AG
0128–CRIME COVERAGES–DISCOVERY BASIS
(February 2025)
The American Association of Insurance Services (AAIS) AG 0128–Crime Coverages–Discovery Basis optional endorsement is used with the AAIS Agricultural Output Program. It is attached to AG 0100–Agribusiness Property and Income Coverage Part.
AG 0128 provides seven crime coverage options:
·
Employee
Fraud and Dishonesty
·
Computer and Telecommunications
Fraud
·
Counterfeit Currency, Money
Orders, and Travelers Checks
·
Forged or Altered Checks, Drafts,
or Promissory Notes
·
Forged or Altered Charge, Credit,
or Debit Card Written Instruments
·
Money and Securities
·
Keytrol Fraud
Coverage applies only if there is
a limit and deductible for the coverage(s) selected on the declarations.
The following sections of AG 0100 are needed to complete the coverage this endorsement provides, along with CL 100–Common Policy Conditions:
·
Definitions
·
What Must be Done In Case of Loss
·
Valuation
·
How Much We Pay
·
Loss Payment
·
Other Conditions
These additional definitions apply only to the coverages this endorsement provides.
Computer fraud is the use of hardware, software, or other computer-related devices to fraudulently transfer, make payments, or deliver the insured’s covered property to a person or place away from the insured location. The activity can take place from a covered location, the insured’s computer, or a banking premises.
|
Example: Joshua is working on his laptop
at his favorite coffee shop. He doesn’t realize that Pamela, also in the
coffee shop, has taken over his account. She hacks into his online banking
and transfers money from his account to an offshore account. |
An employee is an individual (as opposed to a corporation) who meets all the following qualifications:
· Is considered to be in the service of the named insured or has completed that service within the past 30 days.
· Receives wages, salary, or commissions from the named insured
An employee who performs services under the named insured’s control and direction. In addition, any natural person who meets any of the following conditions:
· An employee of an employment contractor under the named insured’s direction and control but only while performing services for the named insured. This arrangement can be on a temporary or a short-term basis or for a more extended period. However, there is an important restriction. Temporary or short-term employees are not considered employees when they control property away from a covered location.
· Workers who provide volunteer services to the named insured and do not receive any compensation for those services. However, there is an important restriction. These volunteer workers are not employees whenever they raise funds during fund-raising events.
· Student interns at the named insured’s facilities who receive practical work experience. There must be course credit for the work performed. Such students are employees only while acting as employees.
· Individuals while managing funds or other covered property for an employee benefit or welfare plan included in this endorsement as follows:
o The named insured’s trustees or directors
o Any officer who owns 25% or more of any insured entity
· An administrator, employee, manager, officer, or trustee of an employee benefit or welfare plan that this endorsement covers. Independent contractors that act in these capacities are not employees.
The following are not considered employees:
· Agents, brokers, factors, commission merchants, consignees, independent contractors, or similar or related representatives
· Directors, trustees, or managers are considered employees when they perform duties customary to those of regular employees or that manage funds or property belonging to an employee benefit plan.
The 12 20 edition adds four
additional definitions (items 3-6) provided below:
This is a pension plan subject to the Employee Retirement Income Security Act (ERISA) and is named on the declarations for this coverage.
A dishonest or fraudulent act committed by an employee responsible for handling funds or other property of an employee benefit plan can take various forms. This includes larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, or intentional misappropriation. It also encompasses accepting, agreeing to accept, or requesting anything of value in exchange for actions, decisions, or duties related to any employee benefit plan matter. Additionally, it includes any other fraudulent or dishonest acts.
The act does not have to involve personal gain, nor does it need to be punishable, as long as a court in the state where the act occurred would allow recovery through a bond that offers protection against fraud or dishonesty.
This activity involves an employee, either acting alone or in collusion with others, who is responsible for handling funds or other property belonging to an employee benefit plan. There is a significant risk that these funds or property could be lost due to dishonest actions by the employee. Please note that this does not apply to the operational assets of the employee benefit plan. This may include the following:
· Physical contact with the funds or other property
· The authority:
o to have physical contact or control over the funds or other property.
o to transfer the funds or other property to oneself or another party by being able to negotiate its value.
o to distribute the funds or other property.
o to sign checks or other instruments on the funds or other property.
o to have oversight or decision-making power over the funds, other property, or individuals performing the activities described above.
