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, the condominium association, has only coverage for employee theft under a Commercial Crime Coverage Form (Loss Sustained Form), CR 00 21 11 15.

The first question: 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 employee as defined under the Coverage Form CR 00 21 11 15, since it is not a natural person.

The second question: 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 Coverage Form CR 00 21 11 15, 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" of the Commercial Crime Coverage Form, CR 00 21 11 15. 

Puerto Rico Subscriber

The answer to both questions is no, the administration company and it's 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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