What is Crime Insurance?
It is a class of insurance that seeks to protect the insured from fraudulent and criminal acts of a third person and/or the insured's employees such robbery, burglary, forgery, theft, extortion, among others.
The following are the most commonly available Crime Insurance policies:
a. Fidelity Insurance
b. Money Securities and Payroll Robbery Insurance (MSPR)
c. Bankers Blanket Bond (BBB)
d. Electronic Computer Crime (ECC)
e. Plastic Cards Insurance
It is a class of insurance that seeks to protect the insured from fraudulent and criminal acts of a third person and/or the insured's employees such robbery, burglary, forgery, theft, extortion, among others.
The following are the most commonly available Crime Insurance policies:
a. Fidelity Insurance
b. Money Securities and Payroll Robbery Insurance (MSPR)
c. Bankers Blanket Bond (BBB)
d. Electronic Computer Crime (ECC)
e. Plastic Cards Insurance
FIDELITY INSURANCE
What is Fidelity Insurance?
It is a type of crime insurance that covers losses sustained by the insured arising from the dishonest acts of its employees.
It is a type of crime insurance that covers losses sustained by the insured arising from the dishonest acts of its employees.
MONEY SECURITIES AND PAYROLL ROBBERY INSURANCE
What is Money Securities and Payroll Robbery Insurance?
It is a type of crime insurance that cover losses sustained by the insured for losses caused by a third party while the money, securities and payroll money are within the insured’s premises or while in transit.
Compared to Fidelity Insurance, it shall not cover losses if due to the dishonest acts of the insured’s employees.
It has four (4) main insuring clauses
Section 1 – Money and Securities the Premises
Section 2 – Money and Securities While In Transit
Section 3 – Loss of Payroll Money Within and Outside the Premises
Section 4 – Inclusive Extra Income
It is an all risk policy which shall cover losses provided it is not due to the following:
It is a type of crime insurance that cover losses sustained by the insured for losses caused by a third party while the money, securities and payroll money are within the insured’s premises or while in transit.
Compared to Fidelity Insurance, it shall not cover losses if due to the dishonest acts of the insured’s employees.
It has four (4) main insuring clauses
Section 1 – Money and Securities the Premises
Section 2 – Money and Securities While In Transit
Section 3 – Loss of Payroll Money Within and Outside the Premises
Section 4 – Inclusive Extra Income
It is an all risk policy which shall cover losses provided it is not due to the following:
- Losses due to fraudulent acts of the insured, its employees and officers.
- War or acts of war
- Shortage of money due to error of omission
- Forgery
- Acts of Nature
DISHONESTY, DESTRUCTION AND DISAPPEARANCE INSURANCE
What is Dishonesty, Destruction and Disappearance Insurance?
It is class of crime insurance which combines the benefits under Fidelity Insurance and MSPR.
It is class of crime insurance which combines the benefits under Fidelity Insurance and MSPR.
BANKER'S BLANKET BOND
What is a Bankers Blanket Bond?
It is a type of a crime insurance which is customized for banks. It is a combination of Fidelity Insurance and Money Securities and Payroll Insurance plus additional enhancements.
There are eight (8) insuring clauses in a BBB, namely:
What events or acts are covered under Insuring Clause 1 – Infidelity of Employees?
Loss resulting solely and directly from dishonest or fraudulent acts by Employees of the Insured bank committed with the manifest intent to cause the Insured bank to sustain such loss or to obtain a financial gain for themselves wherever committed and whether committed alone or in collusion with others, including loss of Property through any such acts of Employees.
Who is an employee?
It means respectively:
Define property.
It means cash (i.e. currency, coins and Bank Notes), bullion, precious metals of all kinds and in whatsoever form and articles made there from, gems (including uncut gem stones), precious and semi-precious stones, certificates of stock, bonds, coupons and all other types of securities, bills of lading, warehouse receipts, checks, bill of exchange, acceptances, drafts, certificates of deposit, letters of credit, promissory notes, money orders, orders upon public treasuries, stamps, insurance policies, title deeds, certificates of title and all other negotiable and non-negotiable instruments or contracts representing money or other property (real or personal) or interests therein, and other valuable papers, including books of account and other Insured bank in the conduct of their business, in which the Insured bank has an interest, or which are held by the Insured bank for any purpose or in any capacity and whether so held gratuitously or otherwise and whether legally liable therefor or not.
