Commercial crime insurance is an insurance policy for losses to your business because of criminal acts, such as employee theft or third-party fraud. Commercial crime coverage can be bundled with an existing commercial property policy or purchased as a stand-alone policy. Stand-alone crime insurance costs between $650 and $2,500 yearly.
Key takeaways
- Crime insurance primarily protects businesses from employee theft.
- Over time, other protections have been put into place, such as investigative costs, computer fraud, and funds transfer, or even theft of client property off-site.
- Crime insurance can be purchased on its own or bundled with other coverage.
- An Employee Retirement Income Security Act (ERISA) bond is an example of crime insurance.
Getting crime insurance online quickly can be challenging. However, dedicated small business insurer Hiscox makes it easy. In minutes, you can get a quote and purchase a policy online for crime insurance.
Crime Insurance Coverage & How It Works
Small businesses are the most likely to suffer from occupational fraud, which represents an average loss of 5% yearly. This is why commercial crime insurance is so important for business owners to consider. That 5% translates to approximately $150,000 in median losses each year.
Crime insurance is a policy you should consider to protect your business from financial losses resulting from criminal activity. Most commercial property insurance policies, if they have theft coverage, do not cover employee-related theft or theft of your items when they are in transit. But crime insurance, which can be purchased as a stand-alone policy or added to an existing business owner’s policy (BOP), does provide this crucial coverage.
Crime Insurance Claim Examples
Typically, crime insurance has two areas of coverage. First-party coverage is for a loss to your business from criminal activity while third-party coverage protects your business from another business or entity claiming that your business carried out a criminal act.
Examples of a covered loss include:
- Employee dishonesty: The most common type of crime insurance loss involves a dishonest act by an employee, such as taking cash from the register.
- Forgery: An employee forges a manager’s signature on a check for themselves.
- Illegal funds transfer: An employee creates a false vendor and transfers funds to a bank account associated with the fictitious business.
- Kidnapping, extortion, and ransom: A blackmailer threatens to reveal proprietary information.
False money order or counterfeit schemes: A customer pays for an order with counterfeit money.
What Crime Insurance Doesn’t Cover
Like any insurance policy, commercial crime insurance doesn’t cover every crime-related loss your business may suffer. These gaps in coverage are called exclusions on your policy.
Some common exclusions are:
- Executive crime: Criminal acts by an executive are usually not covered.
- Coordinated