How Does Business Crime Insurance Work?

Business crime insurance, also referred to as commercial fidelity and crime insurance, is designed to protect a company’s cash, assets, merchandise, and other property against business-related crimes not covered under a standard general liability or commercial property policy, such as: 

• Fraud – Including the receipt of counterfeit currency.
• Embezzlement – When a non-employee steals or misappropriates a company’s money or property.
• Forgery – Alteration of negotiable paperwork, including forging the insured’s signature.
• Misrepresentation – If an employee convinces someone to enter into a contract based on false information.
• Theft, Robbery, & Dishonest Acts – Including damage and/or destruction of money, securities, and other property due to employee dishonesty. Coverage generally extends to the insured’s premises, as well as offsite.
• Electronic Crimes – Computer and social engineering (i.e., impersonation) fraud, including computer system manipulation and the transfer of funds.

Related: All About Cyber Liability Insurance 

Business crime insurance policies are written on a named perils basis, which means that unless a cause of loss is specifically included, it’s excluded (more next). 

These policies either provide coverage on a 1) per-loss-limit basis, a 2) per employee limit, or a 3) per position limit. Furthermore, policies usually specify different coverage limits for losses that occur on business property, versus off-premises. 

As with most other types of commercial business insurance, a crime insurance policy comes with a deductible that insureds are responsible for before coverage kicks in. 

What Doesn’t Business Crime Insurance Cover?

Business crime insurance policies typically exclude losses:

• Accounting errors
• Caused by you or your business partners
• Caused after the insured knows that a crime has been committed by an employee
• Indirect losses, including business interruption or loss of income
• Salaries (including commissions and other fees)
• Legal expenses
• Related fines and penalties
• Cyber liability and data breaches, including the loss of patents, trade secrets, or customer lists
• Fire damage to property
• Losses related to maintaining inventory records
• Claims caused by an employee who’s previously been caught stealing
• Legal fees, except those related to forgery
• Some inventory shortages
• Losses caused by trading and investment decisions
• Receipts for proof of commodity ownership

Furthermore, business crime insurance excludes losses caused by criminal activity, accounting errors, your actions or those of your partners.  

Additionally, if you’re employed as an attorney, claims adjuster, or work in the financial industry, many carriers won’t provide business crime insurance. 

What are Some Examples of Business Crime Insurance in Action?

Business Crime Insurance Example #1

An employee regularly steals from your company’s petty theft fund, resulting in tens of thousands in losses over the course of several years. 

Business Crime Insurance Example #2

A third party, such as a hacker, gains access to your business and consistently steals funds or other forms of property. 

Business Crime Insurance Example #3

An employee or unrelated burglar attempts to steal from your business, and in the course accidentally damages your company’s property. 

Which Business Types Need Commercial Crime Insurance?

If you’re a busines that handles cash or processes online payments (credit cards and other methods), whether a nonprofit, private, or public company, you’re highly susceptible to commercial crime and might need related insurance. 

Consequently, businesses of any size can be impacted by commercial crime, although smaller businesses with lower profits and less personnel are often most vulnerable, since employees and management are often in closer contact. 

With these details in mind, you could also benefit from business crime insurance if your company had five or more full-time employees, hires part-time or seasonal employees, sells items like apparel or small electronics, has access to sensitive customer data or financial records, or experiences frequent public foot traffic. 

How Much Does Business Crime Insurance Cost?

Business crime insurance is quote-based, which means that a wide variety of factors can contribute to how much you pay. Some of the most common include a business’s: 

• Coverage limits – The higher your limits, the more you’ll pay in annual premiums.
• Revenue (annual sales)
• Size / Number of employees – The greater number of employees, the more a company can expect to pay.
• Locations
• Regional impact
• Industry – Higher-risk industries (e.g., convenience stores) will pay more than lower-risk industries.
• Cash and high-value item accessibility to employees
• System controls (i.e., audit requests, payment processes, etc.)
• Security measures – Physical features like full security systems, individual cameras, and in-depth auditing procedures
• Claims history – If your business has frequent claims, you’ll likely pay more than someone with fewer.

With these details in mind, you can expect most standalone crime insurance policies to cost somewhere between $300 and $4,200 per year for $100,000 in coverage, with business revenue under $500K. 

How Can You Buy Business Crime Insurance?

In most instances, companies can purchase business crime insurance as part of a special multi-peril policy, which packages together several types of commercial insurance. These include property loss, liability, and other forms, depending on your company’s specific needs. 

Depending on the carrier, you might also be able to purchase business crime insurance as a standalone policy, which can provide greater flexibility regarding their specific insurance exposures.  

How Can You Learn More About Business Crime Insurance? 

The team at IHS Insurance Group boasts decades of combined experience helping clients like you choose the appropriate business crime insurance limits, depending on your exposures. We also always include your budget in the decision process! 

Do you need a FREE Quote or have questions regarding commercial insurance? Please fill out our quick  GET A FREE QUOTE form, and an agent will get back to you at your convenience!

We look forward to speaking with you today!