1. Forms
2. CR
3. CR-00-26

What the form is

The CR 00 26 Government Crime Policy (Discovery Form) is a specialized insurance policy that provides crime coverage for governmental entities on a "discovery" basis. This means the policy covers losses that the insured discovers during the policy period, even if the wrongful act that caused the loss occurred prior to the policy's inception, subject to the policy's terms, conditions, and retroactive date, if any. It is a monoline policy, meaning it is written as a standalone policy and not typically as part of a package policy. Coverage is provided for various insuring agreements, which must be selected and have a limit of insurance shown in the Declarations.

Classes of business it applies to

This form is specifically designed for governmental entities. This can include, but is not limited to:

• State governments and their agencies
• County governments
• City, town, or village municipalities
• Public school districts
• Special purpose districts (e.g., water, fire, park districts)
• Other political subdivisions

For example, a city government could use this policy to protect against losses from employee theft of funds or fraudulent alteration of checks issued by the city.

Special considerations

• Discovery vs. Loss Sustained: The "discovery" trigger is a critical feature. It differs significantly from "loss sustained" forms (like the CR 00 27), which typically cover losses that are both sustained (occurred) and discovered during the policy period or within a specified time after its expiration. The extended period to discover a loss after policy expiration is generally shorter for discovery forms (e.g., 60 days) compared to loss sustained forms (e.g., one year).
• Government-Specific Provisions: The form contains provisions tailored to governmental entities, which differ from those in commercial crime forms. For instance:
  • Government forms may offer two Employee Theft insuring agreements: one on a "per loss" basis and another on a "per employee" basis.
  • Provisions related to employee benefit plans may differ due to the Employee Retirement Income Security Act (ERISA) exemption for many governmental plans.
  • Exclusions might apply to losses caused by officially bonded employees or by treasurers or tax collectors in their official capacity.
  • An indemnification clause may be included for public officials who are required by law to furnish individual bonds for the faithful performance of their subordinates.
• Coverage Territory: The standard coverage territory is typically the United States, its territories and possessions, and Puerto Rico. Unlike some commercial crime forms, coverage in Canada is often excluded in government crime forms.
• Insuring Agreements: The policy provides a selection of insuring agreements. Coverage is only active for those agreements for which a limit of insurance and a deductible are shown in the Declarations. Common insuring agreements include:
  • Employee Theft (often with Per Loss and Per Employee options for government entities)
  • 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

Key information for agents and underwriters

• Risk Assessment: A thorough understanding of the governmental entity's operations and exposures is crucial. This includes evaluating internal controls, cash handling procedures, number of employees with access to funds or securities, computer systems security, and any prior loss history.
• Selecting Insuring Agreements and Limits: Agents must guide the governmental entity in selecting the appropriate insuring agreements and establishing adequate limits of insurance for each, based on a careful assessment of their potential exposures. The choice between "per loss" and "per employee" coverage for Employee Theft, if available, should be carefully considered.
• Understanding the Discovery Trigger: It is vital that both the agent and the insured understand the implications of the discovery basis, particularly how it responds to losses that may have occurred over an extended period but are only discovered now. The retroactive date, if any, will also be a key factor.
• Comparison with Prior Coverage: If replacing a "loss sustained" form, agents should explain the differences in coverage triggers and potential impacts on coverage for past events.
• Endorsements: A variety of endorsements may be available to modify coverage. For example, endorsements can add coverage for faithful performance of duty for government employees (e.g., CR 25 19) or address specific risks like client property (CR 04 01) if the governmental entity has such exposures. Recent editions may also have endorsements to address virtual currency.
• Underwriting Government Risks: Underwriters should be familiar with the unique aspects of governmental entities, such as statutory requirements, public official bonding, and the political environment, which can influence risk. The financial condition and audit procedures of the governmental entity are also important underwriting considerations.