1. Forms
2. CR
3. CR-04-06

What the Form Is

The CR 04 06, titled "Inside The Premises – Robbery of a Watchperson or Burglary of Other Property," is an endorsement to a commercial crime policy. Its primary function is to provide coverage for the loss of, or damage to, property other than money and securities that occurs inside the insured's premises. This coverage is specifically triggered by an actual or attempted robbery of a watchperson or by an actual or attempted burglary. Additionally, the endorsement covers physical damage to the interior or exterior of the premises itself, provided the damage occurs during the course of such a robbery or burglary, and the insured either owns the premises or is legally responsible for damage to it.

Classes of Business It Applies To

This endorsement is suitable for a wide range of commercial enterprises that maintain valuable tangible property (other than money and securities) on their premises and face a risk of loss from burglary or robbery of a watchperson. Examples include:

• Retail Stores: Businesses holding inventory such as electronics, apparel, or jewelry. For instance, a high-end boutique that employs an overnight watchperson could benefit if thieves overpower the watchperson and steal merchandise.
• Manufacturing Facilities: Plants that store raw materials, finished goods, or valuable equipment on site.
• Warehouses: Facilities storing goods for third parties or their own inventory.
• Offices: Businesses with valuable office equipment, computers, or tenant improvements that could be damaged or stolen during a burglary.
• Service Businesses: Such as repair shops that hold customer goods on their premises.

Special Considerations

• Definition of Property: It's crucial to note this endorsement covers "other property," explicitly excluding money and securities, which are typically addressed by other crime insuring agreements (e.g., CR 04 07).
• Watchperson Requirement for Robbery: For robbery coverage to apply under this endorsement, the robbery must be of a "watchperson."
• Evidence of Crime: Coverage is contingent upon actual evidence of a criminal event (robbery or burglary).
• Post-Loss Security Condition: A significant condition is that after a covered loss, all coverage under this endorsement is suspended until the premises are restored to the same level of security that existed before the loss. However, this suspension is waived if at least one watchperson is on duty whenever the premises are closed for business. For example, if a door is damaged during a burglary, coverage might be suspended until the door is repaired to its prior secure state, unless a watchperson is present during non-business hours.
• Removal of Sublimits (06 22 edition): The 06 22 edition of this form removed the $5,000 limit that previously applied to items like precious metals, precious or semiprecious stones, pearls, furs, manuscripts, and drawings. These items are now subject to the overall limit of insurance for "other property" under this endorsement.
• Notification to Law Enforcement: The endorsement adds a duty that if the insured believes a loss involves a violation of law, they must notify local law enforcement.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters should carefully assess the nature and value of the "other property" on the insured's premises. Key factors include the type of inventory or equipment, its susceptibility to theft, and its concentration of value.
• Security Measures: The presence and adequacy of security measures are paramount. This includes alarm systems, safes (though this form focuses on property other than money/securities which are often in safes), physical security of the building, and importantly, the use and reliability of watchpersons.
• Moral Hazard: As with all crime insurance, assessing the moral hazard associated with the insured is important.
• Interaction with Other Coverages: Agents should ensure clients understand how this endorsement fits within their overall crime coverage. For instance, if a business also needs coverage for theft of money and securities, a separate insuring agreement like CR 04 07 (Inside the Premises – Robbery or Safe Burglary of Money and Securities) would be necessary.
• Limit Adequacy: Given the potential for significant loss of merchandise or equipment, selecting an adequate limit of insurance is crucial. The removal of specific sublimits in the newer edition for certain valuable items means the main endorsement limit needs to be sufficient to cover these exposures.
• Understanding Definitions: Clear understanding of terms like "burglary," "robbery," and "watchperson" as defined in the policy is essential for both underwriting and claims handling.