These are the assets of an employee benefit plan used in its operation, rather than for paying benefits to plan participants.
There are three elements to forgery:
· The signature of a person must be altered or fabricated.
· The intent of the alteration or fabrication must be to deceive.
· The person making alterations or fabrications (with or without authority) must not own the signature.
If all three elements are present, there is a forgery.
Mechanical signatures are treated the same as handwritten signatures.
This is when devices such as terminal access cards or Keytrol devices are used to fraudulently transfer property away from a covered location.
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Example: Brittany uses a Morgan Farm’s
terminal access device to enter Beaver Co-op and fill up her vehicle’s tank.
Unfortunately for Beaver Co-op, Morgan Farm does not know Brittany and does
not know how she obtained the card. The loss of fuel is a covered loss under
Beaver Co-op’s Keytrol Fraud coverage. |
This person provides direction to the named insured’s limited liability company.
This is owned tangible property or tangible
property of others, but only if not excluded within this endorsement.
Telecommunications fraud occurs when a transfer, payment, or delivery of covered property is made fraudulently from a covered location, financial institution, or named insured’s computer to a location or individual outside the covered location. The method used to perpetuate this fraud must be either of the following:
· Any type of telecommunication transmission, including facsimile, telephone (cellular), telegraph, cable, or teletype, regardless of whether owned by the insured or in the insured’s care, custody, or control.
· An electronic funds transfer from a financial institution but sent based on fraudulent written orders alleged to have been from the named insured or an agent of the named insured.
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Example: Lucas Henry hired Mark Houser,
a financial manager, to purchase a dairy farm in Pennsylvania, which is
located in a different state from Lucas. The closing of the property was to
be conducted over the phone and finalized through electronic transfer. Lucas
approved Mark's wiring of the closing funds to David Brown’s (the seller)
financial institution, The First Dairy Bank. Mark received an email with instructions that
requested the funds be sent to a different financial institution than
initially proposed. The email appeared to come from David Brown’s attorney,
so Mark proceeded as instructed. Later, Mark received another email from
David’s bank asking if he could please transmit the funds immediately, as
they were waiting to finalize the closing. It was then that Mark realized he
had been deceived by the first email, which had come from a fraudulent
sender. |
Coverage can be provided for up to seven separate coverages. If a limit is shown on the declarations, there is coverage. The only losses covered are those discovered during the policy period without regard to when the loss(es) actually occurred.
|
Example: Mary is a very diligent
bookkeeper whom Marvin (her boss) implicitly trusts. Mary has surgery that
keeps her away from work, and Marvin hires a temporary bookkeeper. That
bookkeeper points out several discrepancies in Mary’s books. Marvin discovers
that Mary stole over $150,000 from him during the ten years she was employed.
The policy in force when Marvin discovers the loss responds to this loss. |
a. Coverage applies for direct physical loss of, and direct loss from damage to, money, securities, and other covered property if both of the following apply:
· The named insured owns, holds, or is legally liable for the items. This includes property that is on the premises of a customer.
· If the loss or damage results from a dishonest or fraudulent act committed by an employee, whether acting alone or in collusion with others. There is no requirement for the employee to be identified in order to qualify for coverage.
Examples of such acts include theft, computer fraud, and forgery or alteration, but coverage is not limited to only these.
Regarding item a. only, payment for a single occurrence is limited to the Employee Fraud and Dishonesty Limit specified on the declarations. An occurrence refers to all losses resulting from a single or series of fraudulent or dishonest acts committed by one or more employees.
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Example: Continuing the example above,
Mary did not act alone. She recruited John, the warehouse manager, to help
her. Even though two individuals were involved and there were several
incidents, all their thefts are treated as a single occurrence. |
Editor’s
Note: With the 12 20 edition, item b. has been added.
b.
This section pertains to the Employee Benefit Plan losses due to employee
dishonesty but excludes operational assets. It encompasses losses to money,
securities, other covered property, as well as all other funds or property the
plan uses or may use to pay benefits to plan participants or beneficiaries.
