1. Forms
2. CR
3. CR-15-20

What the Form Is

The CR 15 20 "Include Property of Others" is an endorsement to a commercial crime insurance policy. Its primary function is to broaden the policy's protection to cover direct physical loss of or damage to property that belongs to others but is legally in the insured's care, custody, or control. This coverage typically applies when such property is on the insured's premises or, if specified in the base policy, while in transit under the insured's responsibility.

Classes of Business It Applies To

This endorsement is particularly important for businesses that, as part of their normal operations, handle, manage, or are temporarily responsible for property owned by their customers or other third parties. Real-world examples include:

• Repair and Service Businesses: Jewelers repairing watches, electronics shops fixing devices, auto body shops holding customer vehicles.
• Bailees: Dry cleaners with customers' apparel, short-term storage facilities, valet parking services.
• Service Providers with Client Assets: IT consultants working on client-owned servers at the client's location (if policy extends off-premises), event planners managing rented equipment for an event.
• Consignment Businesses: Shops selling goods on behalf of individuals.

Special Considerations

• Valuation: Accurately determining the value of property belonging to others can be complex. The insurance policy will outline specific valuation methods, and it is crucial for the insured business to maintain reliable records and systems for tracking and valuing this third-party property.
• Limit of Insurance: The coverage limit for "property of others" might be a specific sub-limit within the main policy or a distinct limit set forth in this endorsement. Insureds must ensure this limit adequately reflects their maximum potential exposure.
• Coverage Triggers: The endorsement typically covers losses from the same perils as the underlying crime policy (e.g., employee dishonesty, robbery, safe burglary), but specifically as they apply to the property of others.
• Contractual Requirements: Businesses may be contractually obligated by their clients or service agreements to maintain insurance for third-party property in their possession. This endorsement helps meet those obligations.
• Rating Basis: The endorsement explicitly states that its rates are based on the actual exposure. This means the premium is directly influenced by the declared values, nature, and susceptibility to loss of the third-party property handled by the insured.

Key Information for Agents and Underwriters

For Agents:

• Proactively identify clients whose operations involve holding or being responsible for customer or third-party property, as they may overlook this specific exposure.
• Assist clients in conducting a thorough assessment to determine the maximum potential value of such property they might have at any given time.
• Clearly explain how the coverage limit is established and how the declared exposure directly impacts the premium for this endorsement.

For Underwriters:

• Carefully evaluate the types of third-party property involved (e.g., high-value items, items attractive to thieves).
• Assess the adequacy of the insured’s procedures for safeguarding, inventorying, and tracking property belonging to others.
• Verify that the declared exposure is consistent with the scale and nature of the insured’s business operations.
• Ensure pricing accurately reflects the increased risk associated with covering property of others, as mandated by the form's rating instruction.
• Consider potential moral hazard if the insured's controls over third-party property are found to be insufficient.