As with any business insurance policy you buy, you hope you never need to use it. However, no company is entirely immune to risks, regardless of their precautions.

For example, a fire may rip through your workspace, causing severe damage. A customer could slip and fall on your premises, leaving you liable for their medical bills, or an employee inadvertently opens a malicious email link which exposes your clients’ data to fraud.

The same can be said for dishonest acts such as petty theft and fraud committed by your employees. Of course, you want to trust the people you hire, but unfortunately, your business may be more susceptible to internal crime than you think.

A credit card being used in a fraudulent act

According to research, 75% of employees admit to stealing from their workplaces at least once, and 64% of small business employees pinch or lift funds from their employers. That doesn’t mean everyone you hire is a potential thief, but it does highlight the necessity of erring on the side of caution and adding commercial crime insurance to your policy.

Commercial Crime Insurance 101

Commercial crime insurance (also known as fidelity insurance) is a policy that protects business owners from the direct loss of funds due to an act of internal theft. It also covers you from internal acts of forgery, counterfeiting or impersonation that result in stolen money, inventory (both physical and digital), property, stocks, or securities. In addition, it can cover the dishonest actions of employees and third parties (such as contractors and volunteers).

Commercial crime insurance can be purchased as a standalone policy, but it’s usually added as an endorsement to an existing insurance policy package.

Who Needs Commercial Crime Insurance?

Commercial crime insurance should be considered a vital policy for businesses of all sizes. Small business owners especially should include crime insurance as part of their package, not because they’re more at risk, but because one act of theft could be crippling in terms of its expense.

If you can answer “yes” to any of the following questions (and chances are, you can), your business could be susceptible to criminal activity:

  • Do employees have access to company money or equipment?
  • Do contractors ever work alone in your company space?
  • Do you keep valuable business items on- or off-premises in a safe or vault?
  • Do you have inventory or merchandise that can be easily stolen?
  • Do you allow electronic payments by debit or credit cards?

Commercial crime insurance can cover a variety of criminal actions such as forgery, embezzlement, and electronic transfer fraud. Here’s a list of some of the ways your business can be covered and some real-life examples you may be able to relate to: 

  • Theft by an employee: A policy will typically cover all financial losses related to employee theft (so long as you weren’t aware of the robbery before the policy start date). Say you own a retail store, and you’ve noticed an employee has been failing to register all customer purchases, taking the extra money from the cash register to balance the books. Crime insurance could reimburse your business for the stolen money.
  • Theft by a third party: A crime insurance policy could cover the costs of money or securities stolen from your property by someone not affiliated with your business. You might be thinking, “Doesn’t a commercial property policy cover theft?” While a commercial property policy covers third-party theft, it typically doesn’t protect monetary property – its purpose is to cover tangible property. So, suppose someone breaks into your business and manages to break into your safe after hours, stealing thousands in cash. Your crime insurance policy could cover the stolen funds and the repairs to the safe if required.
  • Loss of money while in transit: If you’re a victim of theft while your money or other securities are in-transit, you can be covered by crime insurance – even if it’s with a messenger or in an armoured vehicle. You can also be covered if the money is damaged or destroyed beyond acceptable use due to an event that occurs while it’s in transit.
  • Counterfeit money: You can be covered if you accidentally accept counterfeit currency or forged cheques if you assume it was legitimate but can’t be cleared.
  • Electronic funds transfer fraud: Many computer-related claims are covered by a cyber liability insurance policy. However, funds transfer fraud is an instance that a crime policy can cover. Fund transfer fraud is when a computer is used to transfer funds from inside the business or from the insured’s bank account to a third party. So, if a third party hacked into your business bank account and wired themselves thousands of dollars, crime insurance could cover the costs to recover or replace the lost funds.

What Isn’t Covered by Commercial Crime Insurance?

Crime insurance doesn’t cover all criminal acts, such as ones that are covered by other policies and criminal acts that are known by the insured:

  • Damage or loss to your premises or equipment due to a burglary, robbery, or break-in. These are covered by commercial property insurance.
  • Cybercrime-related losses such as a breach of data, stolen lists of customers, and lost patents are covered by cyber liability insurance.
  • Crimes committed by the insured, executives, business partners, or employees acting in coordination with any of these groups.
  • Indirect losses, such as having to close shop due to a break-in. This example could be covered by business interruption insurance.

Most commercial crime policies have a $5,000 limit. If you need a higher limit, speak to a Zensurance broker.

How to Prevent Crime in Your Workplace

It’s not possible to eliminate all risks of crime by any means. However, you can mitigate risk by becoming aware of common criminal tactics.

For instance, check out how to prevent fraud in your business by understanding the common scams that could be used against you. In addition, investigate ways to make it harder for criminals to exploit your business. You can do this by educating your staff and restricting and recording access to areas most susceptible to criminal activity, such as cash registers, point-of-sale systems, safes, and stored inventory.

Safeguard Your Assets Against Internal Theft

Crime exists even in the most secure and vigilant businesses. Protecting what’s valuable to you with commercial crime insurance is crucial.

Get a free quote with Zensurance today to learn how your business can be covered. Answer a few questions about your business, and we’ll provide you with various options that are right for you and your budget.

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