What Crime Insurance Is All About:
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 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.
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
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Does Crime Insurance Cover?
At a High Level...
The best insurance will include coverage against employee dishonesty (with or without third party collusion), fraud (including cyber fraud), embezzlement, robbery, counterfeiting, and forgery.
Getting Into the Details…
Although Crime Liability Insurance can be customized to suit your business needs, knowing what Crime Liability Insurance covers and how it works will help you understand and formulate a policy that will protect your business from criminal activities.
| Type of Claim | Description | Example |
|---|---|---|
| Dishonest Acts | Employees, contractual workers, and volunteers are all vulnerable to the temptation to steal. | From petty thefts to fraud, employees are constantly being tempted to steal because of lack of security, peer pressure, or critical needs. |
| Fraudulent Acts by Third Parties | This happens when someone gains unauthorized access to your business but is not employed directly by the company. | 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. | 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. | 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. | 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. | 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. | 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. | 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. | 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. | A hacker recently convinced a contractor to transfer money to his account. The business lost over a million dollars. |
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?
This kind of insurance is often confused with cyber crime. The main difference between cyber insurance and this insurance is that cyber insurance covers data breaches and the liabilities you may have to answer to if anyone affected by the breach decides to sue. Other scenarios not covered by Crime Liability Insurance are:
- Government seizures
- Loss of income
- Part-time employees who are not working on your premises
- Independent contractors like security guards, cleaning staff
- Employees who have been caught previously committing a dishonest act
- Damages from lawsuits, indirect losses such as business interruptions
- Legal expenses
- Criminal acts committed by company owners or top management
- War
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.
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.