What the form is
The CR 50 01, titled "Policy Change (Loss Sustained Form)", is an endorsement used in Commercial Crime insurance. Its primary function is to amend or modify an existing Commercial Crime policy that has been issued on a "loss sustained" basis. This means the policy covers losses that are both sustained during the policy period and discovered during the policy period or within a specified time after its expiration (typically one year). This form acts as a general-purpose tool to implement various agreed-upon changes to the policy terms and conditions.
Classes of business it applies to
This endorsement applies to any type of commercial entity that has purchased a Commercial Crime insurance policy written on a loss sustained basis. This can include a wide array of businesses, such as:
- Retail stores concerned about employee theft or robbery.
- Financial institutions (though they often have specialized policies, crime coverage components can be similar).
- Manufacturing companies protecting against internal fraud or theft of goods.
- Service industries susceptible to forgery or computer fraud.
- Non-profit organizations handling funds and wanting protection against employee dishonesty.
Essentially, any business that has opted for or been underwritten with a loss sustained crime policy and needs to make a change would utilize this endorsement. For example, if a company changes its legal name, adds a new location that needs coverage, or wishes to adjust its deductible for employee theft coverage, the CR 50 01 would be used to document these modifications on their loss sustained crime policy.
Special considerations
The most critical consideration for using CR 50 01 is that it is specifically designed for Commercial Crime policies written on a loss sustained basis. This is distinct from policies written on a "discovery" basis, which cover losses discovered during the policy period, regardless of when they were sustained (subject to a retroactive date, if any). For discovery-based policies, a different policy change endorsement (e.g., CR 50 09 Policy Change (Discovery Form)) would be applicable.
It's important to understand that the "loss sustained" trigger has specific implications for coverage. A loss must occur during the policy period AND be discovered during that same policy period or within a limited time (often one year) after the policy ends. If a change is made mid-term using CR 50 01, it's crucial to document the effective date of the change, as this can impact how losses occurring around that date are handled.
Key information for agents and underwriters
For Agents:
- Ensure you are using the correct policy change form based on whether the underlying crime policy is "loss sustained" (CR 50 01) or "discovery" (CR 50 09).
- Clearly explain to the insured the nature of the changes being made and their effective date.
- Document thoroughly the reasons for the change and maintain records of the endorsement with the policy.
- When discussing crime coverage options with clients, explain the difference between loss sustained and discovery forms, as this will impact which endorsements like CR 50 01 are relevant.
For Underwriters:
- Verify that CR 50 01 is being applied to a Commercial Crime policy that is indeed written on a loss sustained basis.
- Carefully review the changes being requested via the endorsement to assess any impact on the risk profile or premium. For example, adding a new location or significantly increasing limits would require underwriting scrutiny.
- Ensure that the changes documented on the CR 50 01 are consistent with the insurer's underwriting guidelines for loss sustained crime coverage.
- Be mindful of how changes might interact with other policy provisions, especially those related to conditions in the event of loss and discovery periods.