Commercial Crime Insurance
Embroker helps you get commercial crime insurance to protect your business from losses due to crime-related issues such as petty theft, fraud, and burglary committed by both your employees and outside entities.
Although strong internal controls, audits and a good outside CPA firm can greatly reduce employee theft, even the most vigilant companies have sustained significant multi-million dollar losses.
According to a recent report, companies around the globe lost an estimated $4 trillion to fraud in 2017.
The right crime policy can safeguard your business from the risk of corporate asset theft to more sophisticated computer and online schemes.
We wrote this guide to help you, the business owner, understand both the basics of commercial crime insurance as well as some more advanced considerations. Our hope is that you walk away from this article a more empowered buyer, with a better understanding of the risk you can transfer to other parties via the commercial crime product.
If you’d like help, we’d invite you to talk with a broker or get started by creating an Embroker account. Our highly experienced insurance experts will work with you to gain a deep understanding of your unique needs before negotiating a customized policy on your behalf. For more clarity on pricing, your business will be benchmarked against similar businesses to identify any unforeseen exposures and premium savings opportunities.
What is Commercial Crime Insurance?
Whether it’s crimes committed by third parties or your own employee dishonesty, crime insurance can help protect your company from significant losses.
First party coverage protects your business from its own losses that occurred as a result of some type of criminal activity. Third party coverage protects your business if another business or entity claims that a criminal act perpetrated by your business caused them direct losses.
Who Needs Crime Insurance?
We advise our clients to consider crime insurance because it’s a simple risk transfer mechanism for theft and manipulation.
Businesses that do the following are more exposed to petty theft:
hire part-time employees
engage in cash transactions
have expensive equipment in the office
Companies that deal with the following are more exposed to digital theft and manipulation:
sensitive financial records
Why Do Businesses Need Crime Insurance Coverage?
In order to mitigate this risk, businesses buy insurance directly related to crime. Losses related to criminal acts can be frustrating and costly. In the digital age, manipulation and digital crime can be disruptive and this simple line of insurance can help.
What Does Crime Insurance Cover?
At the most basic level, crime insurance typically covers dishonest acts like petty theft and funds transfer fraud committed by part-time staff, volunteers or contractors, property damage, and burglary.
As the digital world has evolved, so has crime insurance. Now crime insurance can also cover digital crime, including theft of business information, money or property by hackers or con artists.
This often includes acts of forgery, and any instances of counterfeiting and impersonation that can do harm to your business.
What Doesn’t Crime Insurance Cover?
One common misunderstanding regarding crime insurance is related to computer fraud. Commercial crime insurance will often cover losses in which employees or third party hackers committed fraudulent or theft via computers, but crime insurance will typically not cover losses as a result of data breaches – this is covered separately, under your cyber liability insurance policy.
If you’re concerned about digital theft, manipulation and attacks, we encourage you to explore both Crime and Cyber insurance concurrently.
Highly-Publicized Examples of Crime Insurance Policies at Work
- A former senior manager at FoxConn, the world’s largest electronics maker and assembler, was charged with stealing and selling 5,700 iPhones for a value of about $1.56 million.
See: Foxconn Employee Steals 5,700 iPhones Before Getting Caught
- The Sixth Circuit appeals court found that American Tooling Centre’s loss of $834,107 due to email spoofing was covered by their crime policy.
See: Court Finds Travelers Crime Policy Covers Email Spoofing Losss
- Medidata employees were “spoofed” into wiring $5 million to an account they were led to believe was for an acquisition by a series of fraudulent emails that the fraudsters misrepresented were from an outside attorney and Medidata’s own president.
See: Chubb’s Crime Insurance Policy Covers ‘Spoofed’ Wire Transfer
- In May 2018, Happy Egg Co. of Rogers discovered that they were scammed out of nine payments totaling $972,500 that were re-routed via a change-of-account email from a purported employee.
See: Spoofing Scams Costs Arkansas Companies Millions
Commercial Crime Insurance Costs
As with all other types of insurance, companies price fidelity bonds and related policies according to business risk and crime coverage amount.
Some common risk metrics include:
Number of Employees: Insurers also consider whether the employees work at the same location or at multiple offices.
Revenue: Companies with high revenue streams generally are more tempting targets for malefactors and have more to lose.
Office security: Underwriters like to see some basic safeguards, such as a few strategically-located and unobtrusive cameras.
Financial controls: Underwriters also like to see that there are financial controls in place to protect against manipulation.
High-value items: A working prototype of a satellite stored in your office would be high value and could drive premium up significantly.
Now that you have a better understanding of commercial crime insurance, you may be wondering how all of this affects your business and where to go from here. If you need more help or information you can reach out to our team of expert brokers. If you prefer to get started on intelligent quotes, you can get started by creating an Embroker account today.
Having a quality commercial crime insurance policy in place and a broker who can help you navigate the terms and conditions as well as the the claims process can save you money and, more importantly, time.
Embroker is the easiest way to intelligently insure any business. We’re here to help!
Need other policies? Whether you’re a small business owner or large corporation, read up on the other business insurance policies we offer.