13.0 Commercial Crime Coverage & Bonds
Learning Objectives
13.1 Definitions of Crimes
Throughout property insurance, policies use different terms to describe losses caused by criminal acts. For example, a policy may provide or exclude coverage for theft or refer specifically to damage caused during a burglary. Understanding the type of crime involved is important because each term has a distinct meaning and may affect whether coverage applies. These distinctions are especially important in Commercial Crime insurance, where coverage depends on how the criminal act and resulting loss are classified.
13.2 Crime Coverage Forms
Commercial Crime insurance may be written using one of two coverage forms. Both forms offer the same basic Insuring Agreement options, but they differ in how they determine when coverage applies. Although Commercial Crime insurance is classified as property insurance, these forms are structured similarly to liability coverage forms. The Loss Sustained Form is comparable to the Occurrence Form used in Commercial General Liability insurance, while the Discovery Form is comparable to the Claims-Made Form.
13.3 Insuring Agreements
The Crime coverage forms offer 8 types of coverage, or Insuring Agreements:
13.4 General Exclusions
In addition to exclusions that apply only to specific Insuring Agreements, Commercial Crime coverage forms contain exclusions that apply to all Insuring Agreements. These general exclusions include losses resulting from:
13.5 General Conditions
Many of the Conditions included in Commercial Crime coverage forms establish the applicable extended discovery periods and explain how coverage applies when the current policy replaces prior insurance. In addition to standard policy conditions, several conditions apply specifically to all Commercial Crime coverage forms.
13.6 Other Crime Coverages
Though the Insuring Agreements are the baseline coverages provided by Crime policies, a number of other coverages exist, most often added by endorsement.
13.7 Bonds
Bonds provide financial protection against certain types of loss but differ from insurance policies in their purpose, structure, and pricing. Bonds are generally divided into two main categories: