1. Forms
2. CR
3. CR-04-12

What the Form Is

The CR 04 12 Safe Depository endorsement is an optional endorsement to the ISO Commercial Crime Coverage Form. Its primary purpose is to provide insurance protection for businesses that offer safe deposit box services or other safe depository facilities to their customers. This form addresses two main areas of exposure: the insured business's legal liability arising from loss or damage to property that customers have stored in the safe depository, and direct physical loss or damage to customers' property within the depository due to specified perils.

Classes of Business It Applies To

This endorsement is designed for a variety of businesses that, either as a primary or ancillary service, provide safe depository facilities. Examples include:

• Financial Institutions: While banks often have specialized bankers' blanket bonds, this endorsement might be used by other financial entities or in conjunction with other coverages.
• Hotels and Motels: Establishments that provide safe deposit boxes for guests to store valuables.
• Private Safe Deposit Facilities: Businesses whose main operation is renting out safe deposit boxes.
• Clubs or other organizations offering safe storage for members.

For example, a hotel could use this endorsement to cover its liability if a guest's jewelry is stolen from a hotel-provided safe deposit box due to the hotel's negligence, or to cover the guest's loss directly if caused by a covered peril like burglary of the safe deposit area.

Special Considerations

• Choice of Coverage: The endorsement allows the insured to select one or both coverage options:
  1. Coverage A: Addresses the insured's legal liability for loss or damage to customers' property. This means a claim would typically be paid if the insured is found legally responsible for the loss.
  2. Coverage B: Covers direct loss of or damage to customers' property from perils such as robbery, burglary, destruction, or damage, regardless of the insured's legal liability, up to the limit specified.
• Valuation: The policy will specify how customer property is valued. It's important to understand these terms.
• Exclusions: Like all insurance forms, CR 04 12 will have exclusions. For instance, losses due to dishonest acts by the customer or their representatives are typically not covered.
• Security Requirements: Underwriters may have specific security requirements for the premises and the safe deposit facilities themselves as a condition of providing this coverage (e.g., alarm systems, vault construction standards).

A key consideration is whether the business wants to cover only its legal liability (which might require a lawsuit or clear evidence of negligence) or provide a more direct, goodwill-oriented coverage for customer losses even if legal liability is not established.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters will need to carefully assess the physical security of the safe depository, including vault construction, alarm systems, access controls, and surveillance. The types of property typically stored and the concentration of values are also important.
• Limit Selection: Agents should help clients determine appropriate limits of insurance. This involves considering the potential value of property stored by all customers, any contractual obligations the insured has regarding customer property, and the potential for catastrophic loss. Separate limits may apply to Coverage A (Legal Liability) and Coverage B (Direct Customer Loss).
• Pricing: Pricing will be influenced by the limits chosen, the deductibles, the security measures in place, the volume of safe deposit business, loss history, and the specific coverage options selected (Legal Liability, Direct Loss, or both).
• Coverage Gaps: This endorsement is specific to property in a safe depository. Other property of the insured or customers elsewhere on the premises would need to be covered under different policy provisions or endorsements (e.g., CR 04 11 Guests' Property for hotels, which covers property outside of safe deposit boxes but on premises).
• Interaction with other policies: It's important to understand how this endorsement interacts with other policies the insured may have, such as a general liability policy or a financial institution bond, to avoid gaps or overlaps in coverage.