Commercial Crime Insurance for Small Business

Crime is a serious business threat. Whether you are victimized by internal or external acts of crime, the business owner or manager has to assume the responsibility for money, data, or properties that were stolen.

Let us introduce you to Crime Insurance. The insurance that protects you from losses due to internal and external acts such as petty theft, forgery, burglary, extortion, computer fraud, and robbery.

It is not possible to monitor your business 100% of the time. Crime Liability Insurance enables you to recover from losses caused by criminal acts which are not covered by other insurance plans.

Read on to understand if this insurance type is right for your business.

What Crime Insurance Is All About:

What Is Crime Insurance?

Crime is one of the top causes of loss for modern businesses. Crime Insurance can protect your business from both first party risks and third party accusations of crime arising from your business. First party coverage is insurance for direct losses to the business from a covered criminal act. Third party coverage is for accusations from others that a criminal act related to your business caused a loss. A common circumstance is an accussation of theft by your employee of another's property.

This kind of business insurance includes 8 Insurance Service Office (ISO) insuring agreements:

Alteration or Forgery
Employee Theft
Theft of securities and money inside the business premises
Safe burglary or robbery inside the business premises
Theft outside the premises
Funds transfer fraud
Computer fraud
Counterfeit money and Money Order fraud

Crime Insurance is necessary for all business sizes and types. In fact, crime inside the office is almost never a one-time incident. Once an employee develops the habit of stealing, it is very hard to stop it. In addition, an employee committing criminal acts can influence other employees to do the same.

What Does Crime Insurance Cover?

Getting into details...

Dishonest Acts

Employees, contractual workers, and volunteers are all vulnerable to the temptation to steal. Example: From petty thefts to fraud, employees are constantly being tempted to steal because of lack of security, peer pressure, or critical needs.

Third Parties Fraudulent Acts

This happens when someone gains unauthorized access to your business but is not employed directly by the company. Example: Delivery persons, hackers, or agents are examples of persons who can steal from you.

Damage to Property

This is an act committed by an employee or burglar who damages or destroys property. Example: In the course of stealing from your company, a burglar could accidentally damage property in his rush to leave the premises.

Burglary of Safe

This is when a person manages to open an office safe and steal its contents. Example: If you keep cash and sensitive documents in an office safe and they are stolen.

Forgery, Alteration

This refers to someone who forges another person’s signature with the intent to steal or commit fraud. Example: Accepting a forged check can be very complicated as all parties (bank and account holder) will not want to honor the check which means you might have to cover the cost.

Computer Fraud

This involves the fraudulent transfer of money, property, or securities. Example: An email requesting for funds happened in the Tri-City last March causing businesses to lose money for issuing checks.

In Transit

Losses that occur while documents or products are in transit. Example: This usually involves a third party courier service that loses documents or products while they are in the process of being delivered.

Counterfeit

This happens when your employee accepts counterfeit money. Example: An ice cream store got victimized after accepting fake dollar bills. Unfortunately, the cashier did not notice the flaws in the bills and the buyer got away.

Credit Card Fraud

This act involves the use of a fake or stolen credit card. Example: This kind of activity is very popular especially with online transactions that are hacked and credit card numbers are stolen.

Impersonation Fraud

This happens when a person impersonates another and gets away with money, property, or products. Example: A hacker recently convinced a contractor to transfer money to his account. The business lost over a million dollars.

Do I Need Crime Insurance?

It will come in handy if your business:

Is a small to medium-sized business with limited resources to spend on security
Engages in cash, credit card, or check transactions
Hires part-time employees or volunteers
Has inventory, stocks, and products that can easily be used and carried out by employees
Allows employees to handle financial records and customer data
Does not have a good security system

Who is covered by Crime Insurance?

