Crime Coverage
Crime insurance, sometimes called fidelity coverage, is intended to financially protect your business from criminal acts committed by both your employees and third parties. It can cover losses due to fraud, theft, robbery and forgery. Crime is usually excluded from standard business property policies and must be purchased as an enhancement or as a separate policy.
FAQs
Types of crime coverage
Crime insurance is highly customizable depending on your business exposures to fraudulent activities and provides a wide range of coverage types.
- Employee dishonesty & theft helps protect you against dishonest or criminal acts committed by your employees, including theft of money and property
Example: One of your employees has been skimming cash from the register
- Theft of money & securities inside your premises covers theft and damages caused by a person not in your employment. This coverage includes the loss of money and securities by theft, as well as the disappearance, damage or destruction of your property (like a cash register) that is the result of an actual or attempted theft or unlawful entry.
Example: When you arrive at your hardware store, you discover that someone has broken into the store and stolen the cash in the register, several high ticket items and they have destroyed your safe.
- Theft of money & securities outside your premises helps cover the loss of money, securities and other property in the custody of a messenger by theft, disappearance or destruction while outside your premises.
Example: You task an employee with depositing your clothing store’s daily earnings at the local bank. When your employee arrives at the bank, he discovers that he lost the deposit bag somewhere enroute.
- Robbery or burglary inside your premises protects your business against the loss of property, (other than money and securities) that occurs by robbery of a custodian or safe burglary by a non-employee, inside your business premises.
Example: A local thief is caught stealing inventory
- Forgery or alteration protects against the forgery or alternation of checks, drafts and promissory notes by a person that is not your employee.
Example: You discover that your bookkeeper has been altering checks to make them payable to an account she controls.
- Computer & funds transfer fraud is intended to cover the loss of money, securities and other property that is the result of a computer being used fraudulently to transfer money. It also covers the loss of funds by a fraudulent instruction that directs a financial institution to transfer, pay or deliver funds from your business account.
Example: A new employee receives an email that appears to be from the CEO directing him to transfer funds to an outside account. The employee processes the request but it is later discovered that the email is fraudulent.
- Money orders and counterfeit paper currency covers currency that is accepted in good faith in exchange for purchases and money orders that are not paid upon presentation that end up being counterfeit.
Example: A new employee at your convenience store accepts a fake $100 bill from a customer.
- Client Property is defined as the theft of your clients’ money, securities or property by one of your employees.
Example: One of the maids that works for your janitorial business has been caught stealing expensive items like jewelry from your client’s home.
- ERISA stands for the Employee Retirement Income Security Act. This coverage type is for businesses that manage an employee benefit plan, such as a 401(k).
Example: Your HR director manages your employee 401(k) plan but you learn that she has been stealing funds from the company plan.
What isn’t covered by crime insurance?
Crime coverage typically excludes things that are better covered by a different type of insurance. Some examples of common crime exclusions are:
- Accounting errors and omissions would be covered by a professional liability or errors and omissions liability policy
- Theft by the business or property owner
- Data breaches would be covered by a cyber liability policy
- Government seizure
- Vandalism is likely covered by property insurance
It is important to note that if it is found that one of your employees has committed theft of your property and you opt to retain them, any subsequent losses associated with that employee will likely not be covered by your crime policy.
What businesses need crime coverage?
Did you know that 75% of employees admit to stealing from their employers at least once? While you may have trustworthy employees and safeguards in place to prevent fraud, nearly all businesses are susceptible to crime losses. Small business are particularly at risk because they often have less robust security measures in place and have closer relationships to their employees. As technology advances, so too do the ways in which this technology can be used to defraud business owners. If any of the below situations describe your business, crime coverage can help protect your financial assets.
- If your business handles financial transactions with your customers
- If your employees handle financial records and transactions
- If your employees are trusted with client property
- If your business primarily deals in cash or online payments
How much does crime insurance cost?
Crime insurance costs can vary depending on a variety of factors such as: the number of employees you have, your business location, the type of business you operate, your hiring practices and your control procedures. The more preventive measures you have in place to prevent crime incidents, the more affordable your coverage is likely to be.
Crime prevention tips
Prevention is the best way to reduce the likelihood of an insurance loss. See the below tips for some simple ways you can protect your business assets from a crime scenario.
- Check for discrepancies daily
- Utilize security measures like cameras, locks and safes as much as possible
- Conduct employee background checks
- Deposit money daily
- Provide training for employees on what to do in the event of a robbery
- Regular third-party audits