ISO COMMERCIAL CRIME COVERAGE FORM SAMPLE INSURANCE PROPOSAL LANGUAGE
(January 2026)
All PF&M subscribers are permitted to reprint the following
insurance proposal sample language when they prepare insurance presentations
for their commercial insurance customers. Other uses require permission from
The Rough Notes Company, Inc.
The following paragraph or similar language needs to be included in all
insurance proposals:
The information provided in this proposal does not
represent the exact contract terms of the policy. Consult the actual policy for
exact definitions, conditions, coverages, exclusions, and limitations. Coverage
may vary based on the company's underwriting guidelines and practices.
This proposal language is not intended to be an entire insurance
proposal. A client-specific section that includes the name and address of the
insured, the insurance company(s), and the agent, along with information about
them, a list of locations, limits, deductibles, and similar customer-specific
items, is not included and should be prepared.
The intent of any insurance proposal is not to reproduce the insurance
policy but to provide a summary of possible coverages.
Paragraphs explaining coverages unique to this form could be the most
valuable part of your insurance proposal and sales effort. You can customize
coverage examples to suit each customer. However, be cautious when modifying
the proposal language to ensure you do not extend coverage beyond what the
policy specifies.
This proposal should be combined with proposals for other lines of
business, such as commercial property, commercial general liability, time
element, and workers compensation, for a complete account proposal.
Related Articles:
ISO Commercial
Crime Coverages Available Endorsements and Their Uses
ISO Commercial
Crime Coverages Endorsements Checklist
Commercial crime
coverage is usually written using one of two Insurance Services Office (ISO)
coverage forms, the Discovery Form and the Loss Sustained Form.
The Discovery Coverage
Form provides payment of losses discovered, but not necessarily sustained,
during the policy period. This approach is similar to the ISO Claims-made
Commercial General Liability Coverage.
The traditional Loss
Sustained Coverage Form covers losses that occur and are discovered during the
policy period, or losses that occur during the policy period and are discovered
within one year after the end of that policy period. It operates much like
ISO's Occurrence Commercial General Liability Coverage and was the only
coverage form previously available under ISO commercial crime forms. This
traditional, "occurrence-based" coverage form is the one referenced
and utilized in this sample insurance proposal.
The changes from the 06
22 edition are incorporated into the proposal language but are not highlighted
in bold.
This coverage is divided into three parts and provides fidelity coverage
included within the policy:
·
Employee Theft
·
ERISA Plan Official Dishonesty
·
Employee Theft of Client's Property
This coverage is divided into two parts:
·
Forgery of Negotiable
Instruments
Covers losses from forged or altered drafts, checks, promissory notes,
written directions, orders, or promises to pay money, made on the insured or an
agent acting on the insured’s behalf. Additionally, if you refuse to pay for an
instrument you believe is
forged and face a lawsuit.
·
Forgery of Payment Card
Instructions
This coverage is optional. It covers losses resulting from forged written
instruments used for business credit, debit, or other card transactions issued
to the insured, insured employees, or ERISA plan officials.
Covers theft, disappearance, or destruction of money and securities from
inside premises or a financial institution. Also covers damage during theft or
attempted theft or to locked receptacles holding the money or securities.
Covers robbery of a person in charge of the property or safe burglary of
other property that occurs inside the premises. It also covers damage to the
premises and to locked receptacles containing property.
Covers losses from theft, disappearance, and destruction of money and
securities outside the premises, while in custody of a messenger or armored car
company. It also includes coverage for other property that is lost or damaged
during a robbery of the messenger or armored car company.
Covers loss caused by fraudulent entries into any computer system owned,
leased, or operated by the insured. It also covers loss resulting from
fraudulent instructions to transfer property from the insured’s transfer
account at a financial institution. Additionally, it covers loss when an
employee makes entries based on a good faith belief that the contractor
providing the information is the contracted party with a written service
agreement.
Covers situations where
the insured, acting in good faith and beyond their control, transfers money or
securities based on seemingly authorized but fraudulent instructions, resulting
in funds being sent to a fraudulent recipient. It also covers situations where
transfer instructions appear legitimate but are fraudulently altered without
the vendor's approval, causing the insured to transfer money or securities to a
fraudster.