Your Business

Crime insurance is designed to protect your business first and foremost. If your employees steal from you, a third part commits robbery or theft, or you are robbed on the way to the bank your business will be reimbursed.
Your Employees

n addition to your business your employees are covered for robbery while they are doing business off your premises, such as at a jobsite. It also covers your employees for destruction of money and securities off site.
Acts of cyber crime and social engineering

This coverage will pay for the loss to a business when funds are sent to the wrong bank account, or important business information is stolen. There are many different insuring agreements within a crime insurance policy and it is important to know which coverages you're choosing.

What Are the “Limits” on a Crime Insurance Policy?

This type of insurance is usually customized to suit the needs of the business. Limits are computed based on maximum possible losses and budget. Crime Liability Insurance is a must-have for all businesses especially for those that have employees, suppliers, are computerized, and manage sensitive information.

In addition to that...

The best insurance will include coverage against employee dishonesty (with or without third party collusion), fraud (including cyber fraud), embezzlement, robbery, counterfeiting, and forgery.

You’ll Know It’s the Right Policy If It Covers:

Petty thefts, robbery, burglary within office premises
Fraudulent deals with employees, contractors, suppliers, and part-timers
Hacking of your company computers to steal funds, property, or securities
Damage to company property
Irreplaceable items stored in the office

What Does Crime Insurance Not Cover?

Government seizures

Government seizures are not covered by Crime Liability Insurance.
Loss of income

Loss of income is not covered by Crime Liability Insurance.
Employees

Part-time employees who are not working on your premises, independent contractors like security guards, cleaning staff and employees who have been caught previously committing a dishonest act are not covered by Crime Liability insurance.
Legal losses

Damages from lawsuits, indirect losses (such as business interruptions), legal expenses and criminal acts committed by company owners or top management are not covered by Crime Liability insurance.
War

In case of war, Crime Liability insurance does not apply.

How Much Does Crime Insurance Cost?

The cost of Crime Liability Insurance will depend on several factors such as:

Number of employees
Annual revenue
Presence or lack of office security
Presence of irreplaceable items on the office premises
How much insurance you want to buy often depends on how well you know and trust your employees.

Frequently Asked Questions

What is the most common claim on Crime Insurance?

While it may be difficult to think of the reality that your employees, even if they are family members, would steal from you, it is the case. The most common claim on a crime insurance policy is employee dishonesty. Unfortunately, it is often employees that are related to, or very good friends with, the business owner.

Is Crime Insurance the same as Fidelity Bond?

Crime insurance is different from a Fidelity Bond as a bond is required by the Employee Retirement Income Security Act to insure against dishonesty when it comes to retirement plans that are handled by someone within your business. Crime insurance is not required by law and covers employee dishonesty, theft of money and securities, and fraud.

What is third party crime coverage?

If you or your employees go to customer's homes or places of business to do your work, this is where third party crime coverage comes in. It will protect you from claims that you or your employees have stolen from the customer while on their premises completing your work.

Do you need more coverage?

Umbrella Insurance

Umbrella Liability can be a great solution for a business that needs more liability coverage than what is offered in their General Liability, Employer’s Liability or Auto Liability Plan. Umbrella coverage can be purchased as a standalone policy or can be bundled with a General Liability policy.

Errors & Omissions (E&O)

This insurance provides a business with protection should a mistake have been made while delivering professional services. Your General Liability policy will not provide you with this level of protection, so if your company gives advice or provides contracting services you may need this insurance.

Directors & Officers (D&O)

The directors and officers of a privately-held company are at risk from suits by a variety of different people, such as customers, competitors, suppliers and government agencies. However, the greatest number of lawsuits against directors and officers come from the employees of a company itself. D&O Insurance covers your management team, should things go south.

Employment Practices Liability

EPLI is a liability insurance that covers wrongful acts, such as wrongful termination, discrimination, sexual harassment and retaliation. This insurance may also protect your business from other employee-related claims, such as deprivation of a career opportunity, defamation, invasion of privacy, failure to promote, and negligent evaluation.

Inland Marine

This insurance protects goods in transit on land, as well as the property of others that is on your premises or being transported from your premises. An Inland Marine policy is crucial if your business ships goods of any kind on land.

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