program and from studies being undertaken by other public and private agencies.

§ 1932.3a Mandatory pre-inspection of commercial properties.

(a) All properties for which a commercial crime insurance application for coverage against burglary is made shall be inspected by the servicing company for the state in which the property is located to determine whether the property complies with the applicable protective device requirements.

(b) Coverage under a commercial crime insurance policy indemnifying burglary losses shall not commence unless it is determined that the premises sought to be insured complies with all applicable protective device requirements.

(c) No fee for this mandatory preinspection shall be charged to applicants applying for coverage of any premises which has not been covered by a Federal Commercial Crime Insurance Policy including coverage against burglary at any time during the two year period immediately prior to the date of the application.

(d) All other applicants shall be charged a reasonable fee, determined by the Administrator, for this pre-inspection.

[38 FR 19686, July 23, 1973, as amended at 38 FR 30444, Nov. 5, 1973]

§ 1932.3b Optional inspection of commercial properties.

(a) An inspection of any property covered by a commercial crime insurance policy which affords protection against burglary to determine compliance with applicable protective device requirements shall be made by the servicing company for the state in which the property is located if such an inspection is requested by the insured.

(b) If the optional inspection reveals that the insured premises does not comply with the applicable protective device requirements, the insured will be given thirty days from the date on which he is notified of the deficiencies in the protective devices on his property to correct those deficiencies. During that thirty day period burglary losses covered by the terms of the policy will be paid irrespective of any deficiencies in the insured's compliance with the protective device requirements. Burglary losses occurring more than thirty days after the date the

insured is notified of the results of the inspection will not be paid unless it is determined that the deficiency in the premisee's protective devices had been corrected prior to the loss.

(c) A reasonable fee, determined by the Administrator, shall be charged to the insured for each optional inspection of his property.

[38 FR 19686, July 23, 1973]

§ 1932.3c Consequences of failure to comply with protective device requirements for commercial properties.

(a) Properties previously inspected. (1) If a commercial property that has undergone either a mandatory preinspection or an optional inspection, and has been found in compliance with the applicable protective device requirements, suffers a burglary loss caused in whole or in part by the failure of the insured premises at the time of the loss to comply with such requirements, which failure of compliance resulted from a mechanical failure, alteration, or removal of a required protective device by or with the knowledge of the insured subsequent to the inspection, such loss is not covered by the policy.

(2) If during the course of adjusting a claim involving a premise which has been found to be in compliance with applicable protective device requirements at the time of a prior mandatory or optional inspection, the adjuster or other investigator discovers a deficiency in the required protective devices on the premises which had not previously been noted but which does not involve a mechanical failure, alteration, or removal of a required protective device subsequent to the prior inspection, the deficiency will be made known to the insured, who will be given thirty days thereafter within which to remedy the deficiency. During that thirty day period burglary losses covered by the terms of the policy will be paid irrespective of the deficiency.

(b) Properties not previously inspected. Owners of commercial property covered by commercial crime insurance policies including coverage against burglary which has not undergone either a mandatory pre-inspection or an optional inspection are subject to the following regulations:

(1) Each property owner shall be personally responsible for meeting the protective device requirements applicable to the type of property for which he has

As used in this subchapter, the term(a) "Baffle" means a piece of metal that covers the opening between a door and its frame at the area of penetration of the bolt or latch to deter the insertion of tools and prevent the exertion of pressure against the bolt or latch;

(b) "Central station, supervised service alarm system" means a silent alarm system that is constantly in operation, which signals upon any breach of a door, window (including storefront windows and unbarred skylights), or other accessible opening to the protected premises, at a private sentry or guard headquarters that is attended and monitored 24 hours a day, that dispatches guards to the protected premises immediately upon the activation of the alarm, that periodically checks the operation and effectiveness of the system, and that notifies law enforcement authorities as soon as the breach of the premises is confirmed;

(c) "Dead bolt" means a locking device using a fixed bolt that, when in locked position, cannot be retracted by a door knob or handle or other normal door opening device or by the application of force against the penetrating end of the bolt;

(d) "Dead latch" means a locking device, usually spring-operated, that incorporates a feature to render the latch rigid in its locked position and incapable of release by prying or by the turning of an outside door knob or handle or similar door opening device;

