Are employees hired to perform administrative duties considered the insured's "employees" under the insured's commercial policy? (Photo: Shutterstock)
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Question: The insured, a condominium association, retained an administration company to perform duties related to the administration and management of the condominium.
It was discovered that some of the employees of the administration company committed theft and forged checks of the insured. The insured only has coverage for employee theft under a Commercial Crime Coverage Form (Loss Sustained Form), CR 00 21 11 15. I have two questions related to the insured's coverage:
Question one: Should the administration company, retained by the insured, be considered an "employee" as defined under the Commercial Crime Coverage Form, CR 00 21 11 15? Some believe that the administration company should not be considered as an employee as defined under the policy since it is not a natural person.
Question two: Should the employees of the administration company be considered "employees" as defined under the Commercial Crime Coverage Form, CR 00 21 11 15? Some believe that the employees of the administration company should also not be considered as "employees" as defined under the policy since the insured did not directly retain them nor pays their wages or salary, and they don't fall under any of the definition of "employees" in the form.
— Puerto Rico Subscriber
Answer: The answer to both questions is no; the administration company and its employees are not employees of the insured. The administration is not a natural person, as is required by the policy definition of employee. The administration's employees are not direct hires of the insured nor are they filling in temporarily for the insured's employees or from a labor leasing firm. There is no coverage under the employee theft section of the policy. Depending on the actual details, there may be coverage under forgery or alteration since you indicate checks of the insured were forged.
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