1. Forms
2. CR
3. CR-04-04

What the Form Is

The CR 04 04 Extortion–Government Entities endorsement is an optional insuring agreement that can be added to a Government Crime Coverage Form or Government Crime Policy. Its primary purpose is to indemnify a government entity for the loss of "money," "securities," or "other property" that has been surrendered as a result of an extortion threat. The covered threats include those of bodily harm directed against the entity's officials, employees, or their relatives who are captured or allegedly captured. Additionally, it covers threats to damage the insured government entity's premises or property located within those premises. For example, this could cover a payment made if a mayor is threatened with harm unless a ransom is paid, or if there's a threat to bomb a government building.

Classes of Business It Applies To

This endorsement is specifically designed for government entities. This includes various levels of government operations such as state, county, or municipal bodies and their agencies. It is not intended for use with commercial (non-government) entities, for which a separate endorsement (CR 04 03 Extortion–Commercial Entities) exists.

Special Considerations

• Policy Attachment: This is not a standalone policy; it must be attached to a Government Crime Coverage Form or Policy.
• Cyber Extortion Exclusion (Recent Editions): Newer editions of this endorsement (e.g., the 06 22 edition) have removed coverage for extortion threats that are primarily cyber-related, such as ransomware attacks or data breach threats. These types of risks are more appropriately covered under a separate Cyber Insurance policy.
• Scope of Covered Persons: For government entities, the threats of bodily harm typically apply to officials, employees, or their representatives (and their relatives). This differs slightly from the commercial version which specifies directors, trustees, partners, etc.
• Threat Communication: The extortion threat must be communicated to the named insured during the policy period for coverage to apply.
• Reporting Requirements: The insured is generally required to make a reasonable effort to report the extortion demand to law enforcement authorities.
• Territory: The standard territory condition of the main policy may be amended by this endorsement, potentially extending coverage to specific countries listed on the endorsement schedule if threats involve persons or premises there.
• Limited Expense Coverage: It's important to note that this endorsement primarily covers the value of the money, securities, or other property surrendered. It is generally more restricted than a full Kidnap/Ransom and Extortion policy, which might cover a broader range of related expenses.

Key Information for Agents and Underwriters

• Proper Form Usage: Ensure this endorsement is used only for government entities. For commercial clients, CR 04 03 is the appropriate counterpart.
• Assess Cyber Exposure Separately: Given the exclusion of many cyber extortion threats in recent editions, underwriters must assess a government entity's cyber risk profile and recommend appropriate, separate cyber liability coverage.
• Distinguish from K&R Policies: Agents should clarify with clients that this endorsement provides a specific type of extortion coverage and may not be as comprehensive as a dedicated Kidnap/Ransom and Extortion policy, particularly concerning covered expenses.
• Underwriting Factors: When underwriting, consider the public profile of the government entity and its officials, existing security measures, and any history of threats. The limit of insurance and deductible should be appropriate for the potential exposure.
• Review Edition Dates: Be mindful of the specific edition date of the CR 04 04 being used, as coverage details, particularly regarding cyber-related threats, can vary.
• Exclusions in Main Policy: Remind insureds that the exclusions in the main crime policy will still apply unless specifically modified by this endorsement.