(July 2019)
All PF&M subscribers are permitted to reprint the following
insurance proposal sample language when they prepare insurance presentations
for their commercial insurance customers. Other uses require permission from
The Rough Notes Company, Inc.
The following paragraph or similar language needs to be included in all
insurance proposals:
Consult the policy for
definitions and limitations. The terms of this proposal do not represent
contract terms. The policy is subject to company underwriting practices.
This
proposal language is not intended to be an entire insurance proposal. A client
specific section that includes the name and address of the insured, the
insurance company(s) and the agent, and information about them, a list of
locations, limits, deductibles, and similar customer specific items are not
included and should be prepared.
The
intent of any insurance proposal is not to be a reproduction of the insurance
policy but to give a summary of possible coverages.
Paragraphs
that explain coverages unique to this coverage form may be the most important
addition to your insurance proposal and sales effort. Coverage examples can be
tailored to your individual customer. Be careful when altering any proposal
language not to expand coverage beyond what the policy intends.
This
proposal should be combined with proposals for other lines of business, such as
commercial property, commercial general liability, time element, and workers
compensation for a complete account proposal.
Related Articles:
ISO Commercial Crime Coverages Available Endorsements and Their
Uses
ISO Commercial Crime Coverages Endorsements Checklist
Commercial crime coverage is usually written using one of two Insurance Services Office (ISO) coverage forms. The Discovery Coverage Form provides payment of losses discovered, but not necessarily sustained, during the policy period. This approach is similar to the ISO Claims-made Commercial General Liability Coverage.
The traditional Loss Sustained Coverage Form covers only losses both sustained and discovered during the policy period or those sustained during the policy period and discovered within one year after the end of that policy period. It operates much like ISO Occurrence Commercial General Liability Coverage and was the only coverage form previously available under ISO commercial crime forms. This traditional, "occurrence-based" coverage form is the form referred to and used in this sample insurance proposal.
This coverage applies to employees unlawfully taking money, securities, and other property.
This coverage applies to only actions of outsiders who forge or alter checks, drafts, notes, or other written promises, orders, or directions that involve the named insured’s accounts.
This coverage pays for theft, disappearance, or destruction of money and securities from inside the premises or a financial institution’s premises. It also covers damage to the premises during an actual or attempted theft and damage to the locked receptacles that contain the money and securities.
This coverage applies to robbery of a person in charge of the property or safe burglary of other property that occurs inside the premises within a building. It also covers damage to the premises and damage to locked receptacles that contain the property.
This coverage pays for losses due to theft, disappearance, and destruction of money and securities while outside the premises and in the custody of a messenger or an armored car company. It also covers other property that is lost or damaged when the messenger or armored car company is robbed.
This coverage applies to loss that is a direct result of fraudulent entries within any computer system the named insured owns, leases, or operates. It also pays losses result from fraudulent instructions directing financial institution to transfer property from the named insured’s transfer account. The coverage also pay when an employee makes fraudulent entries because of a good faith belief that the contractor providing the information is the contractor with whom the company has a written service agreement.
This coverage pays losses that result from counterfeit money accepted in good faith in exchange for purchases. It also covers losses when money orders accepted as payment for purchases are not accepted by the issuer when presented for payment.
This is the amount on the declarations for each covered insuring agreement. It is the most the insurance company pays in any one occurrence. The definition of occurrence varies by insuring agreement and should be reviewed carefully.
This is the amount deducted from the total amount of a covered loss. This amount is the named insured's responsibility. The insurance company pays only the amount of a loss that exceeds the amount of the deductible.
These are acts that involve any theft or dishonest acts committed alone or with another employee or individual.
These are acts of any employee who is guilty of committing past dishonest acts if the named insured, partners, members, manager, officers, directors or trustees knew about the dishonest acts prior to the policy inception date.
These are acts that also include other dishonest acts such as forgery that employees and outside persons working together commit. This exclusion does not apply to coverage that the Employee Theft Insuring Agreement provides.
These are losses due to any unauthorized
disclosure or use of confidential or personal information of any other
organization or person. Loss because of unauthorized disclosure of the named
insured’s confidential or personal information is also not covered but the use
of that information may be covered depending on the insuring agreement.
