What You Need to Know
Safeguarding Your Business from Criminal Losses
Businesses face various threats, from employee theft to cyber fraud. Commercial Crime Insurance helps manage the financial risks associated with criminal acts, including theft, robbery, and embezzlement.
Without the right coverage, such crimes can cause significant financial harm to a business.
Let’s take an in-depth look at how crime insurance can protect your business from these risks.
What is Commercial Crime Insurance?
Commercial Crime Insurance is designed to protect businesses from financial losses caused by criminal acts such as theft, burglary, and fraud.
It covers losses related to property, money, and securities, safeguarding your company from both external and internal threats, including crimes committed by employees.
Types of Crimes Covered
1. Burglary
Burglary involves the illegal entry into a premises with the intent to steal. Evidence of forced entry, such as tool marks or damage to doors and windows, is required for a burglary claim to be valid under commercial crime insurance.
2. Safe Burglary
Safe burglary occurs when a safe or vault is forcibly opened or removed entirely from the premises.
3. Robbery
Robbery involves the use of force or intimidation to steal property directly from a person.
For a robbery claim to be valid, there must be proof that the person being robbed was threatened or harmed.
4. Theft
Theft is a broader term that covers any unlawful taking of property, including burglary, robbery, and shoplifting.
Unlike burglary or robbery, theft doesn’t necessarily involve force or threats.
5. Forgery
Forgery involves signing someone else’s name or altering documents such as checks or promissory notes with the intent to deceive.
6. Mysterious Disappearance
This refers to property that has vanished without any known explanation.
While it does not involve theft, the property is considered lost without evidence of what caused its disappearance.
Roles Defined in Commercial Crime Insurance
Custodian
A custodian is anyone who has care or custody of property inside the business premises. This includes business owners, partners, or employees but does not include watchpersons or janitors.
Messenger
A messenger is a person responsible for the business’s property while outside the premises, such as an employee carrying cash to the bank.
Watchperson
A watchperson is someone employed solely to guard property on the premises. Their role is specifically to monitor and safeguard the business’s property.
Types of Commercial Crime Insurance Forms
Crime insurance can be written as a standalone policy or included in a Commercial Package Policy (CPP). There are two primary types of crime forms: Loss Sustained and Discovery.
1. Loss Sustained Form
The Loss Sustained Form covers losses that occur during the policy period and are discovered either during the policy period or up to one year after the policy expires.
For example, if a theft occurs in April 2024 but is discovered in September 2025, the policy will cover the loss, provided it happened during the policy period and was discovered within the one-year discovery window.
2. Discovery Form
The discovery form provides broader protection, covering losses discovered during the policy period, regardless of when they occurred.
If an employee stole from the business several years ago but the theft was only discovered during the current policy period, the discovery form would cover the loss.
Crime Insurance Coverage Forms
Commercial crime insurance offers several coverage options to protect businesses from various threats:
1. Employee Theft
Employee theft coverage protects businesses from losses caused by dishonest employees, whether they act alone or in collusion with others.
This can be crucial for businesses with employees handling money, securities, or other valuable property.
2. Forgery or Alteration
This coverage reimburses businesses for losses caused by forged or altered checks, drafts, or promissory notes. It ensures protection against financial manipulation, including the use of fake signatures.
3. Inside the Premises – Theft of Money and Securities
This form covers theft, disappearance, or destruction of money and securities while inside the business premises or a bank.
4. Inside the Premises – Robbery or Safe Burglary
Coverage applies to robbery or safe burglary occurring within the business premises, including damage caused by these crimes.
5. Outside the Premises
Covers theft, disappearance, or destruction of money and securities when outside the business premises, such as when cash is being transported by a messenger or an armored vehicle.
6. Computer Fraud
This coverage protects businesses from losses resulting from computer-based theft or fraud, such as hacking or unauthorized transfers of funds.
7. Funds Transfer Fraud
Funds transfer fraud coverage protects against losses resulting from fraudulent instructions that lead a financial institution to transfer money without the business’s consent.
8. Extortion – Commercial Entities
Covers losses incurred due to extortion threats that demand money, property, or securities under threat of bodily harm to employees or relatives.
9. Guests’ Property
This form protects businesses, such as hotels, from losses related to guests’ property while it is in the business’s care or stored in a safe-deposit box on the premises.
Additional Insights on Crime Insurance
1. Policy Limits and Deductibles
Crime insurance policies typically have separate limits for different types of coverage. For instance, the limit for employee theft might be higher than the limit for computer fraud. Deductibles vary based on the type of loss and are an important factor in determining the out-of-pocket cost for a business before the insurance coverage kicks in.
2. Coverage for Emerging Risks
As cyber threats continue to evolve, some insurers are expanding their crime insurance policies to include coverage for social engineering fraud and phishing attacks. This ensures businesses are protected from modern forms of theft and fraud.
3. Coordination with Other Policies
It’s crucial to coordinate crime insurance with other policies such as cyber liability and property insurance. Doing so ensures that your business is fully protected from a range of risks without coverage gaps or overlaps.
Who Needs Commercial Crime Insurance?
Any business that handles money, valuable property, or has employees managing financial transactions should consider commercial crime insurance. Specific industries that benefit from this type of coverage include:
- Retailers managing large volumes of cash or high-value inventory.
- Financial institutions vulnerable to internal and external theft.
- Healthcare providers with sensitive patient data and valuable medical equipment.
- Manufacturers with significant amounts of raw materials and finished products.
Is Crime Insurance Right for Your Business?
At Armor Insurance Agency, we understand that every business is unique and faces different types of risks.
Commercial Crime Insurance can provide critical protection against the financial consequences of crimes like theft, forgery, and cyber fraud. Protect your business’s assets and reputation by ensuring that you have the right coverage in place.
Whether you are a small business or a large corporation, contact Armor Insurance Agency in Miles City, Montana, to learn more about how commercial crime insurance can safeguard your business from criminal threats.
Whether you are a small business or a large corporation, contact Armor Insurance Agency in Miles City, Montana, to learn more about how commercial crime insurance can safeguard your business from criminal threats.
FAQs
How does crime insurance differ from property insurance?
While property insurance covers physical damage, crime insurance protects against losses due to theft, fraud, and embezzlement.
Is employee theft covered under crime insurance?
Yes, most crime insurance policies include coverage for employee theft, protecting businesses from financial losses caused by dishonest employees.
What is the difference between the loss sustained and discovery forms?
The loss sustained form covers losses that occur during the policy period, while the discovery form covers losses discovered during the policy period, regardless of when they occurred.
Can crime insurance cover cyber-related crimes?
Yes, some crime policies offer coverage for cyber fraud, including computer-based theft and funds transfer fraud.
Does crime insurance cover theft by outsiders?
Yes, crime insurance typically covers theft committed by both employees and third parties, including burglars and robbers.