(e) "Dead lock" means a locking device incorporating a lock that cannot be pushed or retracted into a door or window by the use of tools inserted between the frame of the door or window and the door or window itself. Except as otherwise indicated, a dead lock may be equipped with a dead bolt or a dead latch;

(f) "Double cylinder dead bolt lock" means a dead bolt lock that can be released from its locked position only by a key, whether on the inside or the outside of the door;

(g) "Local alarm system" means an alarm system that signals loudly at the premises by means of one or more tamper-protected sounding devices upon any breach of a door, window (including storefront windows and unbarred skylights), or other accessible opening to the protected premises;

(h) "Silent alarm system" means an alarm system that signals at a location other than the location where it is installed upon any breach of a door, window (including storefront windows and unbarred skylights), or other accessible opening to the protected premises; and

(1) "Throw," when used in the context of a locking device, means the distance that its bolt or latch protrudes from the body of the device when the bolt or latch is in a locked position.

§ 1932.2 Purpose of protective device requirements.

(a) Section 1231(b) of the Act (12 U.S.C. 1749bbb-10a (b)) provides that no Federal crime insurance shall be made available to a property which is deemed by the insurer to be uninsurable or to a property with respect to which reasonable protective measures to prevent loss, consistent with standards established by the insurer, have not been adopted.

(b) It is the intention of the insurer to require at the inception of the program only those protective devices generally in use or readily available for particular types and classes of properties at the present time. As the program progresses, however, the insurer proposes to amend these requirements from time to time to enforce a higher and more effective standard of protection against ordinary property crimes than now exists. Such revised requirements are not expected to be published more often than once a year and will be applicable only to crime insurance policies issued or renewed after their effective date.

(c) Protective device standards that impose less-stringent or optional alternate requirements upon applicants and insureds, as well as clarifications of existing standards, may be published at any time and shall be applicable both to new policies and to renewals and, at the option of the insured, to crime insurance policies already in force.

§ 1932.3 Classification of properties.

The protective devices required under this part fall into two broad categories, residential and commercial. Requirements for residential properties are expected to remain relatively stable and are not likely to vary by classes. The protective devices required for commercial and industrial properties will vary greatly by the type of risk involved and will be changed periodically as experience and knowledge are gained under the

program and from studies being undertaken by other public and private agencies.

§ 1932.3a

Mandatory pre-inspection of commercial properties.

(a) All properties for which a commercial crime insurance application for coverage against burglary is made shall be inspected by the servicing company for the state in which the property is located to determine whether the property complies with the applicable protective device requirements.

(b) Coverage under a commercial crime insurance policy indemnifying burglary losses shall not commence unless it is determined that the premises sought to be insured complies with all applicable protective device requirements.

(c) No fee for this mandatory preinspection shall be charged to applicants applying for coverage of any premises which has not been covered by a Federal Commercial Crime Insurance Policy including coverage against burglary at any time during the two year period immediately prior to the date of the application.

(d) All other applicants shall be charged a reasonable fee, determined by the Administrator, for this pre-inspection.

[38 FR 19686, July 23, 1973, as amended at 38 FR 30444, Nov. 5, 1973]

§ 1932.3b Optional inspection of commercial properties.

(a) An inspection of any property covered by a commercial crime insurance policy which affords protection against burglary to determine compliance with applicable protective device requirements shall be made by the servicing company for the state in which the property is located if such an inspection is requested by the insured.

(b) If the optional inspection reveals that the insured premises does not comply with the applicable protective device requirements, the insured will be given thirty days from the date on which he is notified of the deficiencies in the protective devices on his property to correct those deficiencies. During that thirty day period burglary losses covered by the terms of the policy will be paid irrespective of any deficiencies in the insured's compliance with the protective device requirements. Burglary losses occurring more than thirty days after the date the

insured is notified of the results of the inspection will not be paid unless it is determined that the deficiency in the premisee's protective devices had been corrected prior to the loss.

(c) A reasonable fee, determined by the Administrator, shall be charged to the insured for each optional inspection of his property.

[38 FR 19686, July 23, 1973]

§ 1932.3c Consequences of failure to comply with protective device requirements for commercial proper. ties.

