4354 Final Review Ch. 27

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Crime insurance
Can be added to a commercial package policy (CPP) or purchased
Discovery version
Covers a loss that is discovered during the policy period or within 60 days after the policy expires even though the loss may have occurred before the policy's inception date
Loss-sustained version
Covers a loss that occurs during the policy period, and the loss is discovered during the policy period or within one year after the policy expires
Robbery
Unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or has committed an obviously unlawful act
Burglary
Unlawful taking of property from inside the premises by a person who unlawfully enters or leaves the premises
Safe burglary
Unlawful taking of property from within a locked safe or vault by someone who unlawfully enters the safe as evidenced by marks of forcible entry upon the exterior
Theft
Unlawful taking of property to the deprivation of the insured
Commercial crime coverage form (loss sustained version)
Used by private firms and nonprofit organizations
Employee theft
Coverage pays for the loss of money, securities, and other property that results directly from theft committed by an employee
Forgery or alteration
Coverage pays for a loss that results directly from forgery or from the alteration of checks drawn by the insured or the insured's agent
Inside the premises - theft of money and securities
Pays for loss of money and securities inside the premises that result directly from theft committed by a person present inside the premises, or for disappearance, or destruction
Inside the premises - robbery or safe burglary of other property
Pays for the loss or damage to other property inside the premises by the actual or attempted robbery of a custodian, or by safe burglary inside the premises
Outside the premises
Agreement covers the theft, disappearance, or destruction of money and securities outside the premises while in the custody of a messenger or an armored car
Computer fraud
Covers the loss of money, securities, and other property if a computer is used to transfer property fraudulently from inside the premises to a person or place outside the premises
Funds transfer fraud
Covers the loss of funds that result directly from fraudulent instructions that direct a financial institution to transfer or pay funds from the insured's account
Money orders and counterfeit paper currency
Pays for losses resulting directly from the good-faith acceptance of counterfeit currency
Commercial crime coverage form exclusions
Dishonest acts or theft committed by the named insured
Knowledge or dishonest acts of employees prior to the policy period
Indirect loss
Inventory shortages
Trading losses
Surety bond
Bond that usually provides monetary compensation if the bonded party fails to perform certain promised acts

Principal-agrees to perform certain acts or fulfill certain obligations

Obligee-Receives the proceeds of the bond if the principal fails to perform

Surety-Agrees to answer for the debt, default, or obligation of the principal
Contract bond
Guarantees that the principal will fulfill all contractual obligation
License and Permit bond
Guarantees that the principal will comply with all laws and regulations that govern his or her activites
Public official bond
Guarantees that public officials will faithfully perform their duties for the protection of the public
Judicial bond
Guarantees that the principal will fulfill certain obligations specified by law
Insurance vs. surety bonds
Insurance:
2 parties

Insurer expects to pay losses

Insurer cant recover loss pmt from the insured

Insurance designed to cover unintentional losses that are ideally outside of the insured's control

Surety:
3 parties

Expects no losses to occur

Has legal right to recover a loss pmt from defaulting principal

Guarantees principal's character, honesty, integrity, and ability to perform
Principal
Agrees to perform certain acts or fulfill certain obligations
Obligee
Receives the proceeds of the bond if the principal fails to perform
Surety
Agrees to answer for the debt, default, or obligation of the principal
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