Business crime insurance (also known as commercial crime insurance) is a special kind of business insurance that protects your business from losses related to criminal acts. Crimes covered could be committed by employees or third parties.
While business owners want to be able to trust all their employees, statistics show that 95% of employers encounter employee theft at some point. Whether that’s stealing from inventory or even targeting clients, it’s an alarming percentage.
The good news is that at least you can protect your business financially with a business crime insurance package, which not only insures you against employee theft but also other criminal act-related losses. Here are the essentials that you need to know about business crime insurance.
Commercial crime insurance is meant to protect your business from dishonest criminal acts such as theft, robbery, and destruction of your property. This type of insurance is generally able to be purchased as part of a multi-peril insurance package. You can also buy it as a standalone policy, which usually allows for more freedom and customization, but may be more costly than if you buy it within a policy bundle.
Different insurance companies may have varying coverage details, but the standard business crime insurance should cover the following risks:
Theft can be complicated because there are so many types of theft. Petty theft and larceny are covered by commercial crime insurance. Your coverage limit for theft will list how much the insurance policy will cover you up to.
Employee dishonesty can come in many forms, not just employee theft like shoplifting. They may also commit crimes such as embezzlement, larceny, skimming, forging signatures, inflating expense reports, stealing funds, as well as theft of information.
Employees are necessary for a business to run smoothly and scale. Unfortunately, they are also a point of risk, especially in certain industries such as retail.
Forgeries can happen for document signatures, bank notes, checks, and more. It is more common than you might expect. Checks are sometimes fradulently written, signed, or altered by criminal parties. If your crime insurance covers forgery and alteration, you may be covered financially in case someone commits forgery and hurts your business.
Counterfeit currency used in transactions with your business can be problematic and costly. If your business accept what appears to be a legitimate money order but your bank later charges you and notifies you of counterfeit currency, counterfeit insurance may be able to help your business out.
Commercial insurance policies are important for businesses. If you run a business, commercial crime insurance is a good idea because it will protect your business from criminal act-related losses.
Some businesses will have increased exposure to criminal threats. For example, if you hire part-time employees, they may be more likely to commit petty theft against you. If you do any of the following within your business, your threat exposure will also be above average.
Shoplifting is the most common crime in the United States, and inventory shrinkage is mainly caused by rampant shoplifting.
In today’s day and age, many companies have digital assets that should be insured. Data theft can be extremely costly. If you store sensitive customer data, make transactions digitally, or have any financial records that need protection, you should consider getting crime insurance that covers digital theft and manipulation.
Commercial crime insurance is NOT the same as cyber liability insurance. Your commercial crime insurance policy may cover direct losses following cyber attacks, such as if a hacker or employee commits theft through digital means. However, indirect costs are not covered.
If you are worried about cyber crime costs, cyber liability policies cover the indirect damages following a cyber incident, such as data breaches.
There are many benefits to getting commercial crime insurance. The main one is so that businesses can be financially covered in the case of a crime that results in direct losses for their company, such as employee theft or counterfeit currencies.
A fidelity bond is a subtype of crime insurance and has essential differences from typical crime insurance. While it is meant to protect your business from fraudulent acts committed by employees, it often has lower limits and can reimburse customers for damages.
Business crime insurance does NOT cover every kind of crime! There are many exclusions in crime insurance policies, so it is essential to check your policy details and understand when you are not covered.
The standard business crime insurance policy generally excludes the following:
If you are worried about not having adequate coverage, insurance companies often offer a selection of endorsements and policy add-ons that you can purchase to expand your coverage.
No organization should assume that they are impenetrable. Any company can be hit by crime, no matter if it’s a non-profit, public company, or private company. If you’re a business owner, you should consider crime insurance for your company. As long as you are an organization that is not a financial institution, crime insurance should be a good idea. Financial institutions require unique bonds for crime to ensure proper coverage.
If your company has high risks and can lose a lot from criminal acts of your employees or third parties, you should seriously consider procuring crime insurance. Countless companies face internal theft and related expenses.
Businesses face criminal challenges all the time. Shoplifting is actually a billion dollar problem every year, and fraud can cause many complications and inconveniences. The average fraud case costs a company over _a million dollars! _That is not pleasant for any company and can be catastrophic.
It’s natural for startups to be worried about their budget and think that they should not waste money on unnecessary insurance policies. However, it is important to be aware of your risk level. Assess your business carefully and research your industry to see whether you should get business crime insurance.
Large enterprises sustain heavy losses each year due to criminal acts. Enterprises should certainly look into getting crime insurance that suits their needs so that they can be financially protected.
Small businesses will generally spend anything from $1000 to several thousand dollars every year on business crime insurance. There are ways to reduce your insurance premium like with any other sort of insurance.
Here are some ways you could make your commercial crime insurance more affordable.
If you want a more affordable price, it is a good idea to compare different competitive insurance company quotes before you make a policy decision. Different insurers may make policy adjustments according to your needs and ultimately come to a different premium based on your business.
Not every add-on is necessary. If you’re buying an insurance package, check the policy details so that you aren’t overpaying for endorsements and add-ons that you do not actually need. Assess what your risk level for business crime expenses is and you may be able to adjust your policy based on that.
The coverage limit for your crime insurance policy will tell you up to how much you will be covered in the case of a valid insurance claim. Not every business has enough valuable assets to need incredibly high coverage limits. Double check your policy before you purchase to see whether there are alterations you can make to reduce your business crime insurance premium.
Insurance companies do not usually like to provide coverage for companies that are excessively risky. They want you to take security seriously and have a strong security posture, digital or physical. If you can prove to your insurance company that you are investing in security technology for your business, you may be able to reduce your premium by reducing your risk level.
Increasing your security does not have to be very expensive or complex. It can be as simple as adding password controls and extra authentication layers like multi factor authentication (MFA). Other ways to improve your security include encrypting your data and adding cameras to your business site.
In essence, the more security protocols you have in place, the more likely you will be able to be insured and pay less for your policy.
The amount of commercial crime insurance that your company needs will depend on numerous factors. Companies will often spend thousands of dollars on various forms of insurance each year so that they are adequately covered in case of a covered incident.
As for how much insurance your company should get, it will depend on many factors. An expert can help you make an informed decision.
Not every company is exposed to the same level of risk and threat. When determining your risk level, consider your industry, your niche, the kind of employees you hire, and what assets you have that may be stolen.
While any employee could be dishonest while working for your company, some kinds of hires have been shown to be riskier. If you hire part-time employees, volunteers, contractors, or other temporary workers, you may have more threat exposure. However, at the same time internal risks from long-time, permanent employees is also a serious concern for many business owners.
At the end of the day, a company can only do its due diligence during the hiring process and try to hire trustworthy employees. To ensure that there are not any too costly expenses due to employee dishonesty, you may need business crime insurance.
The main factors related to company size that insurance companies tend to look at are the number of employees you have as well as your revenue. If you have more employees, it seems more likely to insurers that someone will steal from your company. Meanwhile, if you have plenty of revenue, insurance companies know that higher revenue companies tend to see larger claims. Fraud for a small business may be a claim of several thousand dollars, whereas enterprise fraud can skyrocket to over millions of dollars.
Since theft is insured under business crime insurance, insurance companies will look at how much value your business property is. If you have items that have high direct cash value, especially ones that are easily accessible to your workforce (such as daily use equipment), it can make your premium a lot more expensive.
Another big factor to how much your business crime insurance quote will be is your claims history. If you have needed numerous claims in the past, it suggests you have lax security controls and excessive losses. In that case, you may have to pay more for your premium. When dealing with crime, it’s a good idea to be proactive and secure your assets!