CR 04 01–EMPLOYEE THEFT
OF CLIENTS’ PROPERTY
(February
2026)
This analysis is of the
06 22 edition. Material changes are bolded, but format changes that do not
affect coverage are not highlighted.
This endorsement,
formerly known as “Clients’ Property,” is now optional for government entities
and no longer applies to commercial forms or policies. This is because
Commercial Crime Forms, Policies, and the Fidelity and Forgery Policies
now include Employee Theft of Clients’ Property as part of the new Fidelity
Insuring Agreement.
Since the Government
Crime Forms, Policies, and Fidelity and Forgery Policies do not cover Employee
Theft of Clients’ Property, this endorsement now offers that option.
This endorsement can be
attached to the Government Crime Coverage Form, Government Crime Policy, or
Government Fidelity and Forgery Policy. There are no business restrictions
other than those indicated on the coverage forms.
This endorsement
applies to the Insurance Services Office (ISO) Government Crime Coverage Form
or Policy, or the Government Fidelity and Forgery Policy. It is subject to
their conditions, definitions, and exclusions, with only the specified changes
within the endorsement.
This endorsement adds a
separate Insuring Agreement to Section A: Fidelity Insuring Agreement. A
coverage limit must be specified on the declarations, and this endorsement must
be attached for coverage to apply. This coverage does not extend to any other
insuring agreement.
This insuring agreement
is similar to the Employee Theft Insuring Agreement but differs in a key way:
the responsible employee or employees must be identified. Coverage does not
apply if the involved employee or employees are unknown. Additionally, the loss
must involve the property of the insured’s client.
Limit of Insurance has
been added to this endorsement with the 06 22 edition.
The insurance company
will not pay more than the amount specified on the Declarations for a loss.
A Deductible section has been
added to this endorsement with the 06 22 edition.
The deductible amount stated on
the Declaration must be met before the insurance will pay for a loss. After a
loss exceeds the deductible amount, the company will pay up to the Limit of
Insurance listed on the Declaration.
The Exclusions section
has been amended in this endorsement with the 06 22 edition.
The endorsement amends
the policy exclusion section D.1. Applicable To All Insuring Agreements,
replacing it with the following for Acts Committed By Your Employees,
Officials, Or Representatives:
The exclusion applies
to theft, fraud, or dishonest acts committed by any employee, official, or
authorized representative, whether acting alone, with others, or while
performing services for the insured. However, this exclusion does not apply if
the loss is covered under the Employee Theft or ERISA Plan Official Dishonesty
Insuring Agreements.
The Conditions section
has been amended in this endorsement with the 06 22 edition.
The endorsement amends two
policy conditions as follows:
1. Section E.1. Applicable
To All Insuring Agreements, e. Duties in the Event of Loss,
replacing paragraph 3 with the following:
If there is a reasonable
belief that a violation of the law has occurred, the insured must contact local
law enforcement. However, if a loss is covered under the Employee Theft, ERISA
Plan Official Dishonesty, or Forgery or Alteration Insuring Agreements, this
condition does not apply.
2.
Section
E.1.n. Ownership of Property: Interests Covered Condition in the CR 00
25–Government Crime Coverage Form (Loss Sustained Form) is replaced by the following types of property:
·
Property owned or leased by the insured’s client.
·
Property the insured’s client owns, regardless of
the capacity in which they hold it.
·
Property the insured’s client is legally responsible
for, but only if that liability existed prior to the loss.
This condition also clarifies that the
coverage is exclusively for the named insured. The property owner has no rights
or benefits under this policy. The named insured is responsible for filing any
claims on behalf of the property owner.
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Example:
The Department of Insurance (DOI) was
informed that five laptops were missing from the Premium Insurance Office.
DOI employees were the last to be at the premises. Under DOI policy, the
Government Crime Coverage Form does not cover this loss because the DOI was
not responsible for holding the laptops. However, the DOI will lose credibility if it does
not pay for the loss or cannot prove it did not cause it. Therefore, it is
important to have a coverage form that provides protection for the loss of a
client’s property when it is taken by an employee of the named insured. The CR 04 01 - Employee Theft of Client’s Property
policy will address this gap, but it is important to remember that the
employee who took the laptop must be identified for coverage to apply. |
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Example: Changing the previous example, it appears that
Premium Insurance Office did not actually own the missing laptops. Instead,
it was holding them on behalf of a customer. Since Premium Insurance Office
held the laptops for someone else, insurance coverage might be applicable
under the DOI’s Crime Coverage if it includes CR 04 01 and the employees are
identified. |
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Example: The Department of Insurance (DOI) identified the
employees who took the laptops, and the computers were recovered. Sadly, they
were severely damaged and unusable. The DOI received a letter from Premium
Insurance Office that outlined the laptops’ values and the amount the DOI was
expected to pay for the loss. The DOI’s insurance company pays the claim to
the DOI, and the DOI is responsible for forwarding this payment to Premium
Insurance Office. |
The 06 22 edition
includes only editorial changes to the Definition section.
The endorsement adds
two definitions and amends one.
This refers to any
entity for which the insured provides services pursuant to a written agreement.
NOTE: The American Heritage College
Dictionary defines an entity as “something that exists as a discrete (separate)
unit.” This means that an entity can be either an individual or a business.
A
crucial condition to consider is that the services must be governed by the
terms of a written contract.
|
Example: Juan volunteers to check on Connie’s store while
she is away. He assigns Lee, his employee, to visit the store twice daily to
turn the lights on and off. Upon her return, Connie notices several items are
missing and informs Juan. Juan states that Lee was the only person in the
store during her absence. Since Connie is not a client and has no contract
with Juan, there is no coverage. |
Means a single act,
multiple acts, or a series of acts an employee commits during the policy
period, before the policy period, or both. The acts do not have to be related,
but they may be. The employee may commit them alone or in collusion with
others.
Under this endorsement,
theft is revised to mean an occurrence in which property is unlawfully taken
and the taking deprives the insured’s client.
The theft requirement of deprivation for
the client indicates that if the property taken has no value to the client,
then no theft has occurred. This definition is the same as in CR 00 25, except
"insured” is replaced with "your client." This means that the
client must experience deprivation when the property is taken.