Define forgery.
It means the signing of the name of another with intent to deceive; it does not include the signing of one’s own name with or without authority, in any capacity, for any purpose.
What events are covered under Insuring Clause 2 – Within the Premises?
Loss of Property resulting directly from:
What events are covered under Insuring Clause 3 – Loss in Transit?
This clause will respond to losses arising from any cause provided the property is under the custody of Insured bank’s Employee or their authorized representative.
What events are covered under Insuring Clause 4 – Forgery or Alteration?
Loss resulting directly from:
Define bill of exchange.
It is an unconditional order in writing addressed by one person to another, signed by the person giving, requiring the person to whom it is addressed to pay on demand or at a fixed determinable future time a sum certain in money to order or bearer. (Negotiable Instruments Law, Section 126)
Define promissory notes.
It is an unconditional promise in writing addressed by one person to another, signed by the maker, engaging to pay on demand, or at a fixed determinable future time, a sum certain in money to order or bearer. (Negotiable Instruments Law, Section 184)
Define checks.
It is a bill of exchange drawn on a bank payable on demand. (Negotiable Instruments Law, Section 185)
Define drafts
It is used synonymously with bill of exchange although it normally refers to a bill of exchange used in documentary exchange like in letters of credit transactions. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
Define acceptance.
It is used synonymously with bill of exchange although it normally refers to a bill of exchange used in documentary exchange like in letters of credit transactions. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
Define certificates of deposit.
It is form of promissory note which is a written acknowledgement of a bank of its receipt of a certain sum with a promise to repay the same.
Define bonds
It is a certificate or evidence of a debt on which the issuing company or government body promises to pay the bondholders a specified amount of interest to a specified length of time and to repay the loan of the expiration of date.
Define money orders.
It is a non-negotiable as is it governed by postal rules and regulations which may be inconsistent with the Negotiable Instruments Law and it can only be negotiated once. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
What events are covered under Insuring Clause 5 - Securities?
Loss resulting directly from the Insured bank having, in good faith and in the ordinary course of business, acted upon the Securities as defined in the succeeding item which prove to have been:
a. counterfeited, or
b. forged as to the signature of any maker, drawer, issuer, endorser, assignor, lessee, transfer agent or registrar, acceptor, surety or guarantor, or
c. fraudulently altered, or
d. lost or stolen
Define Securities under Insuring Clause 5 - Securities?
Securities shall mean any of the following:
What events are covered under Insuring Clause 6 – Counterfeited Currency?
Loss by reason of the receipt by the Insured bank in good faith of any counterfeited or altered paper currency or coin issued or purporting to have been issued by the Insured bank.
Define counterfeiting.
Intentional copying and reproduction of a genuine article like money for the purpose of misleading the recipient into believing he or she is receiving the genuine article itself.
What events are covered under Insuring Clause 7 – Offices and Contents?
Loss of or damage to (1) any of the office of Insured bank or (2) properties owned by the Insured bank which includes furnishings, fixtures, equipment (except computers, computer systems, computer networks and peripheral equipment, computer programs and other computer related equipment), stationary, supplies or safes and vaults within any office of the Insured bank and owned by the Insured bank caused by:
a. burglary,
b. robbery,
c. hold-up,
d. theft or
e. larceny, or any attempt thereat, or
f. by vandalism or malicious mischief.
However, the loss or damage must not be caused by fire.
It is a type of a crime insurance which is customized for banks. It is a combination of Fidelity Insurance and Money Securities and Payroll Insurance plus additional enhancements.
There are eight (8) insuring clauses in a BBB, namely:
- Infidelity of Employees - financial loss by insured banks due to dishonest or fraudulent acts of employees.
- Loss of Property within the Premises - loss of property resulting from theft, damage, destruction or misplacement.
- Loss of Property outside the Premises - loss or damage to property while in transit in the custody of bank’s employees and including transits carried out by courier service or by registered post.
- Forgery or Alteration - loss sustained due to the forgery or fraudulent alteration of checks, bills of exchange, drafts, acceptances, withdrawal orders, certificates of deposit, letters of credit and money order.
