1. Forms
2. CR
3. CR-15-18

What the form is

CR 15 18 is a commercial crime endorsement designed to formally document and implement changes to a policy's existing schedule of coverages, limits, locations, or other specified items after the policy has been issued and before its renewal date. In commercial crime insurance, the schedule typically outlines critical details such as insured premises, specific coverage limits for different insuring agreements (like employee theft, forgery, or computer fraud), applicable deductibles, and other elements that are individually listed rather than applied on a blanket basis. This endorsement provides the contractual mechanism for recording these alterations during the policy term. A significant aspect of this endorsement is its role in defining the methodology for premium adjustments arising from these mid-term changes, stipulating whether they will be calculated on a pro rata or short rate basis.

Classes of business it applies to

This endorsement is relevant for any commercial entity that holds a commercial crime policy with scheduled items and finds a need to modify these scheduled components during the active policy period. Real-world examples include:

• A retail business undergoing expansion that opens a new store location mid-term would use an endorsement like CR 15 18 to add this new location to their crime policy's schedule, specifying the coverage limits that apply to the new premises.
• A company experiencing an increase in the amount of cash typically held on premises might need to amend the coverage limit for its Inside the Premises – Theft of Money and Securities insuring agreement during the policy term.
• If a business sells off a subsidiary or closes a particular operating location that was specifically scheduled on the policy, this endorsement could be utilized to remove that entity or location from the coverage schedule.

Special considerations

• Mid-Term Application: The CR 15 18 endorsement is intended exclusively for modifications made while the policy is in force, not at the point of renewal. Changes at renewal are typically incorporated into the new policy declarations page or through specific renewal endorsements.
• Premium Adjustment Methodology: The method of premium calculation (pro rata or short rate) is a crucial element defined by this endorsement.
  • Pro Rata Adjustment: The premium adjustment (either an additional premium or a return premium) is calculated in direct proportion to the time remaining in the policy period. This method is often applied for insurer-initiated changes or when the insured requests a change that increases coverage or doesn't result in a coverage reduction.
  • Short Rate Adjustment: This calculation method is typically used when the insured requests a mid-term change that leads to a reduction in coverage, the removal of a scheduled item, or cancellation of a coverage part. It often includes a minor surcharge or penalty to cover the insurer's administrative expenses and to compensate for the altered risk profile and the fact that the initial premium was based on a full term. The specific circumstances dictating the use of short rate versus pro rata will be outlined in the main policy document or the insurer's rating rules.
• Clarity and Accuracy: When employing this endorsement, it is vital that all modifications to the schedule are described with precision and clarity to prevent any ambiguity regarding the scope of coverage.
• Interaction with Base Policy: As an endorsement, CR 15 18 modifies the main commercial crime policy. Its provisions must be read in conjunction with the terms, conditions, and definitions of the underlying coverage form(s) to which it is attached (such as CR 00 04 Theft, Disappearance and Destruction Coverage Form or CR 00 05 Robbery and Safe Burglary Coverage Form).

Key information for agents and underwriters

• Initiating Changes: Insurance agents should utilize this endorsement (or its equivalent) whenever a client requires alterations to scheduled items on their commercial crime policy during the policy term. Underwriters are responsible for reviewing and processing these change requests.
• Pricing and Premium Calculation: A core function of this endorsement is to address the rating implications of mid-term schedule changes, specifically whether adjustments are pro rata or short rate. Underwriters must meticulously calculate any resulting additional or return premiums in accordance with the policy's provisions and the specified calculation method.
• Risk Reassessment: Any modification to the policy schedule, such as adding a new high-risk location, significantly increasing a coverage limit for a volatile exposure like employee theft, or changing the nature of scheduled property, necessitates a thorough re-evaluation of the insured's risk profile by the underwriter. Additional underwriting information might be required before the requested change can be approved.
• Precise Wording: Both agents and underwriters must ensure that the endorsement language is unambiguous and accurately reflects the agreed-upon changes, the effective date of these changes, and their impact on coverage limits and the policy premium. Vague wording can lead to coverage disputes if a claim occurs.
• Effect on Aggregate Limits: If the commercial crime policy includes aggregate limits (a maximum amount the insurer will pay for all losses during a policy period), it's important to consider how changes to scheduled items, particularly increases in individual coverage limits, might impact the erosion or adequacy of these overall aggregate limits.