Regarding
an Employee Benefit Plan, other than operational assets, payment applies to one
occurrence and is limited to the Employee Fraud and Dishonesty Limit specified
on the declarations. An occurrence refers to all losses resulting from a single
or series of fraudulent or dishonest acts committed by one or more employees.
This coverage pays for loss or damage to money, securities, and other property caused by computer or telecommunications fraud. The coverage is worldwide. The most paid in a single occurrence is the limit for this coverage on the declarations.
An occurrence includes not only a single act but also a series of related acts committed by one or more persons. It is not necessary for the individual to be identified for there to be coverage.
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Example: Paul opens his monthly
investment statement and is surprised to see transactions he did not
authorize or discuss. His advisor’s new secretary explained that she received
transfer orders from him and executed them. As a result, funds from three
different transactions were sent to an offshore account, and now the money
cannot be located. The three transactions are treated as a single occurrence.
|
This coverage insures loss or damage due directly to accepting the following three types of financial instruments: counterfeit currency, money orders, and travelers checks. This includes:
· Counterfeit paper money from the United States or Canada, or other countries’ counterfeit paper money, but only if the insured is conducting business in that country.
· Money orders that are altered, forged, counterfeit, or stolen of any express company, post office, or national or state-chartered bank in the United States or Canada that are not paid when presented.
· Travelers checks that are altered, forged, counterfeit, or stolen of any express company or national or chartered bank in the United States or Canada that are not paid when presented.
Coverage only applies when the named insured accepted any of the above financial instruments in good faith and provided money, services, or goods during business activities.
The most that is paid is the applicable limit shown on the declarations for each of the listed financial instruments. The limit is per occurrence. An occurrence is one act or event or a series of related acts by one or more individuals, known or unknown.
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Examples: ·
Rose is on a business trip. She pays for her taxi ride with a
$100 bill and receives two $20 bills as change. This coverage applies when
she discovers that the bills are counterfeits. · Rose wears a necklace to a meeting and receives an offer to purchase it for $200. She agrees to the price but demands a money order. She returns home and presents the money order for payment, but the bank refuses to pay because it is a forgery. Coverage does not apply because this is a personal transaction, not a business transaction. |
If a credit card, debit card, or charge card issued to the named insured, partners, members, officers, employees, or managers is used, and the written documentation required to complete the transaction is forged or altered, coverage is provided up to the limit specified in the declarations. The following conditions apply:
· The limit is per occurrence. The definition of occurrence is all forgery or alteration by one person without regard to how many acts or written transactions are involved.
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Examples: ·
Jerry is the president of Grain and Feed Company. He travels to
France to speak with prospective buyers. He returns, views his credit card
statement, and discovers several charges he did not make. The card company
reviews the charges and confirms that the signatures were forged. The losses
are covered. ·
Jerry is the president of Grain and Feed Company. He is on
vacation in France with his family. They enjoy their two weeks and then return
home. Jerry reviews his credit card statement and discovers several charges
his family did not make. The card company reviews the charges and confirms
that the signatures were forged. These losses are not covered because they
were made with his personal credit card, and Grain and Feed Company is not
liable to the card issuer. |
If a loss is caused by forgery or alteration of checks, drafts, promissory notes, or similar written promises or orders for payment of money that are directly from or are alleged to be from the named insured or acting as an agent of the insured, coverage is available up to the limit stated in the declarations. The following conditions apply:
· The coverage is worldwide.
· The limit is per occurrence. The definition of occurrence is all forgery or alteration by one person without regard to how many acts or written documents are involved.
Coverage applies to loss of money, securities, bullion, and lottery tickets the named insured owns or is legally liable for while at either of the following:
a. A covered location or at a financial institution’s premises
b. While not at a covered location but in the care, custody, or control, or temporarily within the named insured’s residence or the residences of the partners, officers, directors, managers, employees, or members.
Note: Members are
defined as those having ownership interest in any LLC named as an insured.
The loss must be caused by theft, disappearance, or destruction.
