14.2 Crime and Fidelity Coverage

Alaska Property & Casualty Insurance State

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1 Standalone Coverage Map

Standalone Coverage Map

2 Introduction: Alaska Property & Casualty Insurance Exam Overview

Alaska Property & Casualty Exam Overview

3 National Portion: Insurance Fundamentals

1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority

4 National Portion: Property Insurance Concepts

2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses

5 National Portion: Dwelling Policies (DP)

3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage

6 National Portion: Homeowners Policies - Forms & Section I

Homeowners Forms HO-2 through HO-8 and Eligibility Section I Coverages A-D and Additional Coverages Section I Perils Insured Against and Exclusions Replacement Cost vs. ACV and Loss Settlement in Homeowners

7 National Portion: Homeowners Policies - Section II & Endorsements

Section II Coverages E (Liability) and F (Medical Payments) Homeowners Conditions and Duties After Loss Common Homeowners Endorsements

8 National Portion: Personal Auto Policy - Liability & Injury

6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists

9 National Portion: Personal Auto Policy - Physical Damage & Duties

7.1 Part D Coverage for Damage to Your Auto 7.2 Exclusions and Part E Duties After an Accident 7.3 Part F General Provisions, Endorsements, and No-Fault Concepts

10 National Portion: Liability Insurance Concepts

8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

11 National Portion: Commercial Property Insurance

9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP

12 National Portion: Commercial General Liability - Coverages

10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments

13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions

11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements

14 National Portion: Commercial Auto Insurance

12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements

15 National Portion: Workers Compensation

13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements

16 National Portion: Other Commercial Lines - BOP, Crime & Marine

14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)

17 National Portion: Other Commercial Lines - Specialty & Professional

15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability

18 National Portion: Other Commercial Lines - Surety, Flood & Specialty

16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines

19 National Portion: Insurance Regulation & Market Conduct

17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection

21 Chapter 1: Alaska P&C Insurance Regulation & Licensing

1.1 Alaska Division of Insurance 1.2 Alaska P&C Producer Licensing Requirements 1.3 Alaska Producer Duties and Responsibilities

22 Chapter 2: Alaska Property Insurance

2.1 Alaska Homeowners Insurance 2.2 Alaska Property Insurance Policy Provisions

23 Chapter 3: Alaska Auto & Casualty Insurance

3.1 Alaska Auto Insurance Requirements 3.2 Alaska Commercial Liability Insurance

24 Chapter 4: Alaska Ethics & Professional Conduct

4.1 Alaska Ethical Standards for Insurance Producers 4.2 Alaska Privacy Laws and Regulatory Compliance

14.2 Crime and Fidelity Coverage

Key Takeaways Explain This Topic AI

The ISO Commercial Crime program (CR 00 20 discovery form, CR 00 21 loss-sustained form) covers employee dishonesty, forgery, theft of money/securities, computer/funds-transfer fraud, and money orders/counterfeit money.

The discovery form covers losses discovered during the policy period regardless of when they occurred; the loss-sustained form covers losses occurring AND discovered during the period (or within a grace period after expiration).

Fidelity bonds (employee dishonesty / ERISA bonds) protect the employer against employee theft; surety bonds are a three-party guarantee that protect a third party (obligee), not the principal.

Money & securities and inside/outside coverage distinctions, plus the employee-dishonesty exclusion of the very loss the bond covers, are common traps.

ERISA requires plan fiduciaries handling plan funds to be bonded for at least 10% of funds handled, $1,000 minimum, $500,000 maximum ($1,000,000 if employer securities are held).

Last updated: June 2026

Commercial crime coverage

Crime insurance covers loss of money, securities, and other property caused by criminal acts such as theft, robbery, burglary, forgery, and computer fraud. ISO writes this through the Commercial Crime Coverage Forms :

• CR 00 20 — Discovery Form
• CR 00 21 — Loss Sustained Form

These forms package insuring agreements the insured selects, the most common being:

• Employee Theft (employee dishonesty / fidelity)
• Forgery or Alteration (of checks, drafts, promissory notes)
• Inside the Premises — Theft of Money & Securities (robbery/safe burglary)
• Inside the Premises — Robbery/Safe Burglary of Other Property
• Outside the Premises (messenger coverage)
• Computer Fraud and Funds Transfer Fraud
• Money Orders and Counterfeit Money

Discovery vs. loss-sustained trigger

The coverage trigger is the single most tested crime topic.

Form What is covered

Discovery (CR 00 20) Loss discovered during the policy period (or within 60 days after cancellation), regardless of when the act occurred — even before the policy began (subject to retroactive limits).

Loss Sustained (CR 00 21) Loss that occurs during the policy period AND is discovered during the period or within one year after the policy ends.

Trap: With the discovery form, a dishonest act that happened years ago but is found this year can be covered. With the loss-sustained form, both the act and the discovery must fall within (or just after) the policy term. Exam questions describe a timeline and ask which form responds.

Worked example — discovery trigger

An employee embezzled $30,000 over three years (years 1–3). The theft is discovered in year 4 .

The employer has a Discovery Form in force in year 4. Because the loss was discovered during the current policy period, the form responds (subject to the limit and any retroactive date), even though the acts predate this policy.

If the employer instead had a Loss Sustained Form only in year 4, the acts in years 1–3 did not occur during that policy period, so the year-4 policy would not cover those earlier acts — prior policies (if any, with loss-sustained continuity) would have to respond.

The testable distinction: discovery follows the date you find the loss; loss-sustained follows the date the loss happened.

Fidelity bonds vs. surety bonds

Both are "bonds," but they protect different parties — a classic two-party-versus-three-party exam contrast.

Fidelity bond (a form of crime insurance): a two-party arrangement protecting the employer against loss from dishonest employees . Employee theft coverage in the crime form is fidelity coverage.

Surety bond: a three-party agreement among the principal (who performs an obligation), the obligee (who is protected), and the surety (who guarantees performance). If the principal defaults, the surety pays the obligee and then seeks reimbursement from the principal .

Trap: A surety bond is not insurance for the principal — the principal must repay the surety. A fidelity bond is loss coverage for the named insured employer.

ERISA fidelity bonding

Federal ERISA law requires that anyone who handles funds of an employee benefit (pension/welfare) plan be covered by a fidelity bond.

• Bond amount: at least 10% of the funds handled
• Minimum bond: $1,000
• Maximum bond: $500,000 per plan — $1,000,000 if the plan holds employer securities

Also commonly tested: crime forms exclude loss caused by an employee after the insured learned of a prior dishonest act by that employee (coverage terminates for that person upon knowledge of dishonesty).

ERISA worked example: A 401(k) plan handles $2,000,000 in plan assets and holds no employer securities. The required bond is 10% x $2,000,000 = $200,000 , which is above the $1,000 minimum and below the $500,000 cap — so the fiduciary must carry at least a $200,000 bond. If the plan handled $8,000,000 , 10% would be $800,000, but the $500,000 maximum caps the requirement at $500,000 (or $1,000,000 if employer securities were held). Memorizing the 10% / $1,000 / $500,000 / $1,000,000 figures is essential for the national exam.

Employee Theft vs. Outside Crime

ISO crime coverage separates employee dishonesty from crimes committed by outsiders. The exam tests the standard insuring agreements :

• Agreement Covers
• Employee Theft Theft of money, securities, or property by employees (fidelity)
• Forgery or Alteration Forged checks/drafts
• Inside the Premises — Theft of Money & Securities Robbery/safe burglary on premises
• Inside the Premises — Robbery/Safe Burglary of Other Property Robbery of non-money property
• Outside the Premises Money/securities in a messenger's care off-site
• Computer & Funds Transfer Fraud Fraudulent electronic transfers
• Money Orders & Counterfeit Money Accepting bad instruments

Trap: employee theft is fidelity (dishonesty by your own people); burglary/robbery is crime by outsiders — distractors swap them.

Key Crime Definitions and Coverage Triggers

Precise definitions drive crime questions:

Robbery — taking property by force or threat of force from a person who is aware.

Burglary — unlawful entry/exit with visible signs of forced entry (marks of force are required).

Theft — the broadest term: any act of stealing, including robbery and burglary.

Crime coverage can be written on a loss-sustained basis (covers losses sustained during the policy period and discovered within a year after) or a discovery basis (covers losses discovered during the policy period regardless of when they occurred). The ERISA-compliant fidelity bond is a separate requirement: plan officials handling employee-benefit funds must be bonded for at least 10% of the funds handled, with a $1,000 minimum and $500,000 maximum (or $1,000,000 if the plan holds employer securities).