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22 Cards in this Set
- Front
- Back
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COMPREHENSIVE DISHONESTY, DISAPPEARANCE & DESTRUCTION POLICY (3D)
What purpose is served by the continuous until cancelled policy? |
Ensures that there are no gaps in coverage |
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Agreement 1 Employee Dishonesty Coverage
Identify 2 Characteristics of employee dishonesty insurance which differentiate it from other kinds of property insurance |
1. Amount of the loss is difficult to predict(theft from a cash register, or pocketing of monies for which no receipt was given, padding expense accounts, overcharging of fees for services) 2. losses may be undiscovered, discovered only after a significant period of time (many years can pass before a loss may be detected) |
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2 Coverage options available for Employee dishonesty Coverage Form A & Form B |
Form A- Limits the TOTAL amount payable in a single loss to the amount of insurance selected (example given $5,000)
Form B- Limit of insurance selected represents the amount available for EACH employee involved in the loss. (example if 4 employees causing $20k loss the policy will respond to pay $5k each)
Note- if the loss per employee exceeds $5k each Insurer is still only required to pay the $5k no more
*THE LIMIT OF INSURANCE PURCHASED SHOULD BE SUFFICIENT TO COVER THE INSUREDS MAXIMUM EXPOSURE TO LOSS FROM A SINGLE EMPLOYEE
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Discovery period for Form A & Form B |
Form A- Commercial blanket bond 1 year from the date of expiry
Form B- Blanket Position bond 2 years from the date of expiry
Discovery period is the time permitted by the Insurer, commencing with the expiry date of the policy in which the claim must be DISCOVERED by the insured if it is to be covered by the policy |
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Loss under prior Bond or Policy |
The new policy will pay provided that such losses 1. Were covered under the previous policy or bond 2. Can not be claimed under the previous policy because of the expiration of the discovery period *NOTE-shall be part of the limits carried under the previous policy and NOT in addition to them -shall be the lesser of the limit provided under the previous & replacing policy |
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What 2 conditions are necessary to be present to constitute a fraudulent or Dishonest Act? |
1. That there was a clear INTENT to cause the Insured to sustain a loss 2. That there was a clear INTENT to obtain financial benefit other than those earned during the course of construction of employment for the employee or any other person or organization |
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Provide 3 EXAMPLES of persons qualifying as an employee under the terms of this coverage? |
1. Natural persons hired by the Insured in the ordinary course of business affairs 2. Directors & trustees who are also actively involved in the business as an office or employee 3. Persons who became employees through consolidations or mergers |
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Key differences between Form A & Form B |
Employees Covered Form A - All employees are covered, coverage automatically extends on those leaving the services Form B- Coverage does not need to be purchased for ALL employees, Different limits can be purchased for different classes of employees
Limits of Insurance Form A-limit purchased is the MAXIMUM payable regardless of the number of employees involved in the loss Form B- limit purchased is available for EACH employee involved in the loss
Discovery Period Form A- 1 year from the date of Expiry Form B- 2 years from the date of Expiry |
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What recommendation would you make to a client that wants to purchase Form B because of the multiple recoveries option |
The limits selected should be sufficient to cover their maximum EXPOSURE to loss from a single employee |
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When a PRIOR fraud becomes known to the Insured what is the effect on the coverage provided by the policy? |
Coverage CEASED to apply from the moment the insured becomes aware of the prior fraud |
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Explain how this insuring agreement would respond when loss is caused by unidentifiable employees. |
If the circumstances clearly support the conclusion that the fraud was committed by an EMPLOYEE & NOT an OUTSIDER the policy will respond |
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Explain how the "New Insurer" will respond to pay a loss which occurred under a prior bond policy? |
New policy WILL pay the loss if *it would have been covered under the previous policy *and it can't be claimed under the previous policy / bond due to the expiration of the discovery period The amount paid shall be a PART of the limits carried previously and shall NOT be higher than the limit previously paid |
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Identify 2 distinct phases of Risk Management program designed to eliminate or reduce losses due to employee dishonesty |
Pre-employment phase; Written application, personal interview, verification of all references Post-employment phase: cheques needing 2 signatures, ensure employees take holidays, if possible rotate employees job positions, surprise audits, bank accounts should be rotated periodically and special reconciliations prepared |
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AGREEMENT 2 LOSS INSIDE THE PREMISES Outline the coverage's provided for Money & Securities and provide examples of possible claim situations. |
Insures the actual destruction, disappearance & wrongful abstraction of money & securities
EXAMPLES: Destruction: improper use of cutting torches may cause fire to contents of the safe or vault, thieves may destroy or shred non negotiable securities & other documents having no value to them Disappearance: Money missing during counting while insured is temporarily away Wrong abstraction: Involves the taking of money or securities by persons having no entitlement to them and can include loss by robbery, safe burglary or theft |
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AGREEMENT 2 LOSS INSIDE THE PREMISES
State 2 exclusions applicable to this coverage? |
1. Money contained in a vending machine unless the machine is equipped with a continuous recording instrument 2. loss by fire to the property other than money, securities, a safe or vault 3. loss of money, securities and other property which has been transferred by a computer on the basis of unauthorized instruction |
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AGREEMENT 3 LOSS OUTSIDE THE PREMISES
Outline the coverage's provided for Money & Securites by this agreement |
Insurers the actual destruction or wrongful abstraction of money and securities while being conveyed by a messenger, any armored motor vehicle company or within the living quarters in the home of any messenger *Note - no limit applied for living quarters of a home of any messenger |
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AGREEMENT 4 MONEY ORDERS & COUNTERFEIT PAPER CURRENCY
Indicate when coverage's provided by this Agreement would respond |
When a money order is not paid upon presentation to the post office or money taken in the regular course of the insureds business is found to be counterfeit |
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AGREEMENT 4 MONEY ORDERS & COUNTERFEIT PAPER CURRENCY
Provide 2 examples of claims which would NOT be covered by this agreement |
1. NSF cheques 2. Cheques issued on financial institutions which do not exist |
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DEPOSITORS FORGERY COVERAGE
Under what conditions would you recommend that your insured purchase this coverage? |
When a significant number of cheques or other negotiable instruments are written |
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DEPOSITORS FORGERY COVERAGE
Describe the basic coverage provided by this agreement |
coverage is provided for the forgery or alteration of the insureds cheques, drafts and similar instruments only |
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DEPOSITORS FORGERY COVERAGE
What limits are generally selected by insureds who purchase this insurance? |
The limit generally reflects the business's potential exposure to loss which is usually the same limit selected for the Employee Dishonesty coverage |
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DEPOSITORS FORGERY COVERAGE
Provide 2 examples of risk management techniques which can be used to eliminate or reduce such losses |
1. Use of safety paper for cheques 2. Protection of blank cheques 3. Controlled use of facsimile machines & plates |
