1. Forms
2. CR
3. CR-25-47

What the form is

The CR 25 47 endorsement, titled "U.S. Department of Labor – ERISA Plan Coverage Amendments," is designed to amend commercial crime insurance policies to meet the specific bonding requirements for employee benefit plans under ERISA. The U.S. Department of Labor identified certain deficiencies in standard commercial crime coverage when applied to ERISA plans. This endorsement rectifies those issues to ensure that employee benefit plans named as insureds receive adequate coverage against acts of fraud or dishonesty by individuals handling plan funds, as mandated by federal law.

Classes of business it applies to

This endorsement is applicable to any commercial entity that sponsors an employee benefit plan (such as a pension plan, 401(k) plan, or welfare benefit plan) that is subject to ERISA regulations and is listed as a named insured on the entity's commercial crime insurance policy. This is not industry-specific but applies across any business sector where such plans exist.

Real-world example: A manufacturing company has a 401(k) plan for its employees. To comply with ERISA, the plan must be bonded against fraud and dishonesty. The company includes the 401(k) plan as a named insured on its commercial crime policy. The CR 25 47 endorsement would be attached to this policy to ensure the coverage meets ERISA requirements.

Special considerations

• Mandatory Nature: When an employee benefit plan subject to ERISA is a named insured on a Commercial Crime Coverage Form, Commercial Crime Policy, or an Employee Theft and Forgery Policy, this endorsement is generally considered required to provide appropriate coverage and satisfy ERISA bonding requirements.
• Addressing Deficiencies: The endorsement specifically aims to overcome limitations or exclusions in standard crime policy language that might not fully protect an ERISA plan as intended by the Department of Labor. For instance, it may modify definitions or conditions related to employee theft to align with ERISA's expectations for plan protection.
• ERISA Compliance: Failure to have adequate bonding, which this endorsement helps ensure, can lead to regulatory penalties and legal issues for the plan fiduciaries and the sponsoring employer.

Key information for agents and underwriters

• Risk Assessment: When an applicant or insured sponsors an ERISA plan and wishes to cover it under their crime policy, agents and underwriters must verify that this endorsement is included.
• Coverage Gaps: Without this endorsement, there could be significant coverage gaps for the ERISA plan, potentially leaving it exposed to losses from employee dishonesty that standard policy terms might not cover adequately for a plan.
• Underwriting Guidelines: Underwriters should confirm that the limits of insurance provided for Employee Theft coverage are sufficient to meet the ERISA bonding requirements for the specific plan(s) being insured. ERISA generally requires a bond amount of at least 10% of the plan funds handled, subject to a minimum of $1,000 and a maximum of $500,000 (or $1,000,000 for plans holding employer securities).
• Policy Language: It's crucial to understand that this endorsement modifies the underlying crime policy. It doesn't provide standalone coverage but amends existing insuring agreements and conditions as they apply to the insured ERISA plan(s).