Money & Securities as Business Personal Property

Many package policies contain throw-in coverage that can be of significant value. For example, Employee Dishonesty. While it really should be a standalone coverage, and while every business should have it, most probably rely only on the enhancement available in their BOP or Package. 

Sometimes these enhancements can be significant, offering $25,000, $50,000 or more of coverage. While likely not enough to compensate for any significant embezzlement, it’s a lot more than $0. However, since non-ISO policies are just as common, if not more so, than their “standard” counterpart, you still have to pay attention to the wording of this coverage. The $25,000 of “Employee Dishonesty” on your policy could be almost useless. 

This is because of the way some non-standard policies read. First, an excerpt from the “Standard” employee dishonesty optional coverage from ISO’s “Businessowners Coverage Form” BP 00 03 01 10: 

We will pay for direct loss of or damage to Business Personal Property and “money” and “securities” resulting from dishonest acts committed by any of your employees acting alone or in collusion with other persons (except you or your partner)… 

Notice how it specifies three types of property: (1) Business Personal Property, (2) Money, and (3) Securities. 

There are some carriers that lump money and securities into Business Personal Property. Meaning that when they define “Business Personal Property” in the front of their policy they specifically include (instead of exclude) money and securities. This can cause an unintended gap with an insured that you would not otherwise know about. 

The reason is simple: because some carriers define  “money” as BPP, they often don’t need specify money as specifically covered under Employee Dishonesty extensions. Rather, the policy simply states it covers employee theft of “Business Personal Property” or “covered property”. The problem thus arises if someone doesn’t have BPP on their policy – consider a landlord, a Homeowners Association, etc. With this wording, if you don’t have BPP coverage then you don’t have theft of money covered because money is considered BPP. 

I don’t even think this is a “gotcha!” moment. I believe that when a carrier includes things like money/securities inside of BPP they’re actually trying to enhance their coverage. With money as BPP you may even enjoy some of the various extensions and enhancements usually reserved for just contents-type property (E.g. off-premises coverage). However, be aware of this potential unintended consequence when it comes to Employee Dishonesty coverage. 

This is another reason why you can’t rely on summaries and declarations listings of coverage and just assume. If you see a policy that has a $50,000 extension for “Employee Dishonesty” it could end up behaving much differently than you think, even for something as “Standard” as a BOP.