What Is Crime Insurance and How Does It Work

Crime insurance is a type of insurance that helps protect businesses and individuals from financial losses due to crimes such as theft, robbery, and vandalism.

It's a specialized form of insurance that's designed to cover losses that aren't typically covered by standard business insurance policies.

Crime insurance policies often have a deductible, which is the amount you must pay out of pocket before the insurance kicks in.

The deductible can vary depending on the policy and the type of crime that occurs.

Commercial crime insurance provides financial protection from losses resulting from criminal acts such as theft, fraud, and embezzlement.

It's a type of insurance that can safeguard your business from significant losses caused by both third parties or internal employees. Companies around the globe lost an estimated $4 trillion to fraud in 2017.

Commercial crime insurance can help protect your company from losses caused by employee theft, including shoplifting, embezzlement, and larceny. This can be a major concern, even for the most vigilant companies.

There are two types of commercial crime coverage: first-party coverage and third-party coverage. First-party coverage protects your business from its own losses, while third-party coverage protects your business if another business or entity claims that a criminal act perpetrated by your business caused them direct losses.

Some common types of crimes covered by commercial crime insurance include employee theft, third-party theft, forgery and fraud, money laundering, counterfeit currency, and social engineering fraud.

Crime insurance covers a broad range of crime-related losses, including employee theft, computer fraud, and losses related to extortion, kidnapping, and ransom.

One of the key benefits of crime insurance is that it protects businesses from losses resulting from theft by employees. This type of coverage is often referred to as third-party crime insurance coverage, and it typically comes in the form of a fidelity bond.

Employee theft is a significant risk for many businesses, and crime insurance can help mitigate this risk by providing coverage for loss of or damage to money, securities, and other property resulting directly from theft committed by an employee.

Crime insurance also covers forgery or alteration resulting in losses directly from forgery or alteration of checks, drafts, promissory notes, or similar instruments. This can be a significant protection for businesses that handle a lot of financial transactions.

In addition to these coverages, crime insurance can also protect businesses from losses resulting from theft of money and securities on and off premises, as well as from robbery or safe burglary for loss or damage to property other than money or securities.

Here are some examples of what is covered by crime insurance:

It's worth noting that crime insurance typically excludes losses resulting from normal business risks, employee disputes unrelated to dishonesty, and acts of war or terrorism.

Crime insurance comes in various forms to protect businesses from different types of risks.

There's commercial crime insurance, which provides broad protection against criminal acts committed by employees or third parties.

Crime insurance can also be contrasted with cyber insurance, which specifically addresses cyber incidents like data breaches and cyberattacks.

Fidelity bonds, on the other hand, are insurance policies that cover losses from employee dishonesty or fraud, often required in industries like finance and healthcare.

You can also add employee dishonesty coverage to your existing policy, which provides protection against employees who steal from your business.

Business is a target for various types of crimes. Business crime insurance is a type of insurance policy that can protect a business from losses due to business-related crimes.

This type of insurance can cover losses from cash, assets, merchandise, or other property when someone commits fraud, embezzlement, forgery, misrepresentation, robbery, theft, or any other type of business-related crime.

Cyber insurance is a type of coverage that specifically addresses cyber incidents like data breaches and cyberattacks.

Cyber insurance can provide protection against losses due to email spoofing, as seen in the case of American Tooling Centre, which lost $834,107 due to email spoofing and was found to be covered by their crime policy.

Data breaches can occur at your business, and if an employee is responsible, commercial crime insurance may not provide coverage for related expenses, such as customer notifications. You should get data breach insurance, also known as cyber insurance, for this protection.

Cyber insurance can also provide protection against spoofing scams, which have cost Arkansas companies millions, including Happy Egg Co., which was scammed out of nine payments totaling $972,500.

In contrast to crime insurance, cyber insurance specifically addresses cyber incidents and is not just a broad protection against criminal acts.

Here are some key differences between cyber insurance and crime insurance:

Fidelity bonds, also known as honesty bonds, are insurance policies that specifically cover losses from employee dishonesty or fraud.

They're often required in industries like finance and healthcare.

Fidelity bonds are designated as either first-party or third-party, covering acts committed by employees or contractors.

A fidelity bond typically works like a standard insurance policy, with the insured paying back any covered losses.

In contrast, a crime policy provides broader protection against criminal acts committed by employees or third-party individuals.

Businesses of all sizes and industries can be financially impacted by crime. Any organization that handles cash, valuable assets, or sensitive information can benefit from a commercial crime policy.

Finance and technology businesses are especially at risk due to employee access to sensitive personal data. Cleaning businesses also rely on janitorial bonds to protect against employee theft of client property.

If your employees handle financial records and transactions, or if they are trusted with valuable client property, you and your business partners could use this coverage as part of your risk management program and to gain client trust.

Any business that handles cash, valuable assets, or sensitive information can benefit from a commercial crime policy. This includes organizations of all sizes and industries.

Businesses that rely on the trustworthiness of their employees may also want to consider crime insurance. This can help protect against employee theft or misuse of sensitive financial data.

Finance and technology businesses are especially at risk of employee crime-related losses. This is because their employees often have access to sensitive personal data.

Cleaning businesses that rely on janitorial bonds to protect against employee theft of client property may also want to consider crime insurance. This can provide an additional layer of protection against losses.

If your employees handle financial records and transactions, or if they are trusted with valuable client property, you and your business partners may benefit from this coverage.

If you hire an employee with a known criminal record and they commit fraud or theft, commercial crime insurance will not be applicable.

You need to carefully consider the risks of hiring someone with a criminal past.

Employees with a history of crime can be a liability, and if they cause harm to your business, you may not be protected by commercial crime insurance.

Business owners or senior management are not covered by commercial crime insurance policies, which only protect against employee theft or fraud.