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The Basics of Commercial Crime Insurance

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Commercial crime insurance—also referred to as business crime insurance—is designed to protect your business from crime-related losses such as fraud, forgery, embezzlement, robbery/theft, and other crimes. Most businesses can purchase this insurance as part of a package, often referred to as special multi-peril insurance. It is also offered as a stand-alone policy.

Why Do You Need Crime Insurance?

According to the 32nd Annual Retail Theft Survey conducted by Jack L. Hayes International, “Over 348,000 shoplifters and dishonest employees were apprehended in 2019 by just 21 large retailers who recovered over $136 million from these thieves.”

According to an Embezzlement study done by Hiscox in 2018, the average loss from employee embezzlement was $357,650. More than half of the companies impacted only recovered about ⅓ of the embezzled money. Even worse, these businesses lost customers, business partners, and suffered damage to their reputations.

The Association of Certified Fraud Examiners 2020 Report to the Nations covered 125 countries and over 2,500 cases in their report. They reported more than $3.6 billion in losses due to fraud alone between January 2018 and September 2019

While you don’t expect to be robbed or for an employee to steal from your business, it happens every single day. Small businesses aren’t immune to theft, which is why you need to make sure you’re protecting your business with the proper commercial crime coverage.

What is Covered Under Business Crime Insurance?

Crime insurance provides coverage for employee dishonesty coverage, forgery or alteration coverage, theft of property, theft of money and securities, burglary/robbery, computer fraud, and some will include extortion and kidnapping. 

Employee Dishonesty Coverage

Employee Dishonesty Coverage is the core of commercial crime insurance. It protects small businesses (employees, managers, partners, directors) from loss of money due to acts of employee dishonesty (employee theft, fraud, forgery, etc). People often use it interchangeably with crime insurance, however, business crime insurance is usually more comprehensive.

Example: An employee at your local deli has been skimming money off of your cash register during their shift. They weren’t caught until you implemented security cameras behind the counter. Dishonesty coverage paid for the costs associated with the theft. 

Forgery or Alteration Coverage

This portion of the policy covers financial losses sustained by forged or altered checks, usually done by an employee or business partner. Some small business policies cover between $2,500–$10,000 in losses.

Example: One of your employees routinely runs checks made out to the business to the bank. However, they alter an occasional check so it’s deposited into their account. Your bookkeeper finds the discrepancy and reports it. The responsible person is fired and your insurance company helps you recoup your losses.

Theft of Money and Securities Coverage

This part of your crime policy covers monetary and securities losses within or outside of your business. 

Example: Your business account isn’t lining up with your accounting. After an investigation, it’s found that someone had gained access to your account and was routing money to their account. 

Burglary or Robbery Coverage

The robbery and burglary portion of your coverage protects you and your employees if your small business is robbed under the threat of force. It can also cover any damage to your business premises or property associated with the robbery (that is excluded by your commercial property insurance).

Example: Your convenience store is held at gunpoint and the gunmen empty your cash registers. Luckily, your employees aren’t harmed. But your business insurance will cover replacing the damaged doors and windows and replace the loss up to the limits of your policy.

Computer Fraud Coverage

Your business is protected from computer fraud due to phishing, ransomware, and any other losses involving a computer. This can include money transfers perpetrated from fraud including funds fradulent transfer and money orders fraud.

Example: Your work hard to properly train your staff to recognize phishing emails. However, your bookkeeper is duped by a realistic email requesting a wire transfer payment. She later finds out that it was spam and is distraught. But luckily your crime policy will cover the loss. 

Extortion and Kidnapping

Kidnapping and extortion of small and medium-sized businesses aren't common. However, this can be added as an endorsement to most commercial crime insurance policies. If business owners, partner, manager, or other employee is kidnapped and you’re extorted for money, this policy can cover the cost of the ransom.

Example: The manager of your local grocery is kidnapped, and the kidnappers demand a ransom of $25,000. Your insurance policy can help cover the ransom and negotiate the safe return of your employee. 

What is Excluded from a Crime Insurance Policy?

What isn’t covered by a business crime insurance policy? It doesn’t cover any actions perpetrated by you or business partners. It also doesn’t cover:

  • Accounting errors on the part of the business owner
  • Some occupations/businesses such as financial institutions
  • Third-party property damage or personal injury
  • Loss of income due to a business interruption
  • Losses sustained by data breaches must be covered under cyber liability

Crime insurance also excludes coverage if employee theft occurs by someone who was previously found guilty of stealing from you in the past. 

Crime Prevention Tips

What are some ways you can prevent crime in your business? Here are some helpful risk management tips:

  • Closely monitor cash transactions. Deposit any extra cash on hand to the bank daily. Schedule it at different times from day-to-day. 
  • Make sure your receipts are compared to your deposits and that they line up.
  • Lock all rear entrance doors at all times.
  • Keep a safe on-site to store cash and other valuables. 
  • If within your budget, install security cameras throughout your property. 
  • Make sure you conduct background checks on every employee.
  • Make sure your employees are well-trained in opening and closing procedures. 
  • Train your employees on the correct procedure if a robbery is to occur. You want to clearly communicate that they are not to put themselves in the way of harm. 

How Much Does Commercial Crime Insurance Cost?

The pricing of commercial crime insurance depends on different variables, including:

  • The number of employees
  • Annual revenue of your business
  • Whether or not you have security measures in place
  • Other safety measures that you have in place
  • What type of high-value assets you have on your premises
  • The endorsements you choose as part of the crime policy
  • The deductibles and policy limits you choose
  • The insurance company that you work with

Get a Free Commercial Crime Insurance Quote

Do you have questions about a commercial crime package? Do you need tips to help provide protection for your business? We will gladly help answer any questions you may have. If you’d like a free quote, complete the form at the top of the page or call us at 877-907-5267.


Related Insurance Policies: Commercial Property Insurance | Employment Practices Liability Insurance | Kidnap and Ransom Insurance | Commercial Property & Casualty Insurance

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