Summary: The employee theft and forgery policy is updated as of November 2015. Changes have been made for clarification purposes and to keep up with changing technology. The policy is still very similar to the commercial crime policy, and only changes are discussed here. See Commercial Crime Policy. A new exclusion for virtual currency exists, and changes have been made to the exclusion for confidential or personal information.

The definition of "premises" has been removed; only policy language that differs will be presented, as there are still many similarities.

The employee theft and forgery policy has two versions, the discovery version and the loss sustained version—CR 00 28 11 15 and CR 00 29 11 15 respectively.

Since the differences between the discovery and loss sustained policies are discussed in the commercial crime policy those differences will not be discussed here. See Commercial Crime Policy.

Topics covered:

Insuring agreements

Limit of insurance

Exclusions

Conditions

Definitions

Insuring Agreements

 A.Insuring Agreements

Coverage is provided under the following Insuring Agreements for which a Limit of Insurance is shown in the Declarations and applies to loss that you sustain resulting directly from an "occurrence" taking place at any time which is "discovered" by you during the Policy Period shown in the Declarations or during the period of time provided in the Extended Period To Discover Loss Condition E.1.j.:

1.Employee Theft

We will pay for loss of or damage to "money", "securities" and "other property" resulting directly from "theft" committed by an "employee", whether identified or not, acting alone or in collusion with other persons.

For the purposes of this Insuring Agreement, "theft" shall also include forgery.

2.Forgery Or Alteration

a.We will pay for loss resulting directly from "forgery" or alteration of checks, drafts, promissory notes, or similar written promises, orders or directions to pay a sum certain in "money" that are:

(1)Made or drawn by or drawn upon you; or

(2)Made or drawn by one acting as your agent;

or that are purported to have been so made or drawn.

For the purposes of this Insuring Agreement, a substitute check as defined in the Check Clearing for the 21st Century Act shall be treated the same as the original it replaced.

b.If you are sued for refusing to pay any instrument covered in Paragraph 2.a., on the basis that it has been forged or altered, and you have our written consent to defend against the suit, we will pay for any reasonable legal expenses that you incur and pay in that defense. The amount that we will pay is in addition to the Limit of Insurance applicable to this Insuring Agreement.

 Analysis

 There is no change to the insuring agreements. The agreements state that coverage is provided when a limit shown on the declarations applies to a loss that has occurred as a result of a defined "occurrence," which was "discovered" by the insured during the policy period or the extended period to cover loss. This restricts the policy so that the nature of the loss and how it is discovered are defined and must fit those definitions before the policy limit can apply.

 The forgery or alteration agreement is the same as in the prior policies. Loss caused by forgery or alteration of checks, drafts, promissory notes, or similar promises is covered. "Forgery" is defined as the signing of the name of another person or organization with the intent to deceive; it does not include a signature that consists in whole or part of one's actual name, signed with or without authority, in any capacity, for any purpose. For example, company drafts are stolen and the thief signs the checks as if he were the authorized signer, using that person's name. This is a forgery by definition; the intent is to deceive the bank into thinking the check is legitimately signed and authorized. However, if an authorized signer writes himself a check for expenses for a weekend at the spa, that is not a forgery.

 The form contains language stating that a "substitute check" as defined in the Check Clearing for the Twenty-first Century Act shall be treated the same as the original it replaces. Check Clearing 21 is a federal law designed to allow banks to handle checks electronically, thus making processing faster and more efficient. A substitute check is a paper copy of the front and back of the original check; it is slightly larger so that a picture of the original check can be presented. Very specific standards dictate how the substitute check is printed so that it can be used the same way as the original check. With a substitute check, banks can transmit the information electronically instead of physically moving a paper check. This is different than converting checks to electronic payments; different regulations govern electronic funds and paper checks.

 Exclusions

 c.Confidential Or Personal Information