(a) Properties previously inspected. (1) If a commercial property that has undergone either a mandatory preinspection or an optional inspection, and has been found in compliance with the applicable protective device requirements, suffers a burglary loss caused in whole or in part by the failure of the insured premises at the time of the loss to comply with such requirements, which failure of compliance resulted from a mechanical failure, alteration, or removal of a required protective device by or with the knowledge of the insured subsequent to the inspection, such loss is not covered by the policy.

(2) If during the course of adjusting a claim involving a premise which has been found to be in compliance with applicable protective device requirements at the time of a prior mandatory or optional inspection, the adjuster or other investigator discovers a deficiency in the required protective devices on the premises which had not previously been noted but which does not involve a mechanical failure, alteration, or removal of a required protective device subsequent to the prior inspection, the deficiency will be made known to the insured, who will be given thirty days thereafter within which to remedy the deficiency. During that thirty day period burglary losses covered by the terms of the policy will be paid irrespective of the deficiency.

(b) Properties not previously inspected. Owners of commercial property covered by commercial crime insurance policies including coverage against burglary which has not undergone either a mandatory pre-inspection or an optional inspection are subject to the following regulations:

(1) Each property owner shall be personally responsible for meeting the protective device requirements applicable to the type of property for which he has

commercial crime insurance. Ignorance of these requirements shall not be deemed an excuse for any lack of compliance with the protective device requirements of this subchapter.

(2) Premises found upon investigation of a claim made under the policy to lack the required protective devices shall be deemed not to have been protected at the time insurance coverage is alleged to have commenced and no insurance coverage shall be deemed to have attached, regardless of the length of time the policy ostensibly has been in force, unless the property owner can clearly establish that a removal of the protective devices actually occurred subsequent to the date on which insurance coverage is alleged to have commenced, in which event the policy shall be deemed canceled by the insured as of the date of such removal.

(3) Premises found upon investigation of a claim made under the policy to be deficient in meeting the then currently applicable protective device requirements because of the uncorrected inadequacy, inoperability, or malfunction of existing protective devices shall, in the absence of evidence of fraud or misrepresentation be deemed to have been ineligible for coverage from the date of most recent application or renewal, whichever is applicable, and no coverage under the program shall exist with respect to such premises, regardless of the length of time the insured may have had coverage prior to such invalid application or renewal.

(c) The insured shall promptly notify the servicing company of any malfunction or breakdown of protective devices and supply it with all relevant facts at the time the deficiency occurs. If such deficiency is corrected within the time specified by the servicing company, no lapse in coverage will result.

[38 FR 19686, July 23, 1973]

§ 1932.4 Lack of residential protective devices voids residential policy.

(a) Each residential property owner applying for Federal Crime Insurance shall be personally responsible for meeting the protective device requirements applicable to his premises. Ignorance of such requirement shall not be deemed an excuse for any lack of compliance with the residential protective device requirements, and any person who is doubtful as to whether the protective devices existing on his premises at the time of application meet such requirements

should seek competent technical advice before actually making application.

(b) Although agents and brokers are expected to assist and advise property owners as to the requirements for and adequacy of protective devices for residential premises, no agent or broker shall be authorized to approve or disapprove on behalf of the insurer the adequacy of any required protective devices, and any representation to the contrary is false and shall be void.

(c) Residential premises found upon inspection to lack the required protective devices shall be deemed to have been misrepresented at the time of application, and no insurance coverage shall be deemed to have attached, regardless of the length of time the policy ostensibly has been in force, unless the property owner can clearly establish that a removal of the protective devices actually occurred subsequent to the issuance of the policy, in which event the policy shall be deemed canceled by the insured as of the date of such removal.

(d) The insured shall promptly notify the servicing company of any malfunction or breakdown of protective devices and supply it with all relevant facts at the time the deficiency occurs. If such deficiency is corrected within the time specified by the servicing company, no lapse in coverage will result.

(e) Residential premises found upon inspection to be deficient in meeting the then currently applicable residential protective device requirements because of the uncorrected inadequacy, inoperability, or malfunction of existing protective devices shall, in the absence of evidence of fraud or misrepresentation, be deemed to have been ineligible for coverage from the date of most recent application or renewal, whichever is applicable, and no coverage under the program shall exist with respect to such residential premises regardless of the length of time the insured may have had coverage prior to such invalid application or renewal.

