1. Forms
2. CR
3. CR-04-01

What the Form Is

The CR 04 01 Clients' Property endorsement is designed to be added to a Commercial Crime Coverage Form or Policy. Its primary purpose is to provide coverage to the named insured for the loss of a client's money, securities, or other property that is stolen by an identified employee of the insured. Standard commercial crime policies typically cover only property owned by or leased to the insured, or property for which the insured is legally liable and holding. This endorsement extends coverage to include the property of the insured's clients when theft is committed by the insured's own employees. The definition of "theft" is specifically modified by this endorsement to mean the unlawful taking of property to the deprivation of the insured's client.

Classes of Business It Applies To

This endorsement is particularly important for businesses whose employees regularly work at a client's premises or have access to a client's property. Real-world examples include:

• Janitorial or cleaning services
• Contractors (e.g., plumbers, electricians, builders working on-site)
• Home healthcare providers or other in-home service providers
• IT consultants or technicians working with client equipment or data
• Temporary staffing agencies whose employees work at client locations
• Delivery services or businesses that pick up and deliver client vehicles
• Any business where employees might have the opportunity to steal from a client while performing their duties.

Special Considerations

• Identified Employee: A crucial condition for coverage under this endorsement is that the employee or employees who committed the theft must be identified. This can sometimes be a challenge for businesses.
• Limit of Insurance: A specific limit of insurance for Clients' Property coverage must be shown in the Declarations for this endorsement to apply. This is a separate insuring agreement and not an extension of other crime coverages.
• Client Definition: The term "client" typically means an entity for whom the named insured performs services under a written agreement.
• Location of Property: While earlier versions of the CR 04 01 endorsement may have restricted coverage to property located at the client's premises, some newer editions may not contain this limitation, potentially covering client property stolen by an employee regardless of its location at the time of theft.
• Exclusions: The endorsement is subject to the conditions, definitions, and exclusions of the underlying crime policy, except as specifically modified by the endorsement itself.

Key Information for Agents and Underwriters

• Risk Assessment: Agents and underwriters should carefully assess the insured's exposure to loss of client property. This includes understanding the nature of the services provided to clients, the type and value of client property employees have access to, the number of employees with such access, and the internal controls the insured has in place to prevent employee theft.
• Coverage Gap: It's vital to explain to insureds that standard Employee Theft coverage in a crime policy protects the insured's assets, not their clients' assets. The CR 04 01 endorsement is necessary to bridge this significant coverage gap.
• Alternative Coverages: While this endorsement provides important protection, it's distinct from other coverages like a Business Services Bond, which might have different triggers for coverage (e.g., requiring a conviction of the employee).
• Underwriting and Pricing: Factors influencing underwriting and pricing include the selected limit of insurance, the deductible, the nature of the insured's business, employee screening practices, internal controls, and prior loss history.
• Clarity on Conditions: The requirement to identify the dishonest employee is a key condition that should be clearly communicated to the insured, as it can impact the ability to make a successful claim.