If you are a small business owner, you must be vigilant in securing your assets against theft to ensure safety. To minimize such perils and losses that might hurt a company’s assets and financial health, getting business crime insurance is essential.
Business crime insurance, also known as commercial crime insurance, is a crucial coverage for businesses to protect themselves from financial losses resulting from business-related crimes. If an individual commits any crime against your business, the policy would pay expenses for assets, merchandise, or property loss. Furthermore, fraud, embezzlement, forgery, misrepresentation, robbery, or theft are the kinds of business-related crimes against your business.
How Does Business Crime Insurance Work
Generally, losses resulting from crimes to businesses do not get covered by standard commercial property insurance. However, business crime insurance gets coverage as fidelity bonds, standalone policies, endorsements to commercial property policies, or as a component of commercial package policies (CPP) or business owner’s policies (BOP).
Business crimes Insurance can assist in recouping your losses from:
- Crimes committed by employees against you or your clients.
- Fund transfer fraud or forgery.
- Theft or robbery by third parties of cash or securities, either on or off premises.
Policyholders for business crime policy must indicate whether they prefer loss-sustaining or discovery-based coverage. Regardless of when the crimes might happen, discovery coverage covers those that are discovered and reported within the policy term. Loss sustained coverage covers crimes discovered during the policy term or within a year after it expires, provided an extended discovery period is applicable.
What Does Business Crime Insurance Cover
Business crime insurance aims to prevent various types of fraud including computer, check, embezzlement, business theft, computer, billing, and payroll fraud. However, the terms and offerings of your provider may determine how differently business crime policy is structured. In addition to a base crime insurance policy, you might need to choose certain endorsements to adequately cover your biggest risks.
For instance;
- Do you require coverage if theft occurs off-site?
- If a pension plan officer embezzles funds from the company-sponsored plan, does ERISA coverage need to be considered?
- Do any of your staff members possess the ability to transfer money?
- Are you concerned that workers may steal from your customers?
These are a few instances of particular risks that might call for extra thought and underwriting. Remember that employee theft rarely happens just once. Rather, the crime frequently takes place over a long period. Request your agent to discuss the two types of crime coverage: “loss sustained” and “loss discovered” to safeguard against ongoing losses.
The first type of coverage applies as long as your policy was in effect at the time of the crime, even if the thief began raiding five years prior. The second kind is only relevant if the offense happened within the duration of the policy.
What Does Business Crime Insurance Not Cover
There is no standard list because each policy has unique terms and exclusions. However, the following categories of losses do not get coverage from crime policy:
- Attorney fees (for taking the employee to court).
- Investigative costs (finding the crime or demonstrating its completeness).
- Losses incurred (such as not being covered for second chances) after you already know an employee has stolen from you or a previous employer.
- Theft of information (e.g., client lists, corporate records, trade secrets, and intellectual property).
- Losses that are only asserted based on inventory records (in the absence of convincing proof of theft).
- Bonuses or salaries are already given to the worker who turns out to be a thief.
- Indirect losses (such as missed pay from missed workdays or projects that aren’t able to be completed due to stolen computers or equipment).
Who Needs Business Crime Insurance
Any company that has volunteers or employees could benefit from purchasing business crime insurance. Businesses with a high turnover rate or a large number of part-time employees will particularly benefit from the coverage. Businesses with expensive office equipment, product inventory, electronic transfers, or frequent cash transactions, including credit unions and banks, require a business crime policy.
How to Get Business Crime Insurance
Businesses that offer commercial property and other business insurance kinds can help you purchase business crime insurance. Some insurers may allow adding business crime coverage to existing commercial property, business owners, or commercial package policies.