Covers losses resulting from counterfeit money accepted in good faith in
exchange for purchases. It also covers losses when money orders accepted as
payment for purchases are not accepted by the issuer when presented for payment.
This is the
insurance limit shown on the Declarations. It represents the maximum payment
for all losses resulting from a single event. If a loss falls under multiple Insuring
Agreements, the company will pay only the highest limit rather than the sum of
all applicable limits.
This is the amount deducted from the total
loss amount. The insurance company will not pay until the loss exceeds the
deductible listed on the declarations page. Once the deductible is met, the
insurer covers the loss amount exceeding the deductible, up to the policy's applicable
coverage limit.
·
Acts Committed by You,
Your Partners, or Members
Acts involving theft or any other fraudulent or dishonest acts, whether
committed alone or with another employee or individual.
·
Acts Committed by Your
Employees, ERISA Plan Officials, Managers, Directors, Trustees, or
Representatives
Acts involving fraudulent or other dishonest activities, such as forgery,
committed by employees and outside individuals working together.
·
Acts Committed by Your Employees or ERISA Plan Officials Prior
to the Policy Period
Acts by any employee or ERISA plan official who committed fraudulent or
dishonest acts in the past are not covered if the named insured or designated
person was aware of these acts before the policy start date.
·
Confidential or
Personal Information
Losses from unauthorized disclosure or use of confidential or personal
information.
·
Data Security Breach
Costs, fees, penalties, fines, and any other expense incurred related to
accessing or disclosing another entity’s or person’s
confidential or personal information.
·
Governmental Action
Acts of a governmental authority to seize or destroy property that lead to the loss of that property.
·
Indirect Loss
This insurance does not cover losses that are indirect consequences of a
covered incident, such as income loss resulting from the inability to access
money, securities, or other property, or costs, fees, or other expenses
incurred by the named insured to demonstrate a loss or to assess its amount.
·
Kidnap, Ransom, Extortion And
Other Unlawful Demands
Loss from paying ransom or surrendering property due to unlawful demands,
threats of bodily harm or property damage, or threats to introduce a denial of
service or viruses to computer systems. The exclusion also includes fees,
costs, or other expenses incurred and associated with this type of loss.
·
Legal Fees, Costs, and
Expenses
There is no coverage for any legal fees, costs, or expenses incurred.
·
Nuclear, Biological, Or
Chemical Hazard
Losses resulting from or associated with nuclear reactions, nuclear
radiation, radioactive contamination, or from pathogenic or toxic biological or
chemical agents, regardless of how the loss occurs.
·
Pollution
Loss or damage caused by or resulting from any form or aspect of
pollution.
·
Virtual Currency
Any loss related to virtual currency. This is any type of electronic
currency, such as digital or cryptocurrency.
·
War and Military Action
Loss resulting from, or connected to, any act of war or any warlike
action.
A.1.a.—EMPLOYEE THEFT
·
ERISA Employee Benefit Plans
Loss to Property
belonging to any employee benefit plan.
·
Inventory Shortages
Loss where the only proof that a loss occurred is dependent on an
inventory or profit and loss computation. A computation can only be used to support
the physical count of the inventory or the amount claimed.
·
Trading
A loss from trading. It can be a genuine or fictitious account or in the
insured’s name.
·
Warehouse Receipts
Losses resulting from fraudulent or dishonest transactions involving
warehouse receipts and related papers.
A.1.b.—ERISA PLAN OFFICIAL DISHONESTY
·
Inventory Shortages
Loss where the only proof that a loss occurred is dependent on an
inventory or profit and loss computation. A computation can only be used to
support the physical count of the inventory or the amount claimed.
A.1.c.—EMPLOYEE THEFT OF CLIENTS’ PROPERTY
·
Inventory Shortages
Loss where the only proof that a loss occurred is dependent on an
inventory or profit and loss computation. A computation can only be used to
support the physical count of the inventory or the amount claimed.
·
Trading
A loss from trading. It can be a genuine or fictitious account or in the
insured’s name.
·
Warehouse Receipts
Losses resulting from fraudulent or dishonest transactions involving
warehouse receipts and related papers.
