You can buy crime insurance from insurers that sell business policies. Coverage may be purchased as a separate policy or added to a commercial property or business owners policy (BOP) via an endorsement.
Types of Business Crime Insurance Coverages
Commercial crime insurance typically includes coverage for a number of different situations, including employee theft, forgery, computer fraud, and more. The most common coverages are outlined below.
Employee Theft
Business crime insurance is also sometimes called employee theft or employee dishonesty coverage. Although crime insurance usually also covers crimes committed by people outside of your organization as well, one of the core components of business crime insurance is coverage for losses caused by employee theft. Employee theft insurance fills a coverage gap in commercial property policies and BOPs, which often exclude property losses caused by employee theft.
Forgery or Alteration
Forgery or alteration insurance covers losses resulting from forgery or alteration of checks, drafts, and promissory notes that you or someone acting on your behalf wrote. Say, for example, your company issues a check to a vendor in the amount of $1,000. The vendor alters the check by adding a zero, changing the amount to $10,000. Any financial losses from the vendor’s criminal activity would be covered.
Theft of Money and Securities Inside Your Premises
This coverage protects you if someone breaks into your premises or your bank’s business location and steals your cash or securities. For instance, if a thief kicks in your business’s door and steals cash by prying open a locked safe, you could be compensated. Money and securities insurance also covers any damage to your premises or a locked safe, cash box, or cash register located inside your premises if the damage is caused by thieves or would-be thieves. In the previous example, the insurance would cover the damage to your door and safe, and reimburse you for your stolen cash.
Robbery or Safe Burglary Inside Your Premises
Robbery and safe burglary insurance covers loss or damage to property other than money or securities. If a criminal enters your premises and robs you or an employee, or forcibly breaks open a locked safe or steals the safe itself, you will be financially protected. Let’s say a thief entered your high-end clothing store. He pointed a gun at an employee and demanded she hand over six designer leather jackets, each worth $10,000. He then raided a safe filled with jewelry and left your store with the stolen goods. You would most likely be able to get the value of the jackets and jewelry back.
Theft of Property Outside Your Premises
Your crime insurance may include a provision that covers the loss of money and securities outside your business premises in certain circumstances. In order to be covered, the assets would need to have been in the custody of a company messenger or an armored car company, and would need to have been stolen, destroyed, or have disappeared. For example, suppose an employee is carrying a bag of cash to the bank so they can deposit it into your firm’s checking account. Suddenly, a thief darts out, grabs the cash, and disappears. Your policy should cover you in that situation.
Computer Fraud
Crime insurance may cover computer fraud. This coverage protects businesses from losses that occur when a fraudster uses a computer to transfer money, securities, or other property from your company’s premises or from a bank to a location or person outside those premises. For example, you would be covered if a disgruntled former employee hacked into your computer system, created a fake vendor profile using their bank account details, and then transferred money from your company’s bank account into their personal account.
Funds Transfer Fraud
Funds transfer fraud insurance covers situations in which a scammer gets money by pretending to be from your organization. For example, imagine a scammer who emails one of your employees and pretends he’s you, the owner of the company. He directs the employee to wire a large sum of money into a fake vendor’s bank account, which is actually the fraudster’s account. Under ordinary commercial crime policies, the insurer may not be legally obligated to cover this theft. If this is a major concern for your business, you should look into getting separate coverage that is specifically designed to cover funds transfer fraud.