The most paid for any one occurrence is the limit of coverage listed on the declarations. An occurrence is an act, an event, or a series of related acts or events, regardless of the number of persons involved who caused the loss.
Keytrols and similar devices provide customers with convenient access to goods. However, if the Keytrol or similar device is activated fraudulently, the named insured incurs a loss because the property is taken without a corresponding customer charge. This coverage provides for loss of money, securities, and other covered property resulting from keytrol fraud.
The limit specified in the declaration is the maximum amount that will be paid for a single occurrence. An occurrence means a fraudulent act committed by one person, regardless of how many cards or devices are involved. It also means a single act or series of acts by one or more individuals using more than one card or device.
These Crime Extensions enhance the coverage provided by one or more of the coverages listed above. They do not apply to any coverage that has not been selected. Each extension is included within the applicable coverage limit and does not offer additional limits of insurance unless stated otherwise. The deductible for the Crime Coverage also applies to the extension.
a. Employee Fraud and Dishonesty coverage is extended to provide coverage for dishonest acts by an employee while that employee is temporarily out of the coverage territory. There is a limitation that the employee can be outside the territory for no more than 90 days but there is no requirement that the 90 days be consecutive.
Editor’s Note: With the 12 20
edition, item b. has been added.
b. This section pertains to the Employee Benefit Plan losses due to Employee Fraud and Dishonesty but excludes operational assets. This coverage applies to employees outside of the coverage territory for no more than 90 days. It includes direct physical losses of and direct loss to money, securities, and other covered property, as well as any funds or property the plan may use to pay benefits to participants or beneficiaries. The Employee Fraud and Dishonesty deductible does not apply.
Note:
This coverage seems to be very limited because no additional coverage limit is
granted.
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Example: Helen Fisher was on a business
trip to Greece to renew a contract. Recently promoted to President of the
International Division, she did not have a company credit card and,
therefore, had to use her personal credit card for all expenses. Everything
went smoothly during her trip, and she successfully renewed the contract. Upon returning home, however,
Helen reviewed her monthly credit card statement and discovered four
fraudulent charges incurred while she was abroad. Fortunately, these losses
would be covered. |
This coverage is labeled as a personal accounts extension, but what it
actually does is add the named insured, its partners, officers, and
members as insureds when a loss involves the personal accounts of any of those
individuals. All other conditions and terms that apply to Forged or Altered Checks,
Drafts, or Promissory Notes coverage
continue to apply, including that the named insured must be legally
liable. The limit for this Coverage Extension on the declarations is a
sub-limit of the limit for Forged or
Altered Checks, Drafts, or Promissory Notes.
The maximum amount payable for a loss is limited to the amount specified
in the declarations for any single occurrence under the Forged or Altered
Checks, Drafts, or Promissory Notes coverage extension. Additionally, the
deductible for the Forged or Altered Checks, Drafts, or Promissory Notes
coverage applies.
Note: This
coverage seems to be very limited because no additional coverage limit is
granted.
Any item covered under Money and Securities is covered while in the care, custody, and control of an armored vehicle company. However, this policy only covers the amount that is not recoverable from the armored vehicle company and its insurance carrier. Loss is subject to the limit of this extension shown on the Declarations.
The Money and Securities deductible is applicable.
The first group of exclusions applies whether the loss event results in widespread damage or affects a significant geographical area or not and are essentially absolute. Subject to specific exceptions, each is totally excluded, regardless of any other cause or event contributing to a loss, concurrently or in any other sequence. The insurance company does not pay for any direct or indirect loss or damage caused by or that results from any of these events.
Loss or damage caused by order of
any civil authority is excluded. Some examples of such loss or damage are
seizure, confiscation, destruction, or property quarantine.
Coverage does not apply to any loss
caused by or resulting from nuclear reactions, nuclear radiation, or
radioactive contamination. This applies whether the event is controlled or
uncontrolled, and regardless of whether it is caused by natural, accidental, or
artificial means. Losses resulting from nuclear hazards are not considered
losses caused by fire, explosion, or smoke.
Note: Coverage for nuclear risks is only available
through nuclear umbrella coverage associations.
Editor’s Note: With the 12 20
edition, this exclusion has been updated.
