INTRODUCTION

This is a new endorsement with the 06 22 edition. It broadens coverage to include other property involved in transfers, beyond just money and securities. It replaces the Fraudulent Impersonation Insuring Agreement within the coverage form or policy.

Example: Janey received a message from Gary, her boss, instructing her to expedite the shipment of four cartons of equipment to a new customer, Felix and Friends. She followed the instructions. The next day, when Gary returned, Janey asked about the order so she could properly invoice it, and Gary explained that he had not made such a request. The four cartons were never located. Gary filed a claim with his insurer, which declined to pay due to the fraudulent-instruction exclusion.

ELIGIBILITY

This endorsement can be added to the Insurance Services Office (ISO) Commercial or Government Crime Coverage Form or Policy.

NOTE: The CR 04 17 – Fraudulent Impersonation endorsement has been withdrawn with the 06 22 edition. It is now incorporated into the coverage forms and policies.

ANALYSIS

This is an endorsement to the ISO Commercial Crime Coverage Form or Policy and the ISO Government Crime Coverage Form and Policy and is subject to their conditions, definitions, and exclusions. The only changes are those within this endorsement.

INSURING AGREEMENT

Section A. Insuring Agreements 7. Fraudulent Impersonation has been replaced by the following:

7. Fraudulent Impersonation – Extended Coverage

This endorsement includes coverage for losses resulting from the following:

a. The insured acting upon a transfer instruction to alter a customer’s or vendor's account or wire transfer account based on what appears to be an authorized request, but is actually from an imposter without the customer's or vendor's knowledge or approval. The insured, acting in good faith and beyond their control, makes the change, and the money or securities is sent to a fraudulent account.

b. The insured, acting in good faith and beyond the insured’s control, sends money or securities or other property to a person, entity, or account based on fraudulent instructions and without the consent or knowledge of the authorized individual, customer, or vendor.

NOTE: The only change from the policy or form wording to this endorsement is the inclusion of the phrase “other property” in Section A.7.b.

Example: Jasper sells high-end electronic equipment. A new representative from one of his vendors paid a visit to explain that their current equipment was being discontinued and a new line was being introduced. A few top retailers had been selected to be the first to stock the new equipment, but only if they agreed to return all of their current equipment. Jasper was eager to comply, so he allowed the representative to remove all of the stock. Jasper then waited to receive the new equipment that never came.

Jasper will only be covered for this loss if CR 04 18 is on the policy.

DEFINITIONS

Regarding Insuring Agreement A.7. – Fraudulent Impersonation, the definition of 34.b. “Transfer Instruction" has been replaced as follows:

Transfer instruction

Transfer instructions conveyed through electronic communication, such as email, text message, instant message, telefacsimile, telephone, or other electronic methods, or in writing, directing the insured to transfer, remit, or deliver money, securities, or other property to a person, entity, or account outside the insured’s control.

NOTE: The only difference between this endorsement definition and the policy or form wording is the addition of the phrase “other property.”