Commercial Crime Insurance Explained

Business owners may believe they only need basic commercial insurance coverage, but it’s wise to investigate obtaining coverage for a commercial crime insurance policy. But, can you afford to take the chance even with the most trusted of employees managing and operating your business?


Commercial Crime Insurance Real-Life Example

In May 2020, our team at Mason-McBride was notified by an insurance carrier of a claim. Unfortunately, the claim involved one of our clients.  

The client’s trusted Office Manager stole just more than $1,000,000 from the company. The insurance carrier conducted a detailed review.  The Office Manager failed to pay the insurance premiums for the business. The coverage had been canceled for non-payment.

Luckily, the only policy the Office Manager kept in force (paid up-to-date and active) was the commercial crime insurance policy! Within eight months, the carrier investigated the claim and paid our insured is $1,000,000. The annual premium for the commercial crime insurance policy was in the $1,700 range. 


The Basics of Commercial Crime Insurance

Crime insurance coverage protects companies from financial losses related to employee theft, fraud, robbery, forgery, and electronic crimes. A business can have stringent internal policies and procedures in place.  Risk still exists.  A trusted employee can act dishonestly, or external fraud can still occur.

According to Trusted, a crime policy generally also covers losses caused by specific acts of non-employees, including:

  • Theft, damage, or destruction of money, securities, and/or other property on the insured’s premises or elsewhere (for example, while in transit).
  • Forgery or alteration of negotiable instruments, including forging of the insured’s signature on business checks.
  • Fraudulent manipulation of the insured’s computer system, including a hacker transferring funds to an outside account.
  • Fraudulent electronic funds transfer instructions sent to the insured’s bank purporting to be from the insured.
  • Receipt of counterfeit currency by the insured.
  • Social engineering fraud.

The consequences of these crimes can be financially devastating for companies. Plus, it can also lead to severe reputational harm.

Therefore, crime insurance is an essential part of a company’s insurance arsenal. 

Additionally, the Employee Retirement Income Security Act of 1974 (ERISA) requires any person handling funds of a qualified employee benefit plan to be bonded. This feature is typically included in a commercial crime policy.



Scenarios Typically Not Covered in a Crime Insurance Policy

The following scenarios are typically not covered by crime insurance, as detailed on

  • Losses are caused by employees after the insured knows about a crime committed by that employee.
  • Indirect or consequential losses of any nature, such as business interruption or loss of potential income.
  • Legal expenses.
  • Expenses incurred in compiling proof of loss, unless claims/investigative expense coverage is included in the policy.
  • Data theft, including theft of a company’s data, trade secrets, client lists, or intellectual property.
  • Property damage caused by fire.
  • Fines and penalties.
  • Salaries and bonuses, commissions, fees, and any associated lost income.
  • Losses are based solely on inventory records.



Why Small Businesses Need Commercial Crime Insurance

If you’re a small business owner, one criminal act may mean the difference between keeping your business afloat and closing it entirely. A standard commercial property policy doesn’t cover you against the different criminal acts that can cause a substantial loss of money.

Commercial crime insurance protects you against criminal acts that result in losses for your business. Several sections of the policy describe the types, locations, and perpetrators of crimes that would be covered.


Obtaining a Crime Insurance Quote

Now you’re ready to obtain a quote. But, first, you’ll have to complete a comprehensive proposal form. This form will help your independent insurance agent, and insurance carriers better understand the risks faced by your business. 

This form requires you to provide information on:

  • Company size, including revenues, number of employees, locations, and geographic spread.
  • Operational industries.
  • Employee accessibility to cash or high-value items.
  • Systems and controls you have in place to prevent losses.  These include audit and payment request processes.


business theft insurance


Take Action to Safeguard Your Company 

Find out how Mason-McBride can help protect your business and request a proposal.

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