into an agreement

Who took it?
If an employee took it, employee theft applies and the sorting stops. If anyone else did, or no one can be identified, go to the next step.
What was taken?
Money and securities point to the inside or outside money agreements; goods and equipment point to robbery or safe burglary of other property. A thief who pries the back door at night and carries stock off the shelves is outside that agreement, because no safe was forced and no custodian was present; that loss usually falls to the commercial property policy instead.
Where and how?
A messenger held up on the way to the bank is outside the premises. A wire sent after a fake email from the "CEO" is fraudulent impersonation, while one triggered by altered bank instructions with no employee involved is computer and funds transfer fraud.

Which insuring agreement pays?

0 of 15 answered · 0 right

This set runs through the agreements, the definitions, the employee rules and the policy conditions. The agreement table above is the reference to keep at hand.

Notes on each optionCommit to an answer first. The notes under the item then open on every option: what rules it in or out, and the one word that splits the runner-up from the key.

Item 01
While adjusting a crime claim, the insurer asks the insured's chief financial officer to answer questions under oath. Under the policy conditions, this is:
1. ANo court order is needed; examination under oath is a contractual duty the insured accepted.
2. BThe duty does not depend on suspected fraud; the insurer may request it on any claim.
3. CIt is not optional; refusing breaches the insured's duties after a loss.
4. DCorrect: the crime form's loss conditions require the insured to submit to examination under oath at the insurer's request.
More notes ↓
Item 02
June discovers that her cashier took $500 from the register over several weeks. Which crime insuring agreement covers the loss?
1. AOutside the Premises covers money in transit with a messenger, not register theft by staff.
2. BCorrect: dishonest taking by an employee falls under the employee theft insuring agreement.
3. CRobbery needs force or a threat against a custodian, and safe burglary needs forced entry; neither happened.
4. DThe inside-the-premises money agreement excludes theft by employees, which is the tell here.
More notes ↓
Item 03
A charity wants theft by its unpaid volunteers who handle donations covered under its employee theft coverage. What is needed?
1. ACorrect: unpaid volunteers are not automatically employees, but an endorsement can treat volunteers other than fund solicitors as employees.
2. BOutside the premises covers money in transit, not dishonest volunteers.
3. CThe crime form's employee definition does not automatically include unpaid volunteers.
4. DAn ERISA fidelity bond protects employee benefit plans, not a charity's donations.
More notes ↓
Item 04
A crime policy has a $50,000 limit for employee theft and a $10,000 limit for inside the premises—theft of money and securities. A burglar breaks in and steals $18,000 in cash from the office. Ignoring any deductible, how much will the policy pay?
1. AThe $50,000 employee theft limit does not apply because the burglar was not an employee.
2. BThe full $18,000 exceeds the limit of the insuring agreement that actually applies.
3. CCash stolen from the premises by an outsider is covered, so the loss is not zero.
4. DCorrect: a burglar's theft of cash on the premises falls under Inside the Premises – Theft of Money and Securities, which carries its own $10,000 limit.
More notes ↓
Item 05
A town wants coverage for losses caused when its treasurer fails to perform duties faithfully, not only for theft. Which crime coverage fits?
1. APublic officials liability covers claims by third parties against officials, not the town's own loss.
2. BFraudulent impersonation covers being tricked into transferring funds by someone posing as a vendor or employee.
3. CEmployee theft needs an unlawful taking, but the town wants coverage broader than theft.
4. DCorrect: faithful performance of duty covers loss from an official's failure to perform duties as required by law.
More notes ↓
Item 06
Which act is an alteration rather than a forgery under a crime policy's forgery or alteration coverage?
1. ACorrect: alteration means changing a genuine instrument, such as raising the amount on a check the owner really signed.
2. BTaking cash from the register is theft, not forgery or alteration of any instrument.
3. CPutting a fake signature on an endorsement is forgery, because the signature itself is false.
4. DSigning the owner's name without authority creates a false signature, which is forgery rather than alteration of a genuine check.
More notes ↓
Item 07
A store clerk accepts a counterfeit $100 bill in good faith in exchange for merchandise. Which commercial crime insuring agreement covers the loss?
1. AForgery or alteration applies to checks and similar instruments, not paper currency.
2. BCorrect: counterfeit currency accepted in good faith for merchandise is covered under money orders and counterfeit money.
3. CNothing was stolen; the clerk took a fake bill in a sale.
4. DComputer and funds transfer fraud involves fraudulent electronic transfers, not a fake bill at the register.
More notes ↓
Item 08
An employee makes unauthorized securities trades for the company, losing $80,000 of company funds, and gains nothing personally. Under the commercial crime policy, the loss is:
1. AForgery or alteration covers forged or altered instruments, not bad trades.
2. BComputer fraud covers outsiders using a computer to steal property, not an employee's trading.
3. CEmployee theft requires an unlawful taking, and this employee took nothing for himself.
4. DCorrect: the crime form excludes loss resulting from trading, in the insured's name or any other account.
More notes ↓
Item 09
A hacker breaks into a retailer's online ordering system and causes $30,000 of merchandise to be shipped from its warehouse to a fake address. Which crime insuring agreement covers the loss?
1. AThe hacker is not an employee, so employee theft does not apply.
2. BFraudulent impersonation needs a person deceived into sending the goods, but here a computer was manipulated.
3. CInside the premises coverage for other property needs robbery or safe burglary.
4. DCorrect: using a computer to fraudulently transfer property from the premises to an outside place is computer and funds transfer fraud.
More notes ↓
Item 10
A small retailer insured under a businessowners policy wants employee theft protection without buying a separate crime policy. What can it do?
1. A'Only a crime policy' overreaches; the BOP offers the coverage as an option.
2. BCorrect: the ISO BOP offers employee dishonesty as an optional coverage for added premium.
3. CThe BOP does not include employee dishonesty automatically.
4. DAn inland marine floater does not cover employee dishonesty.
More notes ↓
Item 11
A year-end count shows $25,000 of inventory missing. The owner suspects employee theft, but the only evidence is the difference between book inventory and the physical count. How will the employee theft coverage respond?
1. AInside the premises coverage for other property requires robbery or safe burglary, not an unexplained shortage.
2. BThere is no presumption that shortages are theft.
3. CEmployee theft cannot pay when the only proof is an inventory computation.
4. DCorrect: crime forms exclude loss whose existence depends only on an inventory or profit-and-loss computation.
More notes ↓
Item 12
A company wants employee theft coverage only for its three cashier jobs, with a $10,000 limit for whoever holds each job. Which approach fits?
1. ABlanket coverage covers all employees under one limit without listing positions.
2. BCoverage is not scheduled by location here; the company wants specific jobs covered.
3. CA name schedule lists individuals, so coverage would not carry over to a new cashier.
4. DCorrect: a position schedule covers whoever holds each listed position, with a limit per position.
More notes ↓
Item 13
A company refuses to honor a check forged in its name and is sued by the bank that cashed it. With the insurer's written consent, the company defends the suit. Under Forgery or Alteration, its reasonable legal expenses are:
1. AThe legal expenses do not erode the forgery limit; they are paid on top of it.
2. BCorrect: forgery or alteration pays reasonable legal expenses in addition to the limit when the insured defends with written consent.
3. CCrime forms usually exclude legal fees, but forgery or alteration makes this specific exception.
4. DPayment does not depend on winning; the expense is covered whatever the outcome.
More notes ↓
Item 14
A store finds $1,200 in cash missing from a locked office drawer, with no sign of forced entry and no suspect. Under Inside the Premises – Theft of Money and Securities, the loss is:
1. AForced-entry marks are required for safe burglary of other property, not for money and securities.
2. BThis agreement covers disappearance, so proof of a theft is not needed.
3. CNaming an employee is needed only for an employee theft claim.
4. DCorrect: Inside the Premises – Theft of Money and Securities covers theft, disappearance or destruction, so the unexplained loss is covered.
More notes ↓
Item 15
Jen was fired for poor attendance. Twenty days later she uses a key she never returned to take $4,000 of inventory from her former employer. Under the ISO crime form's employee theft coverage, the loss is:
1. AThe form keeps a person an employee for 30 days after termination, so being off the payroll does not end coverage.
2. BCorrect: a former employee counts as an employee for 30 days after termination, unless fired for dishonesty, and Jen was fired for attendance.
3. CEmployee theft coverage does not require a criminal conviction.
4. DThe form does not exclude former employees; it covers them for 30 days after termination.
More notes ↓

Mixed practice test · Timed mock

Where crime coverage stops

Where does employee theft coverage fit next to bonds?

It is the modern home of the old fidelity bond. Fidelity coverage is a two-party arrangement in which the insurer pays the employer for employee dishonesty, and ISO now writes it as the employee theft agreement of the crime form. A surety bond is different: it has three parties. See surety vs fidelity bonds.

When does employee theft coverage stop for one particular employee?

As soon as a designated person learns that the employee has committed a dishonest act, coverage for that employee ends, even if the policy itself stays in force. Coverage for every other employee continues.

Where do ransomware and data breach losses go?

The crime form's computer fraud agreement pays for property taken through a fraudulent computer entry. Ransom demands, breach response and the income lost to a system outage belong to cyber coverage, covered under specialty commercial coverages.

AWords the crime form defines

BThe eight insuring agreements, each with a sample loss

CDiscovery form vs loss sustained form

DSorting a crime loss into an agreement

EWhich insuring agreement pays?

FWhere crime coverage stops