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.
The coverage trigger for Commercial Crime insurance depends on two important dates: the date the loss occurred and the date the insured discovered the loss. The Loss Sustained Form and Discovery Form differ in how these dates determine whether coverage applies.
Coverage Forms
Loss Sustained Form
The Loss Sustained Form covers losses that occur during the policy period and are discovered either during the policy period or within 1 year after the policy terminates. A loss is considered discovered when the insured first becomes aware of facts that would cause a reasonable person to believe that a covered loss has occurred or is likely to occur. Discovery also occurs when the insured first receives notice of an actual or potential claim alleging that the insured is responsible for a third party’s loss.
The Loss Sustained Form includes a Loss Sustained During Prior Insurance condition. This condition may cover a loss that occurred entirely during a previous policy period but was not discovered until the current policy period. Coverage applies only when there was no interruption between the prior and current insurance and the loss would have been covered under the current policy. The current insurer’s payment remains subject to the applicable policy terms and limits.
Discovery Form
The Discovery Form covers losses that occur at any time before the policy is canceled, provided the loss is discovered during the policy period or within an applicable extended discovery period. Unlike the Loss Sustained Form, coverage is primarily triggered by the date the loss is discovered. Discovery Forms commonly, although not always, include a retroactive date. When a retroactive date applies, losses that occurred before that date are not covered, even if they are discovered during the current policy period.
The Discovery Form includes an Extended Period to Discover Loss condition. The standard discovery period continues for 60 days immediately after the policy terminates. However, when the policy covers an employee benefit plan listed in the Declarations, such as a welfare or pension plan, losses involving that plan may be discovered within 1 year after policy termination.
Claims Covered by the Crime Coverage Forms
| Loss Sustained Form | Discovery Form | |
|---|---|---|
| When must the occurrence happen? | During the policy period | Any time before policy expiration, but subject to a retroactive date |
| When must the insured discover the occurrence? | During the policy period, or within 1 year of policy termination | During the policy period, or during an extended reporting period: within 60 days of policy termination for most losses, or within 1 year of policy termination for losses involving an employee benefit plan |
Forms for Commercial Enterprises
In addition to the Loss Sustained Form and Discovery Form, Commercial Crime coverage is available for two general types of commercial organizations.
Commercial Crime Coverage Forms
The Commercial Crime Loss Sustained Form and Commercial Crime Discovery Form are designed for private businesses and nonprofit organizations. Under these forms, a single limit of insurance applies to losses covered by the Employee Theft Insuring Agreement.
Government Crime Coverage Forms
The Government Crime Loss Sustained Form and Government Crime Discovery Form are designed for public entities, including cities, counties, states, school systems, and public utilities. These forms provide two Insuring Agreement options for employee theft coverage. Coverage may be written with a per-loss limit, which applies separately to each employee theft loss, or a per-employee limit, which applies to all covered losses caused by a single employee.