- Securities - loss sustained by the bank due to its having acted upon other types of securities or documents, which are not otherwise insured, under the forged checks section
- Counterfeited Currency - losses sustained by the insured bank arising from the acceptance in good faith of counterfeit notes or coins at the Insured's premises.
- Offices and Contents - loss or damage to furniture, fittings and equipment arising from burglary, theft, hold-up and other criminal acts.
- Legal Fees
What events or acts are covered under Insuring Clause 1 – Infidelity of Employees?
Loss resulting solely and directly from dishonest or fraudulent acts by Employees of the Insured bank committed with the manifest intent to cause the Insured bank to sustain such loss or to obtain a financial gain for themselves wherever committed and whether committed alone or in collusion with others, including loss of Property through any such acts of Employees.
Who is an employee?
It means respectively:
- one or more of the Insured bank’s officers, clerks, servants and other employees while employed by the Insured bank;
- one or more persons provided by an employment contractor to perform employee duties for the Insured bank under the Insured bank’s supervision;
- one or more of the Insured bank’s retired officers or employees who have been retained by them as consultants, other than consultants involved in the Insured bank’s Data Processing activities while acting in their capacities such consultants; and
- one or more persons engaged by the Insured bank as consultants, other than consultants involved in the Insured bank’s Date Processing activities, while acting in their capacity as such, and
- a guest student pursuing studies or duties in any of the Insured bank’s premises.
Define property.
It means cash (i.e. currency, coins and Bank Notes), bullion, precious metals of all kinds and in whatsoever form and articles made there from, gems (including uncut gem stones), precious and semi-precious stones, certificates of stock, bonds, coupons and all other types of securities, bills of lading, warehouse receipts, checks, bill of exchange, acceptances, drafts, certificates of deposit, letters of credit, promissory notes, money orders, orders upon public treasuries, stamps, insurance policies, title deeds, certificates of title and all other negotiable and non-negotiable instruments or contracts representing money or other property (real or personal) or interests therein, and other valuable papers, including books of account and other Insured bank in the conduct of their business, in which the Insured bank has an interest, or which are held by the Insured bank for any purpose or in any capacity and whether so held gratuitously or otherwise and whether legally liable therefor or not.
Define forgery.
It means the signing of the name of another with intent to deceive; it does not include the signing of one’s own name with or without authority, in any capacity, for any purpose.
What events are covered under Insuring Clause 2 – Within the Premises?
Loss of Property resulting directly from:
- theft, larceny, false pretences, burglary, robbery or hold-up committed by persons physically present on the premises where the Property is located, or
- mysterious unexplainable disappearance, or
- being damaged, destroyed or misplaced howsoever or by whomsoever caused,
What events are covered under Insuring Clause 3 – Loss in Transit?
This clause will respond to losses arising from any cause provided the property is under the custody of Insured bank’s Employee or their authorized representative.
What events are covered under Insuring Clause 4 – Forgery or Alteration?
Loss resulting directly from:
- Forgery or Fraudulent Alteration of, on or in any checks, bills of exchange, acceptances, drafts, certificates of deposit, letters of credit, withdrawal receipts for the withdrawal of funds, money orders, orders upon public treasuries; or
- Having transferred, paid or delivered any funds or property or established any credit or given any value on the faith of any telegraphic, cable, or teletype instructions directed to the Insured bank authorizing or acknowledging the transfer, payment, delivery or receipt of funds or property which instructions purport to have been sent by a customer of the Insured bank or by a banking institution (which purported instructions shall be deemed to bear a forged signature) or have been altered without the knowledge and consent of such customer or banking institution.
- the payment by the Insured bank of forged or fraudulently altered promissory notes bearing forged endorsements.
Define bill of exchange.
It is an unconditional order in writing addressed by one person to another, signed by the person giving, requiring the person to whom it is addressed to pay on demand or at a fixed determinable future time a sum certain in money to order or bearer. (Negotiable Instruments Law, Section 126)
Define promissory notes.
It is an unconditional promise in writing addressed by one person to another, signed by the maker, engaging to pay on demand, or at a fixed determinable future time, a sum certain in money to order or bearer. (Negotiable Instruments Law, Section 184)
Define checks.