These are costs, fees, penalties, fines, and
other expenses the named insured incurs related to accessing or disclosing
another organization or person’s confidential or personal information.
These are acts a governmental authority takes to seize or destroy property that results in loss to that property.
This is loss of income that results from not being able to use money, securities, or other property. This also includes legal liability claims and the costs incurred to establish the amount of a loss.
These are fees, costs, or expenses related to any legal proceeding except when covered under the Forgery or Alteration Insuring Agreement.
These are losses caused by or that relate to nuclear energy in any form.
This is loss or damage caused by or that
result from any form or aspect of pollution.
Any loss relating to virtual currency is
excluded.
This is loss caused by or that relate to any act of war or any warlike action.
These exclusions apply to only the Employee Theft Insuring Agreement. Each
of the following are excluded.
This is loss of money, securities, or other property where the only proof that a loss occurred is discovering it during an audit or while taking inventory.
These are losses that result from stock, commodity, or merchandise trading loss in a genuine or fictitious account.
These are losses that result from fraudulent or dishonest transactions that involve warehouse receipts and related papers.
These exclusions apply to only the Inside the Premises–Theft of Money and
Securities, Inside the Premises–Robbery or Safe Burglary of Other Property, and
Outside the Premises Insuring Agreements. Each of the following are
excluded.
These are mathematical errors or omissions that lead to and result in losses.
This is loss sustained as a result of any exchange or purchase of property.
This is loss that fire causes, except for fire damage to money or securities or fire damage to a safe or vault.
These are losses that involve theft of money from vending machines or other coin-operated devices unless they are equipped to continuously count and record the money.
This is any loss that involves any kind of this property.
This is loss of or damage to property given to others based on unauthorized instructions or because of various types of threats.
These are losses from damage to the premises, its exterior, or to safes or cash receptacles by acts of vandalism and malicious mischief.
This is loss that results from a trick or scheme another party creates that leads the named insured to voluntarily surrender property to that party.
These exclusions apply to only the Computer and Funds Transfer Fraud Insuring Agreement. Each of the following are excluded.
This is loss
that results from fraudulent entering of computer programs or electronic data
into or within a computer system the named insured owns, leases, or operates by
a person or organization that has authorized access to that computer system.
These are losses that result from fraudulently using credit, debit, gift or similar types of cards.
These are losses that result from surrendering or giving property in any exchange or purchase.
This is loss that results from a financial institution or employee acting on any fraudulent instruction to debit or credit the named insured’s account or to pay, transfer, or deliver money, securities, or other property. There is some limited coverage.
These are losses or parts of losses that can be proved or the amount determined by only a profit and loss statement or an inventory calculation.
These conditions apply in
addition to the Common Policy Conditions. This Sample Insurance Proposal
Language does not include them. These conditions
apply to each insuring agreement.
Any new employees or new premises added
during the policy period are automatically covered without an additional
premium charge. This does not apply to situations that involve locations or
employees acquired because of a consolidation or merger.
Fraudulent acts the named insured commits void coverage. Intentionally concealing or misrepresenting a material fact that involves the property covered, the named insured’s interest in that property, or any claim also voids coverage.
There is coverage for up to 90 days for entities, premises, assets, or liabilities added due to consolidation or merger with, or acquisition of another entity or its employees. Coverage ends after 90 days unless the named insured notifies the insurance company and adds coverage to the policy.
The named insured must cooperate with the insurance company based on this coverage form’s terms and conditions.
The named insured has six required duties after it discovers a covered loss or a situation that may result in a covered loss:
This condition contains six sub-conditions.
Losses must occur during the policy term but may be discovered up to one year after the expiration date. If the policy is cancelled and a new crime policy takes effect, the extended period to cover loss ends immediately, whether or not the other insurance provides coverage for losses sustained before its effective date.
This condition contains six sub-conditions.
o The first named insured acts for all other insureds. If the first named insured is excluded, deleted, or in some way is not covered, the next named insured listed becomes the first named insured.
o Knowledge by one insured of anything that affects coverage is treated as knowledge by all insureds.
o An employee of one insured is considered an employee of all insureds.
o The condition for the extended period to discover loss applies to each insured separately.
o The limit of insurance applies to all insureds. A separate limit does not apply to each insured.
o If the insurance company pays the first named insured, it is released by all other insureds, except for employee benefit plans.