Loss caused by any type of war is excluded. War is defined as follows:
·
declared, undeclared, or civil war, or
insurrection, rebellion, or revolution
·
destruction, seizure, or use of property for
military purposes or actions that are warlike by military force.
·
nuclear weapon discharge, regardless if
accidental or not
The second group of exclusions applies to loss or damage caused by or resulting from any of the following loss events. Some of these exclusions have exceptions, conditions, or limitations that should be noted and reviewed carefully. The insurance company does not pay for any loss or damage caused by or resulting from any of these events.
Loss caused by criminal, fraudulent, dishonest, or illegal acts committed by any of the following alone or in collusion with others is excluded:
· The named insured
· The named insured’s partners
· Members that have an ownership interest in any limited liability company named as an insured
·
Officers who own 25% or more of any entity named
as an insured
Note: Providing coverage for such actions would be
similar to paying an insured for committing arson.
It’s important to note that these
exclusions do not apply to losses sustained by an employee benefit plan.
However, they still apply to losses involving operational assets.
If a loss is discovered more than 90 days after the policy expires, terminates, or is canceled, there is no coverage. The following are considered expired, canceled, or terminated:
· Expiration date of the entire policy.
· The date on which any crime coverage is removed by endorsement from the policy.
· The date on which an insured or employee is removed from coverage.
· The date on which the entire policy is canceled.
It’s important to note that these exclusions do not apply to
losses sustained by an employee benefit plan. However, they still apply to
losses involving operational assets.
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Example: Hoosier Hog Farms’ insurance
company pays an employee theft loss that the farms’ employees, Elmer and Mary,
committed. The farm fires Elmer but retains Mary because they think she is innocent.
However, the insurance company deletes Mary as a covered employee. Additional
occurrences that involve only Mary are discovered six months later. There is
no coverage for these losses because they were discovered more than 90 days
after Mary was deleted as a covered employee. |
Coverage does not apply to any loss that is an indirect result of any act or event this endorsement covers. Examples of indirect losses are:
· The named insured’s ability to earn and receive income, dividends, and interest
· Damages for which the insured is legally liable, other than covered compensatory damages included in the coverage.
· Expenses the named insured incurs to prove the claim and determine the amount of loss. This part of the exclusion does not apply to AG 0100:
o Other Conditions –1. Appraisal; or,
o Additional Coverages –7. Inventory and Appraisals Expense (if provided under the AG 0100)
The insurance company does not pay for loss of confidential information, processing methods, trade secrets, or any type of intangible property.
A loss must have actually happened. If the only proof that a loss has occurred is through an inventory shortage or a profit or loss computation there is no coverage under this policy. This information is important to prove a loss, but it cannot be the sole proof of a loss.
There is no payment for the expenses of a legal proceeding or claim except for the Legal Defense Expenses described under Forged or Altered Charge, Credit or Debit Card Written Instruments and Forged or Altered Checks, Drafts or Promissory Notes.
There is no coverage for any loss incurred, directly or indirectly, through trading stocks, futures, commodities, bonds or other financial instruments. This applies whether in the insureds name or in a genuine or fictitious account.
These exclusions apply only to the coverage provided by AG 0100 – 1. Employee Fraud and Dishonesty.
As soon as a named insured, partner, officer, director, limited liability manager, or member has knowledge of fraudulent or dishonest actions of an employee, all employee fraud and dishonesty coverage for actions of that employee cease.
However, coverage still applies if the only person with such knowledge acts in collusion with that employee.
It’s important to note that these exclusions do not apply to losses sustained by an employee benefit plan, but they still apply to losses involving operational assets.
If an employee of the named insured or an employee of a firm acquired by the named insured was terminated under a prior policy, that employee is also terminated under this policy. The only exception is if that employee had been reinstated under this or the prior policy.
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Example: Christy and Vanna were accused
of stealing money from Larry’s Fine Foods. Both accepted a plea deal,
although Vanna continued to argue that she had been framed. Larry trusted Vanna
and kept her employed even though he realized that any employee dishonesty on
her part would not be covered under his policy. Three years after the initial
report, Christy’s real accomplice, Lacey, was caught stealing money. Lacey confessed
to the current theft and all prior incidents, including the one she worked
with Christy. Vanna is reinstated when her innocence is revealed. |
There is no coverage for any vandalism. Computer hacking, denial of access to services, computer viruses or similar damage to computers are all considered vandalism.
