What’s Commercial Crime Insurance
Ever wondered what you would do if your company were robbed? Now imagine the culprit was one of your own employees. Crime insurance can help reduce your financial losses if worst comes to worst.
Commercial crime (fidelity) insurance protects your business from financial losses related to employee theft, forgery, robbery, and cyber-crime.
Sure, you may have put strong control measures in place to prevent dishonest employees from taking advantage of your business - but every system has its loopholes. And (don’t forget) where there’s a will, there’s most definitely a way for criminals or desperate individuals to bypass the security protocols of even the most highly-secured companies.
To make matters more complicated, employees aren’t your only threat - external fraud by non-employees can also hit your business and cause substantial losses.
The Good News
Whether you have concerns about the honesty of your staff or of external hackers and thieves, never fear. A crime insurance policy can shield your business from both internal and external business-related threats, including:
- Theft, damage, or destruction of company money and other assets both on your property or elsewhere (while travelling, for instance),
- Forgery or unauthorized alteration of signed documents or bank instructions
- Hacking or manipulation of your computer systems to transfer funds or access confidential information
- Receipt of counterfeit currency
- Social engineering (impersonation) fraud.
These crimes can hurt your business financially as well as reputationally, making crime insurance policies an essential part of your company’s security.
Not convinced? Here’s another incentive for you to get business crime coverage - the Employee Retirement Income Security Act of 1974 (ERISA) mandates anyone handling funds that belong to your benefits plan to be bonded, a feature that typically is included in commercial crime policies.
Key Features of Crime Coverage
Every policy will differ from insurer to insurer, but here are a few of the common characteristics of crime insurance policies:
- Named Perils.
- Typically, crime insurance policies are written on a “named perils” basis. This means losses must fall under one of the specified crimes in the policy in order to be covered.
- For commercial crime policies, the limit is usually not aggregated, applying separately to each and every loss.
- Deductibles apply separately to each loss. If several crimes are committed by the same person(s), the damages are grouped as a single loss subject to one limit and one deductible, regardless of how long the crimes went on before discovery.
Types of Coverage Triggers
- “Loss Discovered”
Under this form, coverage kicks in 1) as soon as you find out about a loss that occurs anytime during your policy period, or 2) if someone sues you for alleged crime covered under your policy. No matter how long ago the crime actually occurred. No matter how many facts about the crime are known. Unsurprisingly, these forms are much more preferable.
- If the above occurs, you’ll need to send a written notice about the loss discovery within 1-2 months.
- Providing proof of loss is largely your responsibility and must be sent to your insurance provider within 4-6 months of discovery. But here’s some good news - most providers cover some of the expenses required to hire forensic lawyers or accountants and help you recover most of your losses.
- “Loss Sustained”
- This form only allows coverage to kick in when losses actually occur.
What’s Not Covered
So far, we’ve discussed what crime insurance can do for you. But to provide balanced perspective, here’s the fine print about what it doesn’t cover:
Let’s Get Started
- If you know that an employee has committed a crime, your policy may not cover those losses.
- Indirect losses and financial consequences of a business interruption due to crimes.
- Legal and investigative expenses (unless your policy specifically covers these).
- Losses caused by stolen company data, trade secrets, client lists, or patents.
- Property damage caused by fire (there’s other insurance for this, obviously).
- Lost income in the form of salaries, bonuses, commissions, fees, etc.
- Losses only shown on inventory records.
Ready For A Quotation?
If you’ve read this much, you most likely believe crime insurance coverage is necessary for the success of your company. Carriage Trade can help you pick from the cream of the crop and get the best coverage for your business, at the best possible price - just have the following information at hand:
- The size of your company (in terms of revenues, employees, locations, and geographic scope)
- The industry within which you operate
- How much access your employees have to company valuables
- Your current control and preventive measures to minimize the occurrence of losses
- Your audit and payment request processes