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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
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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
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Why are the words “manifest intent” generally used in a fidelity insurance contract?
Mismanagement and ordinary business risks are excluded from coverage
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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
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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.
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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
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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.
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What are some of the extra costs that may be included in calculating the replacement of stock?
- Cost of transportation,
- receiving,
- marking and placing the merchandise on shelves
- processing
- Depreciation
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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
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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.
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Identify the 2 categories of crime losses with respect to who perpetrates them.
- those perpetrated by strangers, and
- those committed by employees
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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
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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
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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
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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
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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.
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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).
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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
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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
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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
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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
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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
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Under the Commercial, Building, Equipment and Stock form, which of the following items is excluded...
- money,
- precious metals,
- securities,
- stamps
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Employee dishonesty insurance is also known as...
- ...a and b above;
- a) fidelity insurance;
- b) fidelity bonding
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The three parties to a bond include...
- the employee,
- the insurer,
- the employer
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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
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EQ: The three "D" of a 3-D policy include...
...Dishonesty, Disappearance, and Destruction
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EQ: When adjusting crime claims, the term "manifest intent" may be used to highlight...
...the exclusion of mismanagement and ordinary business risks
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EQ: An unconditional written promise, signed by a debtor, to pay monies at a certain time on demand is a...
...promissory note
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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
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