Kathy owns a large retail electrical store

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Reference no: EM131046816

Kathy owns a large retail electrical store that sells light fixtures, lamps, and electrical equipment. The firm is not insured for employee theft. A risk management consultant recommended adding an ISO commercial crime coverage form to the firm's package policy, including coverage for employee theft. The crime form was issued on a discovery basis on July 1, 2011 without a retroactive date endorsement. The coverage amount for employee theft is $25,000. A routine audit in December 2011 by an accounting firm revealed that one of the bookkeepers had embezzled $20,000 over a three-month period in 2009.

a. What dollar amount, if any, will the insurer pay for the loss?

b. Would your answer to part (a) be the same or different if the crime coverage form were issued on a loss-sustained basis? Explain.

Reference no: EM131046816

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