It is a bill of exchange drawn on a bank payable on demand. (Negotiable Instruments Law, Section 185)
Define drafts
It is used synonymously with bill of exchange although it normally refers to a bill of exchange used in documentary exchange like in letters of credit transactions. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
Define acceptance.
It is used synonymously with bill of exchange although it normally refers to a bill of exchange used in documentary exchange like in letters of credit transactions. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
Define certificates of deposit.
It is form of promissory note which is a written acknowledgement of a bank of its receipt of a certain sum with a promise to repay the same.
Define bonds
It is a certificate or evidence of a debt on which the issuing company or government body promises to pay the bondholders a specified amount of interest to a specified length of time and to repay the loan of the expiration of date.
Define money orders.
It is a non-negotiable as is it governed by postal rules and regulations which may be inconsistent with the Negotiable Instruments Law and it can only be negotiated once. (Jose R Sundiang and Timoteo Aquino, Reviewer on Commercial Law First Edition, p82)
What events are covered under Insuring Clause 5 - Securities?
Loss resulting directly from the Insured bank having, in good faith and in the ordinary course of business, acted upon the Securities as defined in the succeeding item which prove to have been:
a. counterfeited, or
b. forged as to the signature of any maker, drawer, issuer, endorser, assignor, lessee, transfer agent or registrar, acceptor, surety or guarantor, or
c. fraudulently altered, or
d. lost or stolen
Define Securities under Insuring Clause 5 - Securities?
Securities shall mean any of the following:
- Share certificates, bearer stock, certificates of stock, warrants or rights to subscribe, allotment letters, bonds, debentures, or coupons by limited companies or corporations; or
- Bonds similar in form to corporate bonds issued by partnerships which are secured by mortgages, deeds of trust or collateral trust agreements; or
- Philippine Government or Philippine Government Guaranteed and Philippine Local Authority stocks, certificates of indebtedness, bonds, coupons or warrants issued by the Government of any country or by any of its respective Agencies, States, Provinces, Countries, Cities, Towns or Municipalities; or
- Promissory notes except (i) those issued or purporting to have been issued for use as currency, (ii) those secured or purporting to be secured directly or indirectly by assigned accounts or what purport to be assigned accounts and (iii) those covered under Insuring Clause 4(c).
- Deeds of trust, mortgages upon real property and upon interests in real property and assignments of such mortgages.
- Certificates of deposit and letters of credit except when covered under Insuring Clause 4(a) and bills of lading subject always to General Definitions.
What events are covered under Insuring Clause 6 – Counterfeited Currency?
Loss by reason of the receipt by the Insured bank in good faith of any counterfeited or altered paper currency or coin issued or purporting to have been issued by the Insured bank.
Define counterfeiting.
Intentional copying and reproduction of a genuine article like money for the purpose of misleading the recipient into believing he or she is receiving the genuine article itself.
What events are covered under Insuring Clause 7 – Offices and Contents?
Loss of or damage to (1) any of the office of Insured bank or (2) properties owned by the Insured bank which includes furnishings, fixtures, equipment (except computers, computer systems, computer networks and peripheral equipment, computer programs and other computer related equipment), stationary, supplies or safes and vaults within any office of the Insured bank and owned by the Insured bank caused by:
a. burglary,
b. robbery,
c. hold-up,
d. theft or
e. larceny, or any attempt thereat, or
f. by vandalism or malicious mischief.
However, the loss or damage must not be caused by fire.
ELECTRONIC COMPUTER CRIME
What is an Electronic Computer Crime?
It is a class of crime insurance which seeks to complement and address the limitation in the BBB coverage. It seeks to protect the insured from cyber crimes such as intrusion in the computer and network system that is not covered under the Banker's Blanket Bond.
Some of the losses covered are as follows:
a. Hacking that causes damage or destruction to electronic data or software of the insured.
b. Unauthorized electronic transfer, payment or delivery of funds or property.
c. Damage or destruction of electronic data or software caused by the introduction of a computer virus into the computer system of the insured.
d. Fraudulent modification of electronic data or software of the insured
What is Cyber Crime?
Cyber crime, or computer related crime, is crime that involves a computer and a network. The computer may have been used in the commission of a crime, or it may be the target. (Wikipedia)
What are examples of Cyber Crimes?
