Crime Coverage and Insurance Quiz

James is reviewing two types of insurance policies for his business: the Loss Sustained Form and the Discovery Form. What is the main difference between these two forms?

• The type of losses covered

• The trigger for coverage

• The amount of coverage

• The deductible amount

Answer explanation

The main difference between the Loss Sustained Form and the Discovery Form is the trigger for coverage. The Loss Sustained Form covers losses that occur during the policy period, while the Discovery Form covers losses discovered during the policy period.

Mia owns a small business and recently experienced a theft where cash was stolen from her office. She files a claim under her crime coverage policy. What is the payment method for losses to money under crime coverage?

• At depreciated value

• At replacement cost

• At face value

• At market value

Answer explanation

Under crime coverage, losses to money are paid at face value, meaning the full amount stolen is reimbursed without depreciation or adjustments. This ensures Mia receives the exact amount lost.

Grace is a consultant who accidentally gives incorrect advice to a client, resulting in financial loss. Which type of insurance would help protect her against claims of professional negligence?

• Professional negligence

• Employee theft

• Property damage

• Natural disasters

Answer explanation

Professional negligence insurance protects consultants like Grace from claims arising from errors or omissions in their professional advice, covering financial losses incurred by clients due to such mistakes.

Benjamin recently started a new business and purchased an insurance policy for his company. He wants to know how long new employees and additional premises will be automatically covered under this policy without notifying the insurer. What is the time frame for this automatic coverage?

• 30 days

• 90 days

• 120 days

• 60 days

Answer explanation

The correct answer is 90 days, as most insurance policies provide automatic coverage for new employees and additional premises for this duration without needing to notify the insurer.

Jackson is starting a new business and wants to protect his company from potential employee dishonesty. Who initiates a Fidelity bond in this situation?

• The principal

• The insurer

• The surety

• The obligee

Answer explanation

In this context, the obligee is the party that requires the fidelity bond to protect against employee dishonesty. Jackson, as the business owner, is the obligee who initiates the bond for his company.

Evelyn runs a small online retail business. She is considering purchasing Cyber Liability insurance. What would this type of insurance help protect her business against?

• Natural disasters

• Data breaches and cyberattacks

• Employee theft

• Professional negligence

Answer explanation

Cyber Liability insurance protects against data breaches and cyberattacks, which are critical risks for online businesses like Evelyn's. It does not cover natural disasters, employee theft, or professional negligence.

Ava owns a small business and is reviewing her crime insurance policy. She notices that her policy uses a Discovery form. What is the main purpose of a Discovery form in crime coverage?

• To cover losses discovered during the policy period

• To cover losses sustained during the policy period

• To cover losses after the policy period

• To cover losses before the policy period

Answer explanation

The main purpose of a Discovery form in crime coverage is to cover losses discovered during the policy period, ensuring that any theft or fraud is addressed as soon as it is identified.

Jackson owns a bar and is concerned about potential incidents involving intoxicated patrons. Which type of claim would be covered under Liquor Liability insurance?

• Property damage

• Claims of damages or injuries caused by intoxicated patrons

• Natural disasters

• Employee theft

Answer explanation

Liquor Liability insurance specifically covers claims of damages or injuries caused by intoxicated patrons, protecting bar owners like Jackson from legal issues arising from such incidents.

Jackson is reviewing his company's crime insurance policy and wants to know where the coverage applies. What is the coverage territory for crime coverage?

• North America only

• United States only

• Worldwide

• United States and its territories and possessions, Puerto Rico, and Canada

Answer explanation

The correct coverage territory for crime insurance includes the United States, its territories and possessions, Puerto Rico, and Canada, ensuring comprehensive protection across these regions.

Michael discovers that his store has been broken into, and he suspects a law may have been broken. What must Michael do?

• Notify the FBI

• Notify the police

• Notify the local government

• Notify the insurer only

Answer explanation

Michael should notify the police, as they are responsible for investigating crimes like break-ins. This step is crucial for documenting the incident and potentially recovering stolen property.