Commercial Crime Insurance

Commercial Crime Insurance. Graphic of the word crime.

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. Even with the most trusted of employees managing and operating your business, can you afford to take the chance?

Commercial Crime Insurance Real-Life Example

In May 2020, our team at Mason-McBride was notified by an insurance carrier of a claim. 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 8 months, the carrier investigated the claim and made payment to our insured in the amount of $1,000,000. The annual premium for the commercial crime insurance policy was in the $1,700 range. 

 

The Basics of Commercial Crime Insurance

Commercial crime insurance provides companies with protection from financial losses related to theft by employees, 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 Choice.com, 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 both 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, a feature that is typically included in a commercial crime policy.

 

Scenarios Typically Not Covered in a Commerical Crime Insurance Policy

The following scenarios are typically not covered by crime insurance, as detailed on TrustedChoice.com:

  • Losses 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 based solely on inventory records.

 

Obtaining a Commercial Crime Insurance Quote

Now you’re ready to obtain a quote. 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.

 

Get Started Today

If you have any questions about your coverage, or to review your policy limits, please contact us. For helpful tips on other popular topics, check out our articles on Cyber Insurance, Winter Home Protection, and Ransomware Developments. As always, we are here to help you, your employees, and your business with all your insurance needs — from commercial insurance to group benefits to personal insurance. Thank you for allowing Mason-McBride to serve you!

 

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