Why Your Business Needs Crime Insurance

You trust your employees. You rarely keep customer data on hand. You have strict protocols for both customers and employees to prevent theft. Why does your business need crime insurance?  

According to PwC’s Global Economic Crime and Fraud Survey (2020), 47% of companies have experienced a type of fraud in the past 24 months, including asset misappropriation and accounting fraud. Thirty-seven percent of that fraud has been committed by an employee of the company¹. While any company can be the target of a crime, "smaller organizations often are more vulnerable to fraud because they may lack financial or wire instruction controls that larger organization may routinely employ"². As more companies shift to a work from home model, business owners must consider all potential exposures. 

What is Crime Insurance? 

Crime insurance covers businesses for losses due to employee theft or third- party fraud. It is often listed as a line-item in a Business Owners Policy or as a separate Crime Policy. Depending on your policy, crime coverage can include:  

• Employee Dishonesty
• Forgery or Alteration
• Theft of Money and Securities (inside and outside the premises)
• Computer Fraud
• Funds Transfer Fraud
• Money Orders and Counterfeit Currency

Based on your specific risk exposures, you can elect to purchase some or all of the above coverages and even increase certain limits to ensure you have adequate coverage in the event of a crime loss. 

How do I know if I have the Crime Insurance needed to protect my business?  

We recommend asking your risk advisor to walk you through each line of coverage and the specific ways it could be beneficial to your company’s risk management strategy. In the unfortunate event of a crime loss, your insurance will respond based on the type of crime committed: Employee Dishonesty, Third-Party Theft, Credit Card Fraud or Funds Transfer Fraud.  

Fortunately, it is relatively simple to customize crime insurance for your business’s specific risk. Provide your risk advisor with details regarding your company’s day-to-day operations, regulations, and procedures, as well as employee responsibilities. Be sure to ask your advisor if your crime insurance is “loss discovered” or “loss sustained,” as this can significantly impact the way your claim is reviewed and processed. 

We also recommend involving your general counsel in this discussion so they may be informed of any policy limitations.  

Common Crime Claim scenarios  

• The accountant you’ve trusted for twenty years has been sending small sums of money to an unknown account each month. Since it’s a small amount, it goes unnoticed for years. Over time, the loss amounts to millions of dollars.
• One of your employees is dispatched to a client’s house to complete a work order. While on-site, your employee is caught stealing on camera.
• An employee’s corporate credit card is used by a third party, who forges the employee’s signature. The charge comes back to you.
• One of your software technicians steals a few laptops from your client's workplace. Your client is holding you responsible.
• Your entire company is working from home. One of your employees is responsible for delivering cash deposits from their house to the bank every Monday. Over the weekend, their house is robbed, and the cash is stolen. It is not covered under the employee’s homeowners policy because the cash is company property.

Tips for managing your business’s crime risk 

It’s hard to question employees you trust, but accountability is imperative for business operations. What kind of checks and balances do you have in place for each department? Do you have proper authentication procedures for invoicing and transferring funds? 

• Audit financial records regularly
• Install security cameras in your business space
• Consider the risk management and loss control services provided by your insurance carrier or even your advisor's office.
• Ask your carrier for resources on staff training, fraud prevention, and best practices for working from home. Implement these policies and procedures into your training manuals, employee handbook, and new-hire orientation.
• Implement multi-factor authentication procedures for company email
• Communicate your crime prevention policies to all employees

The descriptions of coverages listed in this article are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle Collins & Associates can assist in meeting your coverage needs, please contact your dedicated risk manager. The information contained in this article is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request. Thank you.