Crime Insurance: What it Covers, and Why It’s Important
This past November, a Virginia woman was convicted of embezzling over $326,000 from a family business for which she provided bookkeeping services. Having plead guilty to the crime, she subsequently plead for home confinement in lieu of a prison sentence, while prosecutors were pointing out that she had used the funds to remodel her home. They sought a prison sentence of up to three years, and the judge issued a sentence of 33 months in prison.
While the prison sentence will certainly punish the woman, it doesn’t help the family business that she destroyed with her unscrupulous actions. For that, the victims would require specialized insurance known as a commercial crime policy, or business crime insurance. Let’s check out how this kind of coverage could have helped, find out when it kicks in, and learn how you can get more information.
What Is Business Crime Insurance?
Business crime insurance is a special type of insurance policy which exists to protect businesses from any losses they suffer as a result of business-related crime. These policies can cover a broad range of damages, including cash losses, loss of or damage to assets, merchandise loss, property loss and others. It protects against embezzlement and forgery, fraud and theft, robbery or misrepresentation, and more.
The Commercial Crime Policy As Risk Management
Business owners will buy a commercial crime policy as a form of risk management to protect against things normal business coverage doesn’t. Most commercial insurance doesn’t cover losses from crime like burglary, theft, fraud, or the like. Business crime insurance fills that gap by allowing for the purchase of a specialized policy or as part of a special package commercial policy, which is sometimes referred to as “special multiperil” insurance.
Special Multiperil Insurance
Many business owners purchase crime insurance as part of a special multiperil package. Such an insurance policy is in place to protect your company from property loss, liability, damage, loss and crime. It essentially attempts to package all of your potential loss-related risk management into a single custom policy.
Crime insurance doesn’t have to be purchased as part of a multiperil policy, however. It can be purchased separately or added onto another policy. This approach allows you to specify the kinds of crimes you want to cover, which is very useful for companies that are more vulnerable to specific losses than others. An author, for example, may be more prone to loss from fraud or intellectual property theft than they are from physical robbery or equipment damage.
Why Crime Insurance Matters
Business-related crime forms a very significant liability for many companies. The ACFE, or Association of Certified Fraud Examiners, reports that over $400 billion in losses are reported every year from abuse and fraud alone. It’s an epidemic problem, with small businesses suffering the most vulnerability because they have less ability to implement safeguards against such practices. With fewer staff, they need to have a greater trust in their employees, which opens the door to theft and fraud.
The numbers reported by the ACFE amount to a loss of roughly $9 per day, per employee. That’s a significant loss when added up, especially to smaller businesses that can’t absorb the loss. It gets worse with more technological innovations, which both make things easier for small business owners, but also open the door for electronic fraud.
Business crime insurance, then, can protect your operations, assets and reputation from unscrupulous acts, whether by employees or outsiders. Whether it’s employees stealing cash from the till, embezzlement of electronic payment systems, burglary or robbery, or forgery or computer hacking, this kind of protection can quite literally save your company from bankruptcy and ruin.
Protect Your Business
Just like the family business above that was hit for $326,000 by an unscrupulous bookkeeper, your company could be at risk of severe harm from dishonest or outright criminal acts. It’s vital that you secure comprehensive insurance to manage the specific risks of your business. Whether you own a marina, a small mom-and-pop specialty store, an accounting business or a computer firm, you’ll have risks that are unique to your business.
Protecting against these risks not only grants peace of mind, but it can be the difference between success and bankruptcy. If you’d like more information on business crime insurance or how a commercial crime policy can help you and your company, Harris Insurance is ready to help.
We have been protecting businesses for over half a century. We’re ready to step in and help you build a custom insurance policy designed specifically for your business needs. From crime coverage to accidents and liability loss, we’re ready to protect you and provide the risk management you need. Get in touch with us for more information and to start your policy today.
