What the form is
The CR 20 16 "Provide Notice of Cancellation to Another Entity" is an endorsement to an Insurance Services Office (ISO) commercial crime insurance policy. Its primary function is to ensure that a third party, who is not the named insured but has an interest in the coverage, receives a copy of any notice of cancellation issued for the policy. The specific entity to receive this notice is designated in the schedule of the endorsement.
Classes of business it applies to
This endorsement is relevant for any commercial entity that holds a commercial crime insurance policy and has a contractual, regulatory, or other obligation to inform a third party if their crime coverage is cancelled. Examples include:
- Businesses that handle client funds or securities, where clients may require notification if fidelity coverage is terminated.
- Companies that have loans or financing agreements where the lender requires notification of any insurance cancellation, including crime coverage.
- Organizations subject to specific industry regulations that mandate notification to a regulatory body or another stakeholder in the event of crime insurance cancellation.
For instance, a property management company might use this endorsement to notify a major client for whom they manage significant funds if their employee theft coverage is cancelled. Similarly, a business with a substantial commercial loan might be required by the lender to have this endorsement in place, naming the lender as the entity to be notified.
Special considerations
It's important to distinguish CR 20 16 from similar endorsements like CR 20 17 ("Provide Required Notice of Cancellation to Another Entity"). While CR 20 16 arranges for a notice to be sent, CR 20 17 may impose a stronger obligation on the insurance company, potentially stating that if the insurer fails to provide the promised notice to the specified entity, the policy could remain in force for that entity. The CR 20 16 endorsement primarily serves as a mechanism to include the designated entity in the cancellation communication process. The exact implications of an insurer failing to notify the third party under CR 20 16 would depend on the specific wording of the endorsement and any overriding legal or contractual agreements outside of the policy itself. Accuracy in listing the name and address of the entity in the endorsement schedule is critical.
Key information for agents and underwriters
For Agents: Agents should proactively identify situations where their clients have a contractual or other need to notify a third party about the status of their crime insurance. Recommending CR 20 16 can help clients meet these obligations and avoid potential breaches of contract. It's a value-added service to discuss this need during the crime insurance application or renewal process.
For Underwriters: The primary consideration for underwriters is the administrative aspect of ensuring that the additional notification process is followed if a policy is cancelled. The endorsement itself typically does not materially change the nature or scope of the insured risk under the crime policy. However, underwriters should confirm that the system for issuing cancellation notices can accommodate sending copies to additional designated entities. There is generally no specific premium charge for this endorsement, as it's considered an administrative modification. Ensuring clarity on who is to be notified and their correct contact information is paramount to avoid potential errors and omissions claims related to failure to notify.