A.2.b.—FORGERY OF PAYMENT CARD INSTRUMENTS
·
Non-compliance With Payment Card Issuer’s Requirements
When the insured fails to comply with the credit, debit, or charge card
provisions, conditions, or other terms of issuance.
·
Inventory Shortages
This is loss
of money, securities, or other property where the only proof that a loss
occurred is discovering it during an audit or while taking inventory.
·
Trading
These are losses that
result from stock, commodity, or merchandise trading loss in a genuine or
fictitious account.
·
Warehouse Receipts
These are losses that result from fraudulent or dishonest transactions
that involve warehouse receipts and related papers.
A.3.—Inside the Premises–Theft of Money and Securities
A.4.—Inside the Premises–Robbery or Safe Burglary of Other
Property
A.5.—Outside the Premises
·
Accounting or Arithmetical Errors or Omissions
Mathematical mistakes:
errors or omissions in accounting or arithmetic.
·
Exchanges or Purchases
Loss in any exchange or
purchase of any property.
·
Fire
Loss or damage caused
by fire, regardless of what started the fire.
·
Money Operated Devices
Loss of property from
within vending machines or other coin- or money-operated devices unless the
machine continuously counts and records the money.
·
Motor Vehicles or Equipment and Accessories
Damage to or loss of
any motor vehicle, its accessories, or trailer is excluded.
·
Vandalism
There is no coverage
for any vandalism or malicious mischief damage to the premises or exterior of
the premises, other property, safes, vaults, or cash registers or drawers
·
Voluntary Parting of Title to or Possession of Property
Loss when the insured
or someone working with them is tricked by any fraudulent or dishonest act into
parting with title to or possession of any covered property.
·
Authorized Access
Loss from an employee,
authorized person, or entity committing fraud by altering electronic data or
programs in any computer system.
·
Credit Card
Transactions
Loss from the use of
any credit, debit, charge, or other similar card, including when the loss
results from information on these cards.
·
Exchanges or Purchases
Loss resulting from
property relinquished during a purchase or exchange.
·
Fraudulent Instruction
Loss from false or fraudulent instructions to transfer, pay, or deliver
money or securities, or other property, which a financial institution acts upon
to debit or transfer from the insured's account, even if the account is debited
or closed due to such instructions.
·
Inventory Shortages
When the fact of a loss
is based solely on an inventory shortage or a profit and loss statement.
The conditions below
are supplementary to the Common Policy Conditions, which are not part of this
Sample Insurance Proposal Language.
·
Additional Premises or
Employees
Any new employees or premises added during the policy period are
automatically covered without additional charges. However, this does not apply
to locations or employees obtained through a consolidation or merger.
·
Cancelation Or
Termination
o
Coverage Termination
Coverage ends immediately upon the effective date of change of control,
voluntary dissolution, or liquidation of the first named insured. For any other
Insureds, coverage ends on their change of control, voluntary dissolution, or
liquidation date.
o
Individual Insured Or Coverage Cancellation
The Insurance Company or the first Named Insured may cancel coverage for
any Insured or Insuring Agreement within the Cancellation Common Policy
Condition.
Coverage is terminated for any employee or ERISA Plan Official if a
designated person, HR employee, or equivalent who is not in collusion with the
employee or Official learns of a theft, fraud, or dishonest act committed by
them, whether it occurs before or after their employment.
o
Termination of Coverage
as to Any Employee or ERISA Plan Official
If an employee or ERISA
plan official commits theft, fraud, or dishonesty, and it is discovered by a
designated person, HR, or similar, coverage ends on the date in the mailed
notice from the insurance company, which is at least 30 days after mailing. The
notifier can't be in collusion with the employee or official, regardless of
when they learned of the act. Notice is sent to the first Named Insured at
their latest address.
·
Concealment,
Misrepresentation, or Fraud
Any fraudulent act committed by the insured invalidates the coverage. If
the insured intentionally misstates or conceals important facts about the
insurance, the insured property, their interest, or any claim, the policy will
be considered void.
