Which coverage would pay in a case where a check is altered and cashed for $2000?

Which coverage would pay in a case where a check is altered and cashed for $2000?

• A. No coverage
• B. Robbery
• C. Forgery or Alteration
• D. Employee Theft

Answer: (D)

When a loss results from a check that has been forged or altered, the protection that applies is for forged or altered instruments. This coverage specifically protects against losses from forged signatures or alterations of negotiable instruments like checks and drafts. That’s exactly what’s happening when a check is altered and then cashed—the instrument itself has been tampered with, not merely that money was stolen by someone pretending to be an employee. Robbery deals with taking property by force or threat, which isn’t described here. No coverage would be inappropriate because there is a recognized risk involving forged or altered financial instruments. Employee Theft would apply only if an employee, in a dishonest act, stole funds or property; the scenario doesn’t specify an employee’s involvement, so the more direct coverage is for forgery or alteration.

When a loss results from a check that has been forged or altered, the protection that applies is for forged or altered instruments. This coverage specifically protects against losses from forged signatures or alterations of negotiable instruments like checks and drafts. That’s exactly what’s happening when a check is altered and then cashed—the instrument itself has been tampered with, not merely that money was stolen by someone pretending to be an employee.

Robbery deals with taking property by force or threat, which isn’t described here. No coverage would be inappropriate because there is a recognized risk involving forged or altered financial instruments. Employee Theft would apply only if an employee, in a dishonest act, stole funds or property; the scenario doesn’t specify an employee’s involvement, so the more direct coverage is for forgery or alteration.