Commercial Crime Insurance

What is Commercial Crime Insurance?

There is a persistent issue of employee fraud across all industries. Whether it's an employee who has succumbed to temptation, a fraudulent scheme from a supplier, or even cybercriminals looking to exploit your trust, these threats can cause significant financial harm to your business. That's where crime insurance comes in.

Also known as commercial crime insurance, this policy provides a comprehensive coverage for criminal acts like employee dishonesty, computer fraud, identity theft, wire transfer fraud, or crimes committed by a third-party.

Apart from financial compensation, a crime insurance policy provides you the ability to respond promptly to criminal incidents, ensuring that your business's reputation remains intact.

Why do you need a Commercial Crime Insurance?
83% of all the organizations in India saw a rise in email phishing/spoofing attacks during the pandemic. It doesn’t matter if your organization is growing steadily or exponentially - monitoring everything and everyone can be extremely challenging irrespective of the size of your company. Having crime insurance ensures that your organization doesn’t suffer financially, and speeds up the recovery times for any business by reimbursing for losses of money, securities, and other tangible property.
Policy costs are affected by a variety of factors:

The number of employees in your business affects your crime insurance premium
A higher revenue flow means higher insurance premium
If your premiums are lower, your deductible will be higher, and vice versa
Basic security measures like strategically placed and unobtrusive cameras help underwriters assess risk better

What will a Commercial Crime Insurance policy cover?

In addition to dishonest acts like theft, funds transfer fraud, burglary, and property damage, crime insurance has now evolved to cover acts like email phishing, spoofing, and social engineering fraud. Here is the detailed coverages of crime insurance :

Theft

This coverage will protect your company from thefts committed by the employees of your business's assets. For example - an office boy stealing sample products from a store or a warehouse.

Fraud and Forgery

This includes stealing money or assets from an employer or organization that one is legally entrusted with. For example – an accountant or a cashier knowingly embezzling funds from the bank account or the cash register. Or a secretary signing your name on a document or a cheque.

Stealing from Customers

You are covered if your employee has stolen money or assets from a customer. For example – if anemployee of a legal company collects extra money for company registration from clients.

Legal Representation Costs

These are defense costs incurred by the insured for providing documents or information required by the investigator during an investigation.

Public Relations Costs

It includes costs associated with managing and mitigating the negative impact on the company's reputation, arising out of the acts or incidents mentioned above.

Crisis Communication Costs

This includes reasonable costs incurred by an insured organization in attaining the services of any public relations (PR) or crisis management firm. This might be required to manage the public image of the business in such situations as fraud or lawsuits.

What's not covered?

Commercial Crime insurance offers many exclusions. Some of the major exclusions in the insurance policy are given below :

Loss of income due to a criminal act by the insured themselves

If a criminal act committed by the insured themselves results in a loss of income for the insured, then such losses are not covered by the crime policy.

Property damage caused by fire

This type of loss is typically covered separately under fire or property insurance policies. Crime insurance also excludes coverage for any loss of income resulting from a fire.

Cybercrime losses such as trade secrets and patents

Loss of intangible assets such as trade secrets, patents, copyrights, and other forms of intellectual property are not covered in this policy. Businesses may opt for other specialized policies that are designed specifically to provide coverage for these types of losses, such as intellectual property insurance.

Crimes committed by CXOs or company management

Losses resulting from criminal acts committed by any of the CXOs or other members of the company management are not covered under this policy.

Who needs a Cyber Insurance?

Whether you are a private company, a public company, or an NGO, an employee can steal from your cash reserves, or fall victim to an email phishing attack. They could obey fraudulent instructions to transfer your company funds to another bank account. Worse, they could collaborate with a third party to steal your company’s stock gradually over a period of time. E-mail spoofing, phishing, theft, employee dishonesty, third-party fraud, forgery, and embezzlement impacts businesses of all types and sizes.

When are you vulnerable to digital theft and manipulation?

You do electronic transactions regularly
Your company has sensitive financial records
You have lots of customer information
Your team has part-time workers
Your office equipment is expensive

FAQs

How does crime insurance work?

Commercial Crime Insurance is a type of insurance that provides coverage for businesses against losses caused by criminal acts such as theft, fraud, and embezzlement. This type of insurance can be purchased by companies to protect against financial losses resulting from criminal activities committed by employees, customers, vendors, or other third parties. By having this coverage in place, businesses can improve their risk management practices, protect their assets, and improve their reputation.

What are the most common crime insurance claims?

Some of the most common commercial crime insurance claims include employee theft, computer fraud, forgery and alteration, robbery and burglary, funds transfer fraud, and social engineering fraud.

What are claims-made vs occurrences?

Claims-made and occurrences are two different types of insurance policy coverage forms that are commonly used in the insurance industry. Claims-made policies cover claims that are made during the policy period. This means that the policy must be active when the claim is made, regardless of when the actual incident occurred. On the other hand, occurrence policies cover incidents that occur during the policy period, regardless of when the claim is made.

What is a loss sustained form?

A loss sustained form is a type of insurance policy that covers losses that occur during the policy period, as well as losses that are discovered after the policy has expired. It provides coverage for losses that are discovered after the policy period ends, but that occurred during the policy period.

Can you switch from claims made to occurrences?

Yes. You can. Changing from claims-made coverage to occurrence coverage usually requires adding a 'tail' or extended reporting period. This can be expensive, and the length of the tail coverage period may be limited.

What is subrogation?

Subrogation is a process, where your insurance company can request repayment from another insurance company based on the damages the other company’s policyholder did to you.