It is a class of crime insurance which seeks to complement and address the limitation in the BBB coverage. It seeks to protect the insured from cyber crimes such as intrusion in the computer and network system that is not covered under the Banker's Blanket Bond.
Some of the losses covered are as follows:
a. Hacking that causes damage or destruction to electronic data or software of the insured.
b. Unauthorized electronic transfer, payment or delivery of funds or property.
c. Damage or destruction of electronic data or software caused by the introduction of a computer virus into the computer system of the insured.
d. Fraudulent modification of electronic data or software of the insured
What is Cyber Crime?
Cyber crime, or computer related crime, is crime that involves a computer and a network. The computer may have been used in the commission of a crime, or it may be the target. (Wikipedia)
What are examples of Cyber Crimes?
- Pharming (pronounced ‘farming’) - is a form of online fraud very similar to phishing as pharmers rely upon the same bogus websites and theft of confidential information. However, where phishing must entice a user to the website through ‘bait’ in the form of a phony email or link, pharming re-directs victims to the bogus site even if the victim has typed the correct web address. This is often applied to the websites of banks or e-commerce sites. (Norton)
- Computer fraud - is any dishonest misrepresentation of fact intended to let another to do or refrain from doing something which causes loss. In this context, the fraud will result in obtaining a benefit by: Altering in an unauthorized way. This requires little technical expertise and is common form of theft by employees altering the data before entry or entering false data, or by entering unauthorized instructions or using unauthorized processes; Altering, destroying, suppressing, or stealing output, usually to conceal unauthorized transactions. This is difficult to detect; Altering or deleting stored data; (Wikipedia)
- Identity theft - is the deliberate use of someone else's identity, usually as a method to gain a financial advantage or obtain credit and other benefits in the other person's name,and perhaps to the other person's disadvantage or loss. (Wikipedia)
- Cyberextortion - it occurs when a website, e-mail server, or computer system is subjected to or threatened with repeated denial of service or other attacks by malicious hackers. These hackers demand money in return for promising to stop the attacks and to offer "protection". According to the Federal Bureau of Investigation, cyberextortionists are increasingly attacking corporate websites and networks, crippling their ability to operate and demanding payments to restore their service. More than 20 cases are reported each month to the FBI and many go unreported in order to keep the victim's name out of the public domain. Perpetrators typically use a distributed denial-of-service attack. (Wikipedia). An example of cyberextortion was the attack on Sony Pictures of 2014. (Wikipedia)
- ATM Skimming - it is type of fraud which occurs when an ATM is compromised by a skimming device, a card reader which can be disguised to look like a part of the machine. The card reader saves the users' card number and pin code, which is then replicated into a counterfeit copy for theft. (BusinessDisctionary.com)
PLASTIC CARDS INSURANCE
What is Plastic Card Insurance?
It is a type of crime which seeks to address the gap in the cover for BBB which excludes "Loss resulting directly or indirectly from the use of credit, debit, charge, access, convenience, identification or other cards
(a) in obtaining credit, or
(b) in gaining access to automated mechanical devices which, on behalf of the Assured, disburse Money, accept deposits, cash cheques, draft or similar written instruments or make credit card loans, or
(c) in gaining access to point of sale terminals, customer-bank communication terminals or similar electronic terminals or electronic funds transfer systems. (Exclusion 15 of BBB KFA81)
This insurance offers coverage to Banks against actual financial losses occurring due to Counterfeiting of Plastic Cards, Loss or Stolen plastic cards, merchant fraud and legal and court cost if any arising from the above losses on the Plastic Cards issued by the insured bank.
It is a type of crime which seeks to address the gap in the cover for BBB which excludes "Loss resulting directly or indirectly from the use of credit, debit, charge, access, convenience, identification or other cards
(a) in obtaining credit, or
(b) in gaining access to automated mechanical devices which, on behalf of the Assured, disburse Money, accept deposits, cash cheques, draft or similar written instruments or make credit card loans, or
(c) in gaining access to point of sale terminals, customer-bank communication terminals or similar electronic terminals or electronic funds transfer systems. (Exclusion 15 of BBB KFA81)
This insurance offers coverage to Banks against actual financial losses occurring due to Counterfeiting of Plastic Cards, Loss or Stolen plastic cards, merchant fraud and legal and court cost if any arising from the above losses on the Plastic Cards issued by the insured bank.