These two exclusions apply only to
the coverage provided by AG 0100 – 2. Computer and Telecommunications Fraud.
a. Criminal, Fraudulent, Dishonest, or Illegal Acts
b. Client Access
Coverage does not apply when all the following apply:
· Loss is due to electronic data being entered into a computer
· The computer is under the control of a client of the named insured
· The individual who entered the data was authorized to access the authentication code or devices of the client
This exclusion applies only to the coverage provided by AG 0100 – 3. Counterfeit Currency, Money Orders, and Travelers Checks.
Criminal, Fraudulent, Dishonest,
or Illegal Acts
This exclusion applies only to the coverage provided by AG 0100 – 4. Forged or Altered Charge, Credit, or Debit Card Written Instruments provides.
Criminal, Fraudulent, Dishonest,
or Illegal Acts
Losses that occur due to criminal, fraudulent, dishonest, or illegal actions committed by employees, directors, managers, trustees, or authorized representatives of a named insured are excluded. This applies whether these individuals are acting independently or in collaboration with others.
This exclusion applies only to the coverage provided by AG 0100 – 5. Forged or Altered Checks, Drafts, or Promissory Notes provides.
Criminal, Fraudulent, Dishonest,
or Illegal Acts
Losses that occur due to criminal, fraudulent, dishonest, or illegal actions committed by employees, directors, managers, trustees, or authorized representatives of a named insured are excluded. This applies whether these individuals are acting independently or in collaboration with others.
These exclusions apply only to the coverage provided by AG 0100 – 6. Money and Securities provides.
Losses due to mathematical or
accounting errors or omissions are excluded.
Coverage is not provided if a loss occurs from property being surrendered or exchanged.
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Example: Parker is an employee at Luscious Treats. He meets
Mandy at a convention where she sells laptop computers. Mandy agrees to sell
Parker a computer for $500, and he gives her the money. Parker takes the
computer box to his room and discovers that the box contains an old telephone
directory, not a computer. There is no coverage. |
There is no coverage for any loss associated with a money-operated device unless it has a continuous recording device.
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Example: Elana Farms has several vending machines for
employees to access drinks and snacks. The machines only accept coins, so a
paper money exchanger was installed. However, the money exchange machine does
not record the money deposited. As a result, if a loss occurs, there is no
coverage. |
There is no coverage for loss of property after it has been taken or removed from the covered location or a financial institution’s premises if it is due to one of the following:
· unauthorized instructions; or,
· the threat of bodily harm or damage to property
This exclusion does not apply to loss of any property outside the covered location or a financial institution in the care and custody of the named insured or its partners, officers, directors, managers, employees or members in either of the following situations:
· They did not know about any such threat when the transfer began.
· They were aware of a different threat unrelated to the loss.
Coverage does not apply to loss due to vandalism or malicious mischief when it includes loss or damage to a covered location or its exterior, cash boxes, cash drawers, cash registers, safes, vaults, or similar receptacles.
There is no coverage for loss when a fraudulent scheme, false pretense, or trick induces the named insured or parties acting on its behalf to voluntarily part with possession of or title to any property.
This exclusion applies only as provided in Crime Coverages item 7. Keytrol Fraud.
The exclusion applies to losses due to criminal, fraudulent, dishonest, or illegal actions committed by employees, directors, managers, trustees, or authorized representatives of a named insured whether acting independently or in collaboration with others.
The following replaces the Notice and Proof of Loss provisions under What Must Be Done In Case Of Loss in AG 0100 to the extent of the coverage this endorsement provides.
If the insured sustains a loss, the named insured must do the following for coverage to be considered:
· Promptly notify their agent or the insurance company.
· Contact the police when a loss may be considered a crime; however, contacting the police is not required for losses described under the following:
o Employee Fraud and Dishonesty
o Forged or Altered Charge, Credit, or Debit Card Written Instruments
o Forged or Altered Checks, Drafts, or Promissory Notes
· Notify the bank or savings institution if the loss involves a debit card.