·
Consolidation–Merger–Acquisition
o If the Insured is the surviving entity of a consolidation, merger, or
acquires assets or liabilities, they must notify the Insurer promptly and
obtain written consent to extend coverage. Coverage for added entities,
premises, assets, or liabilities due to consolidation, merger, or acquisition
lasts up to 90 days. After 90 days, coverage ends unless the insured notifies
the insurer and adds coverage to the policy.
o If the insured acquires a subsidiary during the policy period and holds
more than 50% of its voting rights, they are automatically covered for loss
discoveries made by a designated person. The subsidiary's assets cannot exceed
the declared acquisition percentage, and no losses reported or paid in the
three years prior to acquisition, which would have been covered by this
policy.
In both cases above, any employee benefit plan acquired will
automatically be included under this insurance.
·
Cooperation
The insured must cooperate with the insurance company based on this
coverage form’s terms and conditions.
·
Duties in the Event of
Loss
The
insured has required duties upon discovering a covered loss or a situation that
may result in a covered loss:
o
Inform
the insurance company as soon as possible.
o
Submit
a detailed, sworn proof of loss to the insurance
company within 120 days of discovering the loss.
o
Work
with the insurance company during the investigation and settlement of the claim.
o
Provide
any relevant records related to the loss for the insurance company's review.
o
Attend
an examination under oath and sign a statement of the answers provided if the
insurance company requests it.
o
Protect
all rights of recovery it has against any responsible party for a loss paid
under the coverage and do not relinquish those rights.
The insured does not
need to notify the insurance company if the loss is below the deductible, but
must do so if they later find the loss may exceed it, as follows:
o
Notify
the insurance company within 15 days of the earliest as follows:
§ Date of knowing the
loss may exceed the deductible
§ Effective date of
cancellation or termination of the policy.
§ Termination of the Extended
Period To Discover Loss condition.
o
Provide
the Insurance Company with a detailed sworn proof of
loss within 120 days of the date of notification.
o
Insured must comply with all conditions in this
section.
·
Employee Benefit Plans
When a covered loss
occurs, the payment will be made directly to the employee benefit plan that
incurred the loss. A payment to any plan releases the insurance company
completely.
·
Extended Period to
Discover Loss
Losses must occur during the policy term but may be discovered up to one
year after expiration. If the policy is canceled or replaced, the extended loss
coverage ends immediately, even if other insurance covers prior losses. This includes
ERISA Employee benefit plans.
·
Joint Insured
There may be cases where more than one insured is named on the
declarations. In those cases, the the following
applies:
o
The
first named insured acts for all other insureds.
o
Knowledge
held by a designated person about anything affecting coverage is regarded as
knowledge by all insureds.
o
An
employee of one insured is considered an employee of all insureds.
o
The
insurance limit applies to all insureds collectively. A separate limit does not
apply to each insured.
o
Once
the insurance company pays the first named insured for a loss affecting any
Insured or employee benefit plan, it is then fully released for that loss.
·
Legal Action Against Us
The named insured cannot sue until all conditions are met and only after
90 days from filing proof of loss, but must do so within two years of
discovering the loss. State laws may vary; the policy conforms accordingly.
·
Liberalization
If the insurance
company expands coverage without additional premium at least 45 days before or
during this policy period, the broadened coverage applies.
·
Loss Sustained During
Prior Insurance Issued by Us or by Any Affiliate
An
occurrence is the beginning of a dishonest act. If the same insurance company
or group of insurance companies maintains continuous coverage, coverage applies
to occurrences dating back to the initial date of the continuous coverage. The
policy pays the larger of the limit of insurance available today or the limit on
the date the loss occurred. However, coverage limits do not combine or
accumulate from year to year.
·
Loss Sustained during
Prior Insurance Not Issued by Us or by Any Affiliate
If a
loss sustained in a previous policy term is discovered under the current policy,
coverage applies if both the previous and current policies have the same
coverage and the current policy immediately replaces the previous one. In this
case, the insurance limit available is the lower of the two policy limits.
·
Other Insurance
This
insurance is excess over any other insurance or indemnity unless that other
insurance or indemnity is identical to this insurance. In that case, it is
proportional. However, if all policies are excess, the adjustment is made on a
proportional basis, subject to each policy's respective limit.
·
Ownership of Property;
Interests Covered
Covered property includes property owned or leased by the named insured.
