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Commercial Crime
Commercial Crime Insurance
What is Commercial Crime Insurance?

A report in 2017 shows about $4 trillion was lost by companies to fraud. With a number this high, there's no telling how many companies around the globe are affected. To deal with the possibly seldom but almost inevitable cases of fraud, a crime insurance policy is important.

Commercial crime insurance protects a business against losses caused by fraudulent activities either internally or by a third party. Commercial crime insurance gives coverage for losses relating to monetary, assets, and property theft. The coverage extends to losses incurred by embezzlement, misrepresentation, and other business-related criminal acts.

Two popular types of commercial crime insurance are; first-party coverage and third-party coverage.

  • First-party coverage provides insurance for a company's direct losses. It's a protection for fraudulent acts that directly affects a business.
  • Third-party coverage provides insurance when another business alleges that a fraudulent or criminal act by a company resulted in losses for it.
What does it cover?

Crime insurance provides coverage for petty dishonest acts such as burglary, transfer of funds out of a company's account by a part-time employee, or theft of cash funds. By extension, it protects a business from sophisticated crimes like forgery, cyber fund theft, or information leak.

Crime insurance also covers third-party claims of criminal activities that led to a loss of funds for such a company. For example, if apart-time worker at a company "A " performs a crime that affects a certain company "B", company " A" can be ruled responsible for the loss. In such a situation cited above, a crime insurance plan will cover the cost of the loss.

As a business contemplates purchasing crime insurance, a decision must be made regarding when the policy will be activated.  Crime insurance can be activated in two ways:

  • When a crime is detected, not when it happens. This type of activation means if a crime happens when a policy is active, even if it was detected after the policy period, the coverage is still usable.
  • The second option known as a "loss sustained coverage" applies to losses that happened and were discovered within the policy period. Often, this type of policy gives an additional year advantage for any type of criminal discovery.

Each business decides what type of coverage to choose based on what is most beneficial. As much a company may seek to maximize its insurance, terms and conditions apply and must be examined properly. Speak with your advisor about the value of crime insurance.

What does it not cover?

Every insurance cover has an exemption. Commercial crime insurance exemptions are:

  • Crimes committed by executives of a company
  • A joint crime by the employees and business partners
  • Indirect loss of funds or loss of income
  • Claims that are under the umbrella of other policies
  • Fraudulent acts of business partners
  • Cyber theft of client lists or patents
  • Intellectual Property theft
  • Fire damage
  • Potential income loss

When taking steps to purchase crime insurance, each buyer must speak at length about what is covered and what's not. This helps to understand the extent of the coverage and more importantly, to purchase other types of coverage as necessary.

Who needs it?

Crime insurance is necessary for businesses that have large cash transactions, expensive office equipment, and that hire part-time workers or freelancers. Companies in charge of client data and financial data will also benefit from commercial crime insurance. Digital or offline, the act of fraud is always a threat to any company with financial dealings.

Some common fraudulent acts that any company may want to plan for using the crime insurance cover are:

  • Internal Employee theft: Employee theft could take several forms. It could be through embezzlement, theft orchestrated by an employee alongside an external individual, or information theft. An employee could take money directly from a cash register, forge a signature to steal from the company's account, and partner with an external individual to carry out shoplifting. A company could lose a huge amount of money due to an employee leaking vital customer information or sensitive business intel to competitors.
  • Cyber Frauds: Cyber frauds encompasses both employees who perpetrated a cybercrime or third-party online fraudsters. Cyber frauds covered by crime insurance will involve the loss of funds. However, cyber fraud covered by crime insurance will not include data breaches or any other form of cyber attack. A separate policy is known as cyber liability cover such as criminal acts.

What does it cost?

The cost of crime insurance is dependent on certain metrics and criteria. Often, a crime insurance policy can be packaged with a Business Owners Policy or is purchased as standalone coverage. The insurance premium for commercial crime insurance is typically between $500 to $5,000 a year. Below are factors that determine the cost of a policy.

  • Company Size: The number of employees is considered by insurers before a price is selected. The number of workers, and the amount that are able to access financials, will affect the total premium.
  • Company Revenue: The size of a company's revenue influences the amount charged.  Large revenue means more targets. A company with revenue in thousands will likely pay less for coverage than one with millions.
  • Security Level: The level of security, such as central burglar alarms, interior and exterior cameras, and cyber-security measures, are also a price determinant. For companies with expensive equipment or large cash transactions, security is often considered.
  • Financial Precautions: The strength of financial precautions will also determine the price of coverage. Financial precautions are aimed at mitigating the occurrence of fraud or any form of monetary manipulation.
  • Expensive Office Items: The items in a workplace are put into consideration when analyzing the price of coverage. The premium for a business with equipment or productions worth a fortune would be significantly high.

Why Fullsteam?

We’re humans, not robots.

We could have our algorithm give you a quote in 10 minutes. But your business deserves better than that. You deserve a dedicated insurance advisor and service team who knows how to manage complex risk.

We serve you, not the bank.

Your personal insurance advisor will negotiate the best coverage, at the best rate, from the best insurance carriers. Because anything less wouldn’t be acceptable.

Excellence is our middle name.

Think of us like your personal risk management concierge. The godparents to your business. Call, email, text, DM... we’re here whenever you need us.

We e-everything.

Paperwork is annoying. So we do business digitally. Life is just easier that way. Plus killing trees is mean.

Got questions? Give us a call.