The named insured must send the insurance company within 120 days a signed, sworn proof of loss. The proof of loss must include the following:
· time, place, and details of the loss
· any other policies which may cover the loss
· the interests of the insured and others in the property, including financial interests such as mortgages and loss payees
· any changes in title or occupancy of the covered property during the policy term must be reported
· estimates for the covered property
· a detailed inventory of both damaged and undamaged property must include the quantity, description, cost, and actual cash value of the loss.
o additionally, an inventory of all bills, receipts, and related documents to substantiate the inventory must be attached.
These conditions are in addition to the CL 0100 - Common Policy Conditions and the AG 0100 - Agribusiness Property and Income Coverage Part Conditions.
Employees and locations that become part of the named insured due to a merger, consolidation, or purchase are automatically covered for up to 120 days from the date of the transaction. However, certain conditions must be met. The insurance company must receive written notification within 120 days of the merger, consolidation, or purchase. Additionally, the named insured must pay premiums for the newly added employees and locations, starting from the date of the transaction until the end of the policy period.
If an Employee Welfare or Pension Benefit Plan is acquired through a merger, consolidation, or purchase and sponsored by the insured, it is covered as an insured under the Employee Fraud and Dishonesty Coverage.
There is coverage for a loss discovered within 90 days following the policy expiration, termination, or cancellation date, but only if the loss occurred during the policy period.
If a similar policy replaces this one, this extension ends no later than the effective date of that similar policy.
This condition does not apply to an Employee Benefit Plan but does apply to its operational assets.
Loss discovery is when the named insured initially becomes aware of information or circumstances that lead to the reasonable conclusion that a loss has occurred or is about to occur. This applies even if all the details are not yet known or available.
If there is more than one named
insured, the following provisions apply.
a. Duty of First Named Insured
The first named insured represents
itself and any other insured parties listed on the declarations for all matters
concerning this coverage. If the coverage for the first named insured ends, the
second named insured will take on the role of the first named insured, and all
responsibilities relating to this coverage.
b. Employee Status
Any employee of a named insured is regarded as an employee of all named insureds.
c. Pertinent Knowledge
Knowledge held by any insured, officer, or partner regarding information related to this endorsement’s coverage is deemed knowledge by all insured parties.
Note: The term “named Insured” is not used in this
section of the condition.
d. Payment to the First Named
Insured
Payment for loss made to the first named insured ends the insurance company’s liability for that loss to any other insured. Payment made to any named insured is treated as payment made to the first named insured.
The following elements of this condition comply with the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
a. Under the Employee Fraud and Dishonesty coverage only, the employee benefit plan is covered as an insured.
b. If any such plan is insured in combination with any other named insured, the coverage limit selected for section 1. Employee Fraud and Dishonesty (within this form) must be sufficiently high enough to provide that each plan is insured for an amount at least equal to what would be required if each were insured separately.
c. If an employee benefit plan and another entity on the declarations are both considered insureds, and the employee benefit plan sustains a loss, the payment made by the insurance company to any named insured will be for the use and benefit of only the employee benefit plan.
If it is unclear whether the loss payment will be used to benefit the plan, the insurance company has the right to require a separate agreement among the parties involved. This agreement is to ensure that the payment will be used for the benefit of the employee benefit plan that experienced the loss.
Note: Losses to
operational assets are not included with item c. conditions.
d. If money, securities, or other covered property from two or more employee benefit plans are combined, each plan is responsible for its proportional share of any loss payment, in accordance with the coverage amounts required by ERISA for each plan.
Section e. is new for the 12 20
edition.
e. Losses sustained by an
employee benefit plan are covered if the loss occurred during the policy period
and the insured discovered it within one year of the policy period or within
one year from the date of the cancellation or termination of the policy or the
coverage provided for such employee benefit plan.
This condition does not apply if
there is coverage for a loss under a replacement policy or bond.
There is no coverage if a loss
is not discovered within one year of the end of the policy period.
The insurer must be able to verify the amount of any money and securities loss through the named insured’s kept records.
