1. Forms
2. CR
3. CR-50-04

What the Form Is

The CR 50 04 Coindemnity form is an endorsement designed for use with Commercial Crime insurance policies. Its primary purpose is to set forth the terms and conditions under which multiple parties will share the financial responsibility for a covered loss. This sharing arrangement, known as coindemnity, can involve multiple insurance companies or the insurer and the named insured. This endorsement was part of the significant 1998 ISO Multistate Commercial Crime Revisions, which aimed to provide more options in the treatment of crime losses, such as the introduction of discovery-based coverage alongside loss-sustained coverage.

Classes of Business It Applies To

This endorsement is applicable to a wide range of commercial enterprises that purchase Crime insurance and where a risk-sharing arrangement is either necessary or desirable. Examples include:

• Large Corporations: Businesses with substantial crime exposures that may exceed the capacity of a single insurer or that prefer to share the risk.
• Financial Institutions: Banks, credit unions, and other financial entities often face unique and significant crime risks that may warrant a coindemnity structure.
• Businesses with High-Value Assets: Companies holding significant amounts of cash, securities, or other valuable property susceptible to crime.
• Insureds Seeking Risk Participation: Organizations that wish to retain a significant portion of their crime risk, beyond a standard deductible, in partnership with their insurer(s). For instance, a large retailer might use this endorsement to share a percentage of potential large-scale employee theft losses with its insurer.

Special Considerations

Implementing a coindemnity arrangement using CR 50 04 requires careful attention to detail:

• Clear Allocation of Responsibility: The endorsement must clearly specify the percentage or dollar amount of loss that each participating party will bear.
• Integration with Policy Terms: It must be used in conjunction with the primary Commercial Crime coverage form (e.g., employee theft, forgery, computer fraud) and the relevant Crime General Provisions form (like CR 10 00 for loss-sustained or CR 11 00 for discovery).
• Underlying Agreement: Often, a separate coindemnity agreement may exist between the parties, and this endorsement serves to incorporate its principles into the insurance policy.
• Regulatory Compliance: As with all ISO forms, its use is subject to state-specific adoption and regulations. The 1998 revisions were approved by various states at different times.
• Impact on Limits and Deductibles: The application of policy limits and deductibles needs to be clearly defined in the context of the coindemnity provision to avoid ambiguity in loss settlement.

Key Information for Agents and Underwriters

Agents and underwriters should consider the following when utilizing or evaluating the CR 50 04 endorsement:

• Pricing and Premium Impact: The insurer's net exposure is altered by the coindemnity agreement. Premiums should reflect this shared risk. The portion of risk retained by the insured or shared with other insurers can lead to premium credits.
• Risk Assessment: Underwriters must evaluate the financial capacity and stability of all parties involved in the coindemnity agreement. If other insurers are coindemnitors, their financial ratings and claims-paying history are critical.
• Coverage Clarity: Ensure that the endorsement, in conjunction with the declarations and other policy forms, clearly outlines how a loss will be shared. Avoid creating unintentional coverage gaps or overlaps. For example, specify if the coindemnity applies before or after the policy deductible.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines dictating when coindemnity is appropriate (e.g., for risks exceeding a certain financial threshold, specific industries, or as a condition for providing very high coverage limits).
• Documentation: The schedule within the endorsement or the policy declarations must accurately name all coindemnifying parties and their respective shares of any loss.