1. Forms
2. CR
3. CR-15-15

What the Form Is

The CR 15 15 "Decreased Limit Of Insurance While Premises Not Open For Business" is an endorsement to a Commercial Crime insurance policy. Its primary function is to lower the policy's limit of insurance for specified coverages, typically those pertaining to property on the insured's premises (such as money and securities), during periods when the business is closed or not open to the public. The rationale behind this endorsement is that the risk of certain types of loss (e.g., robbery of cash from registers) is significantly lower when the business is not operating and appropriate closing procedures and security measures are in place. In return for this reduced coverage during off-hours, the insured usually receives a premium credit.

Classes of Business It Applies To

This endorsement is suitable for a variety of businesses where the on-premises exposure to loss, particularly for assets like cash, fluctuates significantly between operating hours and non-operating hours. Examples include:

• Retail Stores: Businesses that handle substantial amounts of cash during the day but deposit most of it or secure it in high-grade safes after closing.
• Restaurants and Bars: Similar to retail, these establishments often have peak cash exposure during business hours.
• Banks and Financial Institutions: May use this to reflect lower cash in teller drawers or accessible vaults outside of banking hours.
• Theaters and Entertainment Venues: Businesses that collect significant cash from ticket sales or concessions during operating times.
• Service Businesses: Any service business that collects payments on-site and has a demonstrably lower exposure when closed.

Special Considerations

• Definition of "Not Open for Business": It is crucial that the policy clearly defines what constitutes "not open for business." This could refer to hours outside of posted operating times, specific days (e.g., holidays), or other defined periods. Ambiguity can lead to coverage disputes.
• Adequacy of Reduced Limit: While a premium credit is attractive, the insured must carefully assess if the decreased limit is still sufficient to cover potential losses even when the premises are closed. For example, a high-value safe on premises might still present a significant exposure.
• Scope of Coverage Reduction: The endorsement should clearly specify which insuring agreements or types of property the reduced limit applies to.
• Security Measures: The use of this endorsement often assumes that the insured maintains adequate security measures when the premises are closed (e.g., safes, alarm systems, surveillance).
• Balancing Cost and Coverage: The insured needs to weigh the premium savings against the potential for an underinsured loss during non-business hours.

Key Information for Agents and Underwriters

• Pricing: The premium credit is typically calculated by applying a credit factor to the portion of the premium associated with the coverage that is being reduced. Underwriters must assess the actual reduction in exposure to determine an appropriate credit.
• Risk Assessment: A thorough understanding of the insured's business operations, cash handling procedures (both during and after hours), and existing security measures is essential. Underwriters should evaluate the maximum probable loss during closed hours to ensure the reduced limit is reasonable.
• Coverage Gaps: Agents should clearly explain the implications of the reduced limit to the insured. If significant values remain on premises after closing, this endorsement might not be appropriate, or the decreased limit needs to be set at a level that still provides adequate protection.
• Underwriting Guidelines: This endorsement is generally best suited for risks where there is a clear and predictable drop in on-premises exposure when the business is not operational. Underwriters should consider the type of business, the nature of the property insured, the typical amounts exposed during closed hours, and the quality of after-hours security.
• Documentation: It's important to document the agreed-upon definition of "not open for business" and the specific coverages and limits affected by the endorsement.