This section does not replace the Valuation Section of the AG 0100. These items are additions to that section.
Bullion is traded on commodities markets, and its value is determined by the published rate on the London Metals Market. The valuation utilizes the average rate from the 14 days preceding the date of the loss. This average may exceed the actual cost of replacement; if so, only the replacement amount will be compensated.
Money is valued at its face value. The insurance company has the option to compensate for the loss of money issued by any country other than the United States at its face value in the currency of that country or in equivalent United States dollars. The equivalency will be determined using the exchange rates published in the Wall Street Journal on the day the loss is reported.
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Example: On March 1, Matthew agreed to
accept payment in the customer's currency to complete a transaction. When he
returned to the United States with the money, he attempted to deposit it into
his account on March 9, only to discover that it was counterfeit. He filed a
claim but was disappointed to learn that the currency's value had dropped by
50% between March 1 and March 9. As a result, his settlement amount was 50%
less than what he had anticipated. |
Other covered property is valued using replacement cost unless actual cash value (ACV) is entered as the valuation on the Crime Schedule.
Other covered property does not include:
· fine arts
· stock
· accounts receivable
· valuable papers and records
· other property with special valuation terms found in the policy and based on replacement cost described in the valuation section of the AG 0100.
The value of any securities is determined by its worth at the close of business on the day the loss. The insurance company can choose to either pay the value of the securities or replace them.
These provisions are in addition to those in the Agribusiness Property and Income Coverage Part under How Much We Pay.
Two or more coverages this endorsement provides may apply to the same loss. In that case, the insurance company does not pay more than the lesser of the actual loss or damage or the sum of the limits for the coverages that apply.
The insurance company pays only the part of a covered loss that exceeds the amount of the deductible that applies to each occurrence on the declarations. Two or more deductibles may apply to the same loss. In that case, only the highest deductible amount is applied.
New for the 12 20 edition: The
deductible does not apply to loss sustained by an employee benefit plan other
than operational losses.
A covered loss may occur that is partially insured by this endorsement and partially by previous insurance coverage. In such cases, the maximum amount the insurance company will pay is the greater of the amount covered by this crime endorsement or the amount recoverable from the prior insurance that was canceled or terminated. It’s important to note this only applies if this insurance company or one of its affiliates issued the previous insurance to the named insured.
The named insured may have more than one coverage form or policy that applies to the same loss. In such cases, the insurance company will only pay the portion of the loss that exceeds the amount covered by the other policies, even if the other amounts are not collectible. The maximum amount paid will be limited to the terms specified in this endorsement.
Bridge Provision – Discovery Basis Replacing Loss Sustained Basis. This provision replaces the above “Insurance Under More Than One Policy.” It is meant to cover a situation where the prior coverage was on a loss sustained basis. If a loss occurs during the loss sustained policy period and is discovered during the extended discovery time of the loss sustained policy, the coverage available on this coverage form is excess over the loss sustained policy. If the insurance company pays in excess for the loss under the current discovery form, the deductible will not apply.
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Example: Discovery Policy: 01/01/2025 to 01/01/2026 Limit of Insurance: $50,000 Money & Securities
– Inside Premise; $1,000 Deductible Loss Sustained Policy: 01/01/2024 to 01/01/2025 Extended Discovery Period: 60-Day Tail -
01/01/2025-03/01/2025 Limit of Insurance: $25,000 Money & Securities
– Inside Premise; $1,000 Deductible Date of Loss: 02/01/2025 Loss Amount: $30,000 Fred’s Farm has a break-in on
February 1, 2025. The perpetrator stole $30,000 in cash and bullion. The
current policy is on a Discovery form. However, the prior policy was on a
Loss Sustained form with a 60-day extended discovery period. In this case, the current Discovery
policy form will pay in excess of the prior Loss Sustained policy form. ·
Loss Sustained policy will pay under the extended period $25,000. ·
The Discovery policy will pay the $5,000, no deductible will
apply. |
Limits for any coverage do not accumulate. They cannot be added together, even when the loss occurs over multiple years.
Loss sustained by multiple named insureds will be limited to the amount that would have been paid if only one named insured had sustained the entire loss.