[38 FR 19686, July 23, 1973]

Subpart B-Residential Properties § 1932.21 Minimum standards for residences and apartments.

In order to be eligible for Federal crime insurance, residential premises shall meet the following minimum standards:

(a) Each exterior doorway or doorway leading to garage areas, public hallways,

terraces, balconies, or other areas affording easy access to the insured premises, shall be protected by a door which, if not a sliding door, shall be equipped with a dead lock using either an interlocking vertical bolt and striker, or a minimum 1/2-inch throw dead bolt, or a minimum 2-inch throw self-locking dead latch.

(b) All sliding doors, first floor and basement windows, and windows opening onto stairways, fire escapes, porches, terraces, balconies, or other areas affording easy access to the premises, shall be equipped with a locking device of any kind.

Subpart C-Nonresidential Properties § 1932.31

Minimum standards for industrial and commercial properties. In order to be eligible for Federal crime insurance, a nonresidential premises shall meet the following minimum standards:

(a) Except for doorways that are completely protected during nonbusiness hours by heavy duty overhead doors or metal security screens or the equivalent, each exterior door shall be equipped with either a heavy-duty dead lock (utilizing either interlocking vertical bolts and striker or else a 1-inch dead bolt that extends at least one-half inch into the frame of the door), or a heavy-duty padlock (with casehardened steel shackle and five-pin tumbler operation), or a comparable dead lock or padlock that provides equivalent protection. Where applicable fire and safety laws permit their use, double-cylinder locks are recommended.

(b) All exterior grate or grill-type doors, overhead doors, and security screens or grillwork (unless permanently installed) shall be equipped with locks that meet the requirements of paragraph (a) of this section.

(c) Except for doorways that are completely protected during nonbusiness hours by heavy-duty overhead doors or metal security screens or the equivalent, each exterior door shall be of heavy gauge metal, tempered glass, or solid wood core (not less than 1% inches thick) construction, or else shall be covered with metal sheeting of at least 16 gauge (6-inch thick) or its equivalent, or with grillwork, to give like protection;

(d) Outside hinge pins shall be welded, flanged, or screw-secured, non-removable pins unless the hinge is constructed so as to provide equivalent protection

against the removal of the door to which it is attached when the door is in the closed position.

(e) Except where expressly prohibited by applicable laws pertaining to fire protection, accessible openings exceeding 96 square inches in area and 6 inches in the smallest dimension (other than storefront display windows), shall either meet the standards for exterior doors, or else shall be protected by inside or outside iron bars one-half inch in diameter, or by flat steel material, spaced not more than 5 inches apart and securely fastened, or by iron or steel grills of inch material of 2-inch mesh, securely fastened, or by other heavy-duty material that provides equivalent protection. The requirements of this paragraph shall not apply to skylights protected by alarm systems. For the purposes of this paragraph, an "accessible opening" is an opening such as a window, transom, skylight, or vent, regardless of whether it is made to be opened, which exceeds 96 square inches in area and 6 inches in the smallest dimension, any part of which is

(1) 18 feet or less above either the ground or the roof of an adjoining building, or

(2) 14 feet or less from directly or diagonally opposite windows, fire escapes, or roofs, or

(3) 3 feet or less from openings, fire escapes, etc., in or projecting from the same wall or an adjacent wall leading to other premises.

(f) The following types of establishments whose inventories pose a particularly heavy risk shall, as a minimum, in addition to the requirements of paragraphs (a) through (e) of this section, be protected by the type of alarm system indicated. If the system specified in subparagraph (1) of this paragraph is not available in the community in which the premises are located, the type of system specified in subparagraph (2) of this paragraph shall be permitted.

(1) Central station, supervised service, alarm systems shall be required for the following:

(i) Jewelry-manufacturing, sale, and retail;

(ii) Gun and ammunition shop;

(iii) Wholesale liquor;

(iv) Wholesale tobacco;

(v) Wholesale drug; and

(vi) Fur store.

whole

(2) Silent alarm systems shall be required for the following: