One of the ABC’s of Business Insurance: Always Buy Crime Coverage!

Crime

If you’re like many business owners, once you get past the initial sigh and/or eye roll that accompanies the word “insurance,” you immediately start to think of property coverage as well as liability insurance. However, you probably don’t give much thought to crime insurance.

You should.

According to the 2018 Hiscox Embezzlement Study, the average loss was $357,650. In addition, the study notes that “companies that were victims of embezzlement lost far more than money: they lost customers, had more difficulty attracting new customers, and lost business partners.” [1].

Keep in mind that these statistics only pertain to embezzlement situations and don’t account for thefts committed by third parties. Outsiders can obviously steal from you as well and will use a variety of methods to steal your money and/or property, including increasingly sophisticated attacks via computer.

Interested in crime insurance yet?

Without getting too far into the weeds, here is a high-level overview of some of the most common types of crime insurance for businesses:

  • Employee Dishonesty: covers the loss of money, securities, and other property committed by an employee.
  • Forgery or Alteration: provides protection against checks, promissory notes, written orders/directions, etc. that are forged or altered.
  • Theft of Money and Securities: coverage for this type of situation is typically written with two different limits of insurance – one for inside your premises (or inside the premises of a financial institution) and another for outside the premises.
  • Robbery or Safe Burglary of Other Property: this covers the burglary of non-monetary items in a safe along with situations where there is bodily harm or the threat of bodily harm.
  • Computer Fraud and Funds Transfer Fraud: computer fraud coverage applies when money, securities, or other property is transferred or paid due to a fraudulent computer entry, while funds transfer fraud coverage pertains to when fraudulent instructions are provided to a financial institution.
  • Social Engineering (fraudulent impersonation of a customer or vendor): this is a newer type of coverage that protects you against having transferred money, securities, or other property based upon an impostor providing transfer instructions (e.g. someone posing as a vendor you utilize and they e-mail you a fake invoice).
  • Clients’ Property: provides coverage for theft of your clients’ money, securities, and other property when committed by one of your employees.

By no means is this a complete list of the types of crime insurance coverage available. Like many other areas of insurance, crime coverage continues to evolve due to new risks that business owners face. Criminals are becoming more creative in their tactics, so you’ll want to make sure your insurance program evolves as well.

Your best bet is to speak with your local independent agent about the types of scenarios that most concern you and then he or she can advise you of the various coverage options that are available. They may also point out some crime situations you hadn’t considered along with the appropriate solutions to protect you against them.

The information above is of a general nature and your policy and coverages provided may differ from the examples provided. Please read your policy in its entirety to determine your actual coverage available.

[1] https://www.hiscox.com/documents/2018-Hiscox-Embezzlement-Study.pdf

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