What Is Commercial Crime Insurance?

With technological advances, businesses can improve processes but also risk cyberattacks or other business-related crimes. Fortunately, for businesses of all sizes, commercial crime insurance can protect your company from losses. These insurance policies will typically cover cash, assets, merchandise, or other property loss if the business is a victim of fraud.  Read on to understand how to get commercial crime insurance and why you need it. 

What Is Commercial Crime Insurance?

Commercial crime insurance is an insurance policy that protects your business when it is a victim of any company perpetrating fraud, embezzlement, forgery, misrepresentation, robbery, theft, or any other type of business-related crime on the company. Business crime insurance can cover your company for all types of business crime, from cyber to physical attacks.

You will need to purchase business crime policies separately from other types of business insurance, such as commercial property insurance or liability insurance.

While businesses that deal in cash used to be the most vulnerable to attacks, now businesses that accept online payments are also susceptible to business crime. When a crime occurs, business crime insurance can cover business losses in cash, assets, merchandise, or other property.

How Does Commercial Crime Insurance Work? 

Most commercial property or business policies do not cover crime-related losses. If your company is a victim of any criminal activity, from cybercrime to a physical break-in, you will only be protected if you purchase business crime insurance. Generally, you can get this as part of an industrial package policy, sometimes called special multi-peril insurance.

You can choose a bundle of policies to protect your business from various losses or perils, including property loss, liability, and cyberattacks. However, unless you specifically choose a crime insurance policy, it's not normally covered in a standard commercial business package policy. 

You can also choose a stand-alone policy. For many businesses, a stand-alone policy is more comprehensive as it allows you to choose a policy that covers the perils or crimes relevant to your business. While comprehensive coverage is important, if your business is an online business, for example, cybercrimes or hacking could be a major threat. If you're concerned about cash embezzlement by an employee, you might choose additional cash coverage. 

Who Needs Commercial Crime Coverage?

Every business can benefit from commercial crime insurance and the protections it offers. However, small businesses with limited employees or limited risk may choose not to get this type of coverage until they grow. 

However, policies can help give even small businesses peace of mind if the worst happens, especially if there is a substantial investment in inventory, cash on hand, or a high volume of online transactions. 

What Does a Commercial Crime Policy Cover?

While commercial crime policies cover many perils, it doesn't cover everything. Here is an overview of common coverage. 

• Forgery or alterations: This includes any losses due to forged checks, drafts, or promissory notes, as well as any alterations to those financial vehicles that lead to business losses. It also includes money orders and counterfeit money that the company accepted for merchandise or services. 
• Inventory loss: This can include theft from a store or warehouse, as well as any other robbery that results in loss or damage to business property other than money or securities.
• Employee theft: This offers coverage to the company in case employees take inventory, money, securities, or other property from the business, or the business loses these due to employee actions. 
• Theft of money includes loss of money and securities, including inside the businesses' premises or a financial institution, like a bank account.
• Fraudulent transfers: If your business is a victim of computer and funds transfer fraud, insurance will cover the losses, whether they result from fraudulent data entry or from electronic data or computer programs.
• Electronic attacks: Crime insurance will also cover the direct losses from cyberattacks or hacking. 

What Is Not Covered?

While commercial crime insurance covers direct financial losses, it doesn't cover indirect financial losses. 

That means it won't cover:

• Business interruption
• Loss of income due to natural disasters or other issues
• Legal expenses
• Indirect losses 
• Losses due to data breaches are not covered in all policies

How Much Does Commercial Crime Insurance Cost?

The cost of commercial crime insurance varies by the type of coverage and the amount of coverage. Costs are affected by the following: 

• Amount of Coverage 
• Any deductibles and deductible amount
• Personal and financial information handled
• Number of employees with access to sensitive information
• Your businesses' credit rating

Location, history of losses, specific risks, and industry can also affect total costs. For a small business, you could pay as little as $500 to $2,000 annually, while medium to large-size businesses require you to pay many times that. You can get a precise quote online to start comparing the best offers. 

Find the Best Commercial Crime Insurance From Benzinga’s Top Lenders

Benzinga's top providers of commercial crime insurance offer reliable protection for businesses of all sizes. Get a quote here. 

How to Prevent Crime Happening From Your Business

To prevent crimes from happening to your business, focus on the business culture and building trust, as well as putting safeguards in place, such as:

• Use security cameras and video monitoring on the premises
• Use strong cybersecurity measures
• Require two signatures on all financial transactions
• Work with banks that are FDIC-insured and with strong cybersecurity protocols
• Perform background checks on all employees
• Carry out a risk assessment to identify weak security areas
• Control inventory and have inventory verification in place
• Use crime mapping before choosing any business premises. 
• Install alarms and security devices
• Lock doors and windows
• Setup a security protocol for opening and closing any offices

Do You Need Commercial Crime Insurance?

Most businesses can benefit from commercial crime insurance. Whether you're just starting out or already have significant cash flow, the proliferation of online crime means most businesses can benefit from added protection. By getting a realistic sense of the coverage you need and shopping around, you can find excellent coverage that fits your business budget and protects company growth. You can also check out the best business insurance 2024 here to discover the best options for your needs. 

Frequently Asked Questions