The named insured cannot bring any legal action against the insurance company until and unless it has complied with all conditions of this insurance. It cannot bring an action until more than 90 days have passed since it filed a proof of loss but not later than two years after it discovered the loss. Certain states may have laws that impose different time frames and the policy is conformed to comply with those laws.
If the insurance company broadens coverage during the policy period or within 45 days before the policy period begins without charging an additional premium, the broadened coverage applies to this policy.
An occurrence is when a dishonest act begins. If the same insurance company or group of insurance companies maintains coverage continuously, coverage applies to occurrences that start as far back as the initial date that the continuous coverage began. The policy pays the larger of the limit of insurance available today or the limit on the date the loss occurred. However, coverage limits do not combine with one another or accumulate from year to year.
If a loss sustained in a previous policy term is discovered under the current policy, coverage applies if both the previous and current policies have the same coverage and the current policy immediately replaces the previous one. In this case, the insurance limit available is the lower of the two policy limits.
This insurance is excess over any other insurance or indemnity unless that other insurance or indemnity is identical to this insurance. In that case, it is proportional. However, if all policies are excess, the adjustment is made on a proportional basis, subject to their respective limits.
Covered property includes property the named insured owns or leases. It also includes property the named insured holds in any capacity or for which it is legally liable, as long as it was liable for such property before the loss occurred.
The named insured must have and keep records of all covered property for the insurance company to use to verify the amount of loss.
Recoveries are reduced by recovery expenses and are returned in the following order:
Recoveries do not include reinsurance the insurance company recovered or the cost of original securities if it had to issue duplicates.
The covered policy territory consists of the United States of America, its territories and possessions, Puerto Rico, and Canada.
The
named insured must transfer all its rights to the insurance company against any
organization or person for any loss it sustained and that the insurance company
paid. It must also do everything required to secure those rights and not do
anything after the loss to impair them.
The terms of the Limit of Insurance section apply first. After that, the following applies.
Property other than money can be paid for in either the currency of the country where the loss occurred or the equivalent in United States dollars at the exchange rate published in The Wall Street Journal on the date the loss was sustained.
Any property the insurance company pays for or replaces becomes its property.
These conditions apply to only the Employee Theft Insuring Agreement.
This insuring agreement ends with respect to
any employee as soon as the named insured, its partners, members, managers,
officers, directors, or trustees learn that an employee has committed theft or
any other dishonest act either before or after being employed. It also ends on
the date specified in a notice the insurance company mails to the first named
insured. That date must be at least 30 days after the date the notice is
mailed.
Coverage applies to losses caused by employees located temporarily outside the United States of America, its territories and possessions, Puerto Rico, and Canada. However, it is limited to the employee being outside this territory for not more than 90 consecutive days.
These conditions apply to only the Forgery and Alteration Insuring
Agreement.
Legal expenses are not subject to a deductible.
Mechanically or electronically produced or reproduced signatures are considered to be the same as handwritten signatures.
Proof of loss must include the instrument, such as the check, or an affidavit that describes the cause and amount of loss.
Coverage applies anywhere in the world.
These conditions apply to only the Inside the Premises–Robbery or Safe
Burglary of Other Property and Outside the Premises Insuring Agreements.
With respect to the Outside the Premises Insuring Agreement, the insurance company pays only the amount of loss the named insured cannot recover from its contract with the armored motor vehicle company and any insurance or indemnity the armored motor vehicle company carries for its customers’ benefit.
$5,000 is the most paid in any one occurrence for loss of precious metals, precious or semiprecious stones, pearls, furs, or fur articles. This limit also applies to any kind of manuscripts, drawings, or records or the cost to reconstruct them or reproduce any information in them.
These conditions apply to only the Computer and Funds Transfer Fraud
Insuring Agreement
$5,000 is the most paid in a single occurrence for loss or damage to manuscripts, drawings, or records. This amount includes the cost to reconstruct them or reproduce any information in them.
Coverage applies anywhere in the world.