It also covers property the insured holds in any capacity or is legally
responsible for, provided the liability existed before a loss.
·
Records
The insurance company
needs to verify the claimed loss amount, so the insured must keep records of
their property to facilitate this process.
·
Recoveries
Recoveries can happen
before or after a claim settles, initiated by insurance or insured, with
recovery expenses deducted first. The remaining amount is then returned in the
following order:
o
Insured
receives the difference between the total loss and what the insurance company
paid.
o
Insurance
company receives the amount it paid for the loss.
o
Insured
is paid the deductible amount they were responsible for.
o
Insured
receives any remaining amount this insurance did not cover.
Recoveries do not include reinsurance, suretyship,
security, or indemnity recovered by the insurance company, and do not cover the
cost of original securities if duplicates were issued.
·
Territory
Loss sustained by the named insured anywhere in the world.
·
Transfer of Your Rights
of Recovery Against Others to Us
The insured must
transfer all its rights to the insurance company regarding any loss suffered
and compensated by the insurer. It must also take all necessary actions to
protect those rights and avoid doing anything after the loss that could impair
them.
·
Valuation–Settlement
The terms of the Limit
of Insurance section apply first. After that, the following applies.
o
Money
is valued at face value.
o
Foreign
currency can be replaced with its country’s face value or US dollars, based on
the exchange rate in The Wall Street Journal on the loss date discovered.
o
Securities
are valued at their closing price on the day the loss is discovered. The
insurance company can replace securities in kind, with cash, or cover the cost
of a lost securities bond to issue duplicates.
o
Other
property is valued at replacement cost without depreciation, within insurance
limits. Damage must be repaired or replaced promptly; if not, actual cash value
applies.
o
Property
other than money can be paid in the local currency where the loss occurred or
the equivalent in U.S. dollars at the exchange rate on the loss date published
in The Wall Street Journal.
o
Any
property paid for or replaced by the insurance company becomes its property.
·
Limit Of Insurance
o
The
insured must choose an insurance limit that meets or exceeds ERISA's minimum
coverage requirements, which vary depending on whether they hold plans with or
without employer securities.
§ Plans not holding employer
securities:
The minimum insurance
limit should be 10% of funds on the policy's effective date or $500,000,
whichever is less, but not less than $1,000.
§ Plans holding employer
securities:
The minimum insurance
limit should be 10% of funds on the policy's effective date or $1,000,000,
whichever is less, but not less than $1,000.
o
If
two or more ERISA plans are covered, the limit must be sufficient to cover each
plan separately.
o
If
there is a loss and the coverage limit falls below the required minimum, the
insurance company will automatically increase it to meet the minimum limit.
o
If
the ERISA required minimum coverage changes after the policy's start, the new
minimum applies automatically without extra premium for the remainder of the
policy term.m
o
When
a loss is sustained by two or more ERISA employee benefit plans, the insurance
company will pay each plan or the combined assets of multiple ERISA employee
benefit plans based on the required coverage amount for each plan.
o
No
deductible applies to the ERISA employee benefit plan.
Ownership Of Property; Interests
Covered Condition E.1.o. is replaced with the following:
Property covered is limited to what the insured’s client owns, leases,
holds for others, or is legally liable for before a loss. It benefits only the
insured, who must submit claims. No other parties, including clients, have
rights or benefits under this agreement.
·
Deductible Amount
Legal expenses are not subject to a deductible.
·
Electronic and Mechanical Signatures
Mechanically or
electronically produced or reproduced signatures are considered equivalent to handwritten
signatures.
·
Proof of Loss
The instrument involved
in a loss, such as a check, must be included with the proof of loss. If it cannot
be produced, an affidavit must be provided explaining the cause and amount of
the loss.
·
Armored Motor Vehicle Companies
If a contract allows
recovery from the armored vehicle company or its insurer, this policy is excess
over that amount. The insurer pays only the loss the insured cannot recover
from that contract or the armored company's insurance for its customers’ benefit.
Change of
Account Request and/or Transfer Instructions require the insured to make a
reasonable effort to verify the legitimacy of the request with the client,
vendor, or authorized person who is not making the request. This cannot be done by
email. Verification results must be documented before any
property change or transfer is made.