Exam 27: Crime Insurance and Surety Bonds

Appliance World sells small appliances.The store purchased an ISO crime coverage policy.Last night,someone used a crowbar to pry open a locked door,leaving marks of forced entry.The thief took a number of appliances.The crime that occurred in this case is called

National Bank believed it had been properly authorized to transfer $250,000 to the off-shore account of one of its corporate customers.The authorization was fraudulent,however,and the transferred funds were stolen.Under which commercial crime coverage insuring agreement would such a loss be covered?

In the ISO Commercial Crime Coverage form,safe burglary is defined as the

Bernice is an underwriter.She is reviewing a commercial crime coverage application.The coverage will be written using the discovery form.Bernice is concerned that a large undiscovered loss may exist prior to the policy's inception date.Which provision should Bernice add to the policy to protect the insurer against liability for such previous losses?

A burglar took some blank checks during a break-in at XYZ Company.He was careful to make sure that the theft would be difficult to discover.Three months later,he wrote himself a check for $20,000 and signed the company treasurer's name on the check.After the check was cashed,the loss was discovered.Which commercial crime coverage form would cover this loss?

Smith is Manager of ABC Department Store.Jones,ABC's Security Director,visited Smith to ask some questions.During questioning,Smith admitted that he stole $10,000 in merchandise.He was disciplined,but not fired.The loss was not reported to the insurer that wrote ABC's crime insurance.Six weeks later,Smith was observed on a surveillance camera stealing over $50,000 in jewelry from ABC.ABC immediately reported the loss to its crime insurer.Which ISO crime coverage condition may prevent ABC from collecting for this loss?

The head teller of a bank embezzled $50,000 from the bank.Which insuring agreement in a financial institution bond is designed to cover such losses?

State X hired Build-Right Construction to build a bridge.State X required that construction be completed within 2 years after the contract was signed.Les Johnson is the president of Build-Right.State X required that Build-Right's promise to perform be guaranteed by a third party.Build-Right purchased a performance bond from Rock Solid Indemnity.The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time.In this scenario,which party is the obligee?

A Pony Express Armored Car was transporting bank receipts from six branch banks to the main bank.A group of robbers staged a daring robbery.They forced the armored car off the road,shot two guards,and took over $120,000 in cash.Which insuring agreement in a financial institution bond would cover the stolen money in this case?

Which of the following statements about the commercial crime insurance policy is true?

Tracy is a trust officer at a bank.One of her responsibilities is to manage funds that have been set aside for the benefit of minor children.What type of bond guarantees that Tracy will faithfully execute her required duties in this capacity?

A bond that guarantees that the person responsible for the property of another will faithfully exercise his or her duties is called a

Which of the following statements is (are)true with respect to the differences between insurance and surety bonds? I.Insurance is a two-party contract; surety involves three parties. II.Insurers usually do not have the right to recover a loss payment from an insured,while a surety does have the legal right to recoup a loss payment.

All of the following are ISO commercial crime coverage exclusions EXCEPT

Bishop Appliance Store is covered by a commercial crime insurance policy.The policy provides coverage for "Employee Theft" on a blanket basis.When the store owner arrived to open the store for business one morning,he discovered that many small electrical appliances were missing.A surveillance tape showed a company employee had disabled the burglar alarm before leaving work,and had returned to the store later and had taken the appliances.Which of the following statements regarding this loss is true?

Two tellers of a Tenth National Bank branch colluded to embezzle $40,000 over a six-month period.State bank examiners detected the embezzlement during a routine bank examination.Tenth National purchased a financial institution bond.Under which of the following insuring agreements is this loss covered?

In the context of a surety agreement,the party who agrees to answer for the debt,default,or obligation of another party is called the

Which of the following statements is (are)true with respect to financial institution bonds? I.Fidelity coverage covers losses resulting from the dishonest acts of employees. II.Financial institutions usually insure their crime exposures through financial institutions bonds.

An armed robber pulled a gun on a teller at the Fourth National Bank.He made off with over $10,000 in cash.Which insuring agreement in a financial institution bond is designed to cover such losses?

Jack,owner of Jack's Bar and Grill,was robbed while attempting to deposit receipts at his bank's night depository.Jack had purchased an ISO commercial crime coverage form.This loss would be covered under which insuring agreement?