1. Forms
2. CR
3. CR-04-10

What the Form Is

The CR 04 10, titled "Securities Deposited With Others," is an endorsement to a commercial crime insurance policy. Its primary purpose is to provide coverage for the loss of securities that the insured business owns or for which it is legally liable. This coverage specifically applies when these securities are located at the premises of a designated custodian, while they are in transit to or from that custodian, or while they are on deposit with a named depository. The typical causes of loss covered by this endorsement include theft, disappearance, or destruction of the securities.

Classes of Business It Applies To

This endorsement is particularly relevant for any commercial entity that handles securities and relies on third-party custodians or depositories for the safekeeping or management of these assets. Real-world examples include:

• Businesses with investment portfolios held by a financial institution, such as a bank or brokerage firm, acting as a custodian.
• Companies that need to transport securities to or from their custodian or depository.
• Organizations that maintain securities on deposit with a financial institution or another type of depository. For instance, an automotive dealership that keeps securities related to its operations outside its own premises with a custodian would be a candidate for this coverage.

Special Considerations

There are several important points to consider when utilizing the CR 04 10 endorsement:

• Named Custodian/Depository: For coverage to be effective, the custodian and/or depository where the securities are held or deposited must typically be specifically named in the endorsement or on the policy's declarations page.
• Limits of Insurance: The maximum amount of coverage provided by this endorsement will be specified as a limit of insurance in the policy declarations.
• Distinction from Similar Coverages: It's crucial to differentiate this endorsement from others. For example, endorsement CR 04 09 "Lessees of Safe Deposit Boxes" covers the insured's property (which can include securities) stored in the insured's own safe deposit box at a depository. In contrast, CR 04 10 applies to securities that are deposited with others (i.e., in the care, custody, or control of a custodian or depository).
• Potential Exclusions: Depending on the edition date of the form, there might be specific exclusions. For instance, some versions may exclude losses related to threats to contaminate goods or computer systems.

Key Information for Agents and Underwriters

Agents and underwriters should focus on the following aspects when dealing with the CR 04 10 endorsement:

• Risk Assessment: A thorough assessment of the risk is necessary. This includes evaluating the types and value of the securities involved, the security measures and financial stability of the named custodian(s) and depository(ies), and the nature and frequency of any transit of the securities.
• Identifying Coverage Gaps: This endorsement is designed to fill a specific coverage gap for securities that are not on the insured's premises but are instead entrusted to a third party. Standard commercial property policies or other crime insuring agreements may not adequately cover this exposure.
• Pricing Considerations: The premium for this endorsement will generally be influenced by factors such as the limit of liability requested, the types of securities being covered, the perceived risk associated with the custodian/depository (including their security protocols and financial health), and the extent of any transit exposure.
• Accuracy in Scheduling: It is vital to ensure that the custodian(s) and depository(ies) are accurately and clearly identified in the policy.
• Holistic Crime Coverage Review: The CR 04 10 is one of several endorsements available within the ISO Commercial Crime Program. Its suitability should be determined as part of a comprehensive analysis of the insured’s overall crime and fidelity exposures.