1. Forms
2. CR
3. CR-00-17

What the form is

The CR 00 17, Public Employee Dishonesty Coverage Form P – Per Employee, is an insurance form designed to protect public entities from financial losses caused by dishonest acts of their employees. Covered property typically includes money, securities, and other property. A key feature of this form is that the limit of insurance applies separately for each employee involved in a covered dishonest act, regardless of whether employees act alone or in collusion.

This form is under the jurisdiction of the Surety Association of America (SAA).

Classes of business it applies to

This form is specifically tailored for governmental or public entities. Examples of entities that would use this form include:

• Cities and Municipalities
• Counties
• Towns and Villages
• Public School Districts
• Special Purpose Districts (e.g., water, fire, park districts)
• Other state or local governmental agencies and political subdivisions

For instance, if a county treasurer embezzles public funds, this policy would respond to cover the loss, subject to the per employee limit and other policy terms. If multiple employees were involved in separate, unrelated acts of theft, the per employee limit would apply to each instance.

Special considerations

• Per Employee Limit: The most significant aspect of this form is that the limit of liability applies on a "per employee" basis. This means that if a single employee is responsible for a loss, the policy will pay up to the specified per employee limit for that loss. If multiple employees are involved in a single occurrence, the per employee limit applies to each identified employee, though the definition of "occurrence" in the policy will be critical.
• Contrast with Per Loss/Occurrence Forms: This form differs from "per loss" or "per occurrence" forms (like CR 00 16), where a single limit applies to the total loss from one event, regardless of how many employees were involved.
• Faithful Performance: Coverage for losses arising from an employee's failure to faithfully perform their duties (as opposed to outright dishonesty) may not be automatically included but might be available via endorsement (e.g., CR 10 53).
• Jurisdiction: Being an SAA form, specific rules, rating methodologies, and interpretations may differ from ISO-driven forms.
• Coverage Amounts: There might be minimum and maximum amounts of coverage that can be purchased under this form.

Key information for agents and underwriters

• Risk Assessment: Underwriters need to carefully assess the public entity's internal controls, segregation of duties, auditing practices, and oversight mechanisms. The number of employees, their roles, and their access to financial assets are critical factors.
• Limit Adequacy: Agents should work with public entity clients to determine an adequate per employee limit. This requires an understanding of the potential exposure an entity faces from a single dishonest employee. Consideration should be given to the largest amount an employee could potentially misappropriate.
• Explaining Coverage: It is crucial for agents to clearly explain the implications of a "per employee" limit versus a "per loss" limit to the insured, ensuring they understand how the policy will respond in different loss scenarios.
• Collusion: While the form may cover acts of collusion, the application of the per employee limit in such scenarios needs to be clearly understood based on the policy wording.
• Endorsements: Agents and underwriters should review the need for endorsements, such as those providing coverage for faithful performance of duty or modifying other terms of the coverage.
• Discovery vs. Loss Sustained: Crime policies can be written on a "discovery" or "loss sustained" basis, which dictates when a loss must be discovered and have occurred to be covered. The specific basis of the CR 00 17 used will be important.