1. Forms
2. CR
3. CR-00-22

What the form is

The CR 00 22 Commercial Crime Policy (Discovery Form) is a standard insurance policy developed by ISO that provides coverage for crime-related losses on a "discovery" basis. This means the policy responds to losses that the insured discovers during the policy period, or during a specified extended period to discover loss after policy termination, regardless of when the criminal act actually occurred. This is a key distinction from a "loss sustained" form, which typically covers losses that are sustained during the policy period and discovered during the policy period or a limited time thereafter. The CR 00 22 is a monoline policy, meaning it includes its own terms, conditions, and declarations and can be issued as a standalone crime insurance policy.

The policy typically offers several insuring agreements, which can include:

• Employee Theft (retitled as "Fidelity" in newer editions )
• Forgery or Alteration
• Inside the Premises – Theft of Money and Securities
• Inside the Premises – Robbery or Safe Burglary of Other Property
• Outside the Premises
• Computer Fraud
• Funds Transfer Fraud
• Money Orders and Counterfeit Money

Coverage under a specific insuring agreement is only activated if a limit of insurance is shown for that agreement in the policy Declarations. The term "Successor" is not part of the official ISO title but may refer to how this discovery form addresses coverage for prior acts, particularly in situations involving mergers or acquisitions where a successor entity discovers losses related to a predecessor company.

Classes of business it applies to

The CR 00 22 is designed for a broad range of commercial entities, excluding governmental entities which typically have their own specialized crime forms (e.g., CR 00 24, CR 00 26). It is suitable for most businesses that face exposure to financial loss from criminal acts. Examples include:

• Retail operations (theft of cash, employee dishonesty)
• Manufacturing companies (employee theft of inventory or funds, computer fraud)
• Service industries (embezzlement, forgery)
• Non-profit organizations (misappropriation of funds)
• Healthcare providers (employee theft, billing fraud discovered later)

Essentially, any business that handles money, securities, or other valuable property, or is susceptible to employee dishonesty or various fraud schemes, could benefit from this coverage.

Special considerations

• Discovery Trigger: The core feature is the "discovery" trigger. A loss is covered if it is discovered during the policy period (or the extended discovery period), even if the act causing the loss occurred prior to the policy's inception, provided there was no prior knowledge of the loss. The policy defines "discover" or "discovered" as the point when the insured first becomes aware of facts that would lead a reasonable person to assume a covered loss has occurred or will occur.
• Monoline Policy vs. Coverage Form: As a policy (CR 00 22), it's a self-contained contract. This differs from a coverage form (like CR 00 20) which is designed to be incorporated into a Commercial Package Policy (CPP).
• Prior Insurance and Continuity: When replacing a "loss sustained" form, the discovery form can provide broader coverage for past incidents. However, policy terms regarding prior insurance and continuity of coverage must be carefully reviewed.
• Successor in Interest / Mergers & Acquisitions: In the event of a merger or acquisition, the buyer's discovery-based crime policy may cover losses sustained by the acquired company but discovered after the acquisition. A "successor in interest" endorsement might be necessary to clarify coverage for the new entity.
• Extended Period to Discover Loss: The policy contains a provision that allows for an extended period (e.g., 60 days for most losses, or one year for losses related to employee benefit plans) to discover a loss after the policy has been canceled or terminated.
• Policy Limits and Deductibles: Each selected insuring agreement will have its own limit of insurance and is subject to a deductible, as specified in the Declarations.

Key information for agents and underwriters

• Risk Assessment: Underwriters must thoroughly evaluate the applicant's internal controls, employee hiring and supervision practices, cash and inventory management, computer and network security, and any history of prior crime losses. The discovery basis means potential exposure to losses that occurred in the past but are yet unknown.
• Pricing Considerations: Premiums for discovery forms generally reflect the broader coverage grant for past acts compared to loss sustained forms. The specific insuring agreements selected and their respective limits are primary rating factors.
• Identifying Coverage Gaps: Agents should clearly explain the "discovery" trigger to clients, especially if they are transitioning from a loss sustained policy, to avoid misunderstandings or coverage gaps. The definition of "discovered" is a critical aspect to discuss.
• Selection of Insuring Agreements: It's crucial for agents to help clients identify and select the insuring agreements that are relevant to their specific exposures, ensuring appropriate limits are chosen for each.
• Impact of Revisions (e.g., 2022 Editions): ISO periodically revises its forms. The June 2022 editions of commercial crime forms introduced significant changes, such as renaming "Employee Theft" to "Fidelity" and modifying the discovery trigger language (e.g., loss discovered by a "designated person"). Professionals must stay updated on these changes.
• Mergers & Acquisitions (M&A) Implications: In M&A scenarios, agents should advise clients on how their crime coverage will respond, particularly regarding the discovery of pre-acquisition losses. Underwriters need to assess the potential for inherited liabilities when a buyer's discovery policy is in place.