What are the insuring agreements usual to a Dishonesty, Disappearance and Destruction policy (3-D policy)?
- Dishonesty coverage with a per-loss aggregate or a per-employee limit.
- Loss of money or securities inside the insured premises for destruction, disappearance, or wrongful abstraction.
- Loss of money or securities outside the insured premises for destruction, disappearance, or wrongful abstraction.
- Loss caused by accepting money orders and counterfeit paper currency.
- Loss caused by cheques issued by the insured by depositor's forgery
What are the loss reporting conditions an insured report must follow on a 3-D policy?
The loss must be reported as soon as possible after discovery
Why are the words “manifest intent” generally used in a fidelity insurance contract?
Mismanagement and ordinary business risks are excluded from coverage
What constitutes a discovery date and why is it important to establish?
- A loss is discovered when an insured has reasonable knowledge that a loss under the policy has taken place (not ordinary employees, must be a person in control (i.e. manager, owner, etc.))
- After the insured has discovered the loss, policy coverage for the dishonest employee is terminated
What consequential loss is specifically excluded under dishonesty coverages?
Mismanagement, business risks, and losses determined by an inventory computation or profit-and-loss computation (where no dishonesty or employee intent can be shown) are excluded.
How is stock defined under the Commercial Building, Equipment and Stock form?
- Merchandise of every description usual to the insured`s business, property belonging to others that the insured is responsible for or liable for.
- Money, securities, stamps etc. are excluded
How is loss calculated on merchandise that is destroyed?
Destroyed merchandise is calculated by the cost of replacing it; The current invoice price, plus any cartage and freight, less any applicable discounts.
What are some of the extra costs that may be included in calculating the replacement of stock?
- Cost of transportation,
- marking and placing the merchandise on shelves
Under what conditions is mysterious disappearance excluded?
- Shortage of stock or equipment disclosed on taking inventory is excluded.
- There must be an explanation for the loss beyond just shortage
How does a locked vehicle warranty operate on a theft claim?
The vehicle must show signs of forced entry and must be securely locked before theft.
Identify the 2 categories of crime losses with respect to who perpetrates them.
- those perpetrated by strangers, and
- those committed by employees
What general areas of proof must be shown when the items are stolen?
- Value of the items stolen
- Existence of the items
- Ownership of the items
How is robbery defined in a crime coverage policy?
- situations where violence is inflicted upon the custodian,
- the fear of violence exists,
- injury or unconsciousness to custodian, or
- showcase was broken during business hours
What types of warranties might apply to a crime claim?
Crimes must be reported to the police and all reasonable security measures must be implemented
How does the loss adjuster check a stock loss when the stock is stolen?
- Records must be used to establish the amount of loss.
- Primarily inventory records
What kind of errors should the loss adjuster be vigilant against in checking the documentation for a theft or employee dishonesty claim?
Careless inventory practices or account recording errors.
Describe what kind of action an adjuster should take upon the report of a claim.
Meet with the insured immediately (and forewarn the insured that the proof of loss will be shown to the defaulter).
Why is it generally inappropriate for the adjuster to interview the defaulter in the very early stages of a claim?
The adjuster should wait until a proof of loss has been filed before interviewing an accused defaulter because unfounded accusations can lead to libel
Describe the factors guiding the adjuster’s interview with the defaulter.
- Interviews can be used as evidence.
- Must have proof of loss and be prepared
What is a promissory note?
A promisory note is an unconditional written promise, signed by debtor, to pay a sum at a fixed time or on demand
How may the insured benefit from a full criminal investigation?
Full criminal investigation may provide assistance to recovery from the defaulter or his/her estate
Which of the following are part of the 3-D rider insuring agreements...
- ...all of the above;
- a) dishonesty coverage with a per-loss aggregate or per-employee limit;
- b) loss of money or securities inside the insured premises for destruction, disappearance, or wrongful abstraction;
- c) loss caused by accepting money orders and counterfeit paper currency
Under the Commercial, Building, Equipment and Stock form, which of the following items is excluded...
- precious metals,
Employee dishonesty insurance is also known as...
- ...a and b above;
- a) fidelity insurance;
- b) fidelity bonding
The three parties to a bond include...
- the employee,
- the insurer,
- the employer
When a claim is made for stolen items, the insured must submit proof to show the following...
- all of the above;
- a) value of the items stolen;
- b) existence of the items;
- c) ownership of the items
EQ: The three "D" of a 3-D policy include...
...Dishonesty, Disappearance, and Destruction
EQ: When adjusting crime claims, the term "manifest intent" may be used to highlight...
...the exclusion of mismanagement and ordinary business risks
EQ: An unconditional written promise, signed by a debtor, to pay monies at a certain time on demand is a...
EQ: Under a crime policy, a loss is considered discovered when...
...the insured has reasonable knowledge that a loss under the policy has taken place