Exam 27: Crime Insurance and Surety Bonds

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?

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 about surety bonds is (are) true? I.The surety has a legal right to recover a loss payment it made on behalf of a defaulting principal. II.The obligee is the party who benefits from the bond if the principal fails to perform.

Graham is a cashier at a convenience store. A customer pulled a gun on him, and said that he would shoot Graham unless he gave him all the money in the cash register. This crime, which is covered under the ISO commercial crime coverage form, is called

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?

Which of the following statements is (are) true with regard to the ISO commercial crime coverage forms? I.The discovery version only covers losses which occur during the policy period. II.The loss-sustained version covers losses which occur during the policy period and the loss is discovered during the policy period or within one year after the policy expires.

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 principal?

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

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.

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?

A cashier at Food World Supermarket accepted a phony $100 bill. Which ISO commercial crime coverage is designed to cover such a loss?

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.

One commercial crime policy condition is "termination as to any employee." This condition terminates crime coverage

In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the

Metro City would like a pedestrian bridge constructed across Big Creek. The city will accept bids on the project until a specified date. Bidders must submit a bid bond that guarantees if the bid is accepted, the bidder will sign the construction contract and furnish a bond that guarantees the construction work will be completed according to contract specifications. This second bond the bidder must post is a

Which of the following statements is (are) true with respect to the kidnap/ransom and extortion coverage available through ISO's Commercial Crime Coverage program? I.It covers the loss of money that is paid for ransom if someone is kidnaps. II.It covers some indirect costs association with a kidnapping, such as hiring a hostage negotiator.

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?

XYZ Insurance Company markets a wide range of coverages. One type of coverage provides monetary compensation if a bonded party fails to perform certain acts. This coverage is called

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?

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?