CR 04 05-Inside The Premises-Theft Of Other Property

CR 04 05–INSIDE THE PREMISES–THEFT OF OTHER PROPERTY

(July 2019)

INTRODUCTION

This endorsement should be used when the broader coverage that the Insurance Services Office (ISO) CP 10 30–Special Causes of Loss used with commercial property coverage forms provides is either not available or is considered to be more coverage than necessary.

This analysis is of the 08 13 edition. Changes from the 08 07 edition are in bold print.

ELIGIBILITY

This coverage can be added to any ISO Commercial or Government Crime Coverage Form or Policy.

LIMIT AND DEDUCTIBLE

The limit and deductible must be entered on the declarations next to the description of this insuring agreement.

ANALYSIS

This is an endorsement to the Insurance Services Office (ISO) Commercial Crime or Government Crime Coverage Forms and Policies and is subject to their conditions, definitions, and exclusions. The only changes are those within the endorsement.

A. Insuring Agreement

The insuring agreement has two separate parts:

1. There is coverage for loss of or damage to property that is not money and securities. The loss of damage must be due to a theft while the property is inside the premises.

2. There is coverage for property damage to the exterior and interior of the premises due to theft or attempted theft. This coverage applies only if the named insured owns the premises or is legally liable for damage to the premises.

B. Exclusions

The exclusions in the ISO Commercial Crime or Government Crime Coverage Forms and Policies that apply to all Insuring Agreements apply to this endorsement. It is important to note that the exclusions that apply specifically to Insuring Agreement 3, Inside the Premises–Theft of Money and Securities do not apply to this insuring agreement. However, the following eight exclusions are specific to this insuring agreement:

1. There is no coverage if a loss occurs because the level of risk within the named insured’s control increased and the named insured did not take corrective action.

 

Example: A windstorm blows out a window at Felix’s store one night. A neighbor calls him and tells him about the damage but he decides to wait until the next morning to go to the store. At that time, he discovers that several items were stolen from the store. Because the broken window was not boarded up the insurance company could deny coverage.

 

2. Coverage does not apply to property given as a part of a purchase or exchange.

 

Example: Marsha sells a new stereo system to Peter who pays with a check. Peter’s check bounces and he cannot be found. Marsha notifies her insurance company and says that Peter stole the stereo system. The company denies coverage when it discovers that the stereo was purchased.

 

3. Fire damage is excluded but there are two exceptions. Fire damage to a safe or vault is covered and theft that occurs during a fire is also covered.

4. Coverage does not apply when the only proof that a loss occurred is an inventory computation or profit and loss calculation.

Note: This information can be used as evidence to support a claim but not as the sole proof of loss.

5. Property covered does not include motor vehicles, trailers, semi-trailers, and any accessories attached to them.

6. There is no coverage for loss of or damage to property given away to someone outside either the premises or the financial institution premises (was banking premises in the 08 07 edition) because of unauthorized instructions or various types of threats. The threat could be to take any of the following or similar actions:

o    Confidential or proprietary information that belongs to the named insured

o    Confidential or personal information that belongs to a person or organization that is not the named insured

o    Weaknesses that are part of the source code that is part of the any computer system. (The 08 13 edition removes the words “the named insured’s” before the words “computer system.”)

Note: Losses due to unauthorized instructions are very difficult to insure. However, threat coverage is available under CR 04 03–Extortion-Commercial Entities, CR 04 04–Extortion-Government Entities, or CR 00 40–Kidnap/Ransom and Extortion Coverage Form.

Related Articles:

CR 04 03–Extortion–Commercial Entities and CR 04 04–Extortion–Government Entities

CR 00 40–Kidnap/Ransom and Extortion Coverage Form and CR 00 41–Kidnap/Ransom and Extortion Policy

7. There is no coverage for any vandalism damage to the covered property, the premises or to the exterior of the premises. Malicious mischief damage is also not covered.

Note: Property coverage forms should be used to provide this coverage.

8. There is no coverage for loss or damage due to a fraudulent inducement, trick, or scheme that causes the named insured to voluntarily hand over property or title to it.

 

Example: George visits Priscilla at her store and is asked to stock a new type of television from her supplier. Priscilla agrees and allows George to take all of her old supply. He advises that he’ll return soon with the new televisions. Three hours later, she calls the supplier to inquire about her new stock. The supplier is surprised by her call since it does not have any new televisions in stock and does not have a representative named George. Priscilla’s loss of $15,000 is excluded because she voluntarily handed over the property.

C. Conditions

CR 04 05 adds two conditions to the conditions in the coverage form or policy:

1. All coverage is suspended after a loss until the premises or location is returned to the same condition and level of security that existed before the loss or damage occurred. However, this suspension is waived as long as at least one watchperson is on the premises whenever the premises is closed for business.

 

Example: A car smashes open the front of the building leased to Coffee Cafe. Thieves enter the premises through the opening and steal merchandise.

Scenario 1: Coffee Café temporarily repairs the wall with heavy plywood and resets the burglar alarm system. The insurance company considers the repairs made as acceptably restoring the premises to a condition equal to the condition that existed before the damage and coverage applies to any subsequent losses.

Scenario 2: Coffee Café chooses to make only minor repairs, resulting in a reduction in the level of security. Bricklayers and glaziers will repair the building within the next three days so the owner decides to stay in the store when it is closed. The alarm cannot be reset until the repairs are complete. During the day, when the business is open, thieves posing as shippers take merchandise from the storage area. There is no coverage for this loss because the level of security is not equal to the level that existed before the loss.

 

2. $5,000 is the maximum amount available in any one occurrence for loss of precious metals, precious or semiprecious stones, pearls, furs, or fur articles. This limit also applies to articles whose principal value is derived from the fur, precious metals, or precious stones, whether they are complete or not. This limit also applies to any kind of manuscripts, drawings, or records or the cost to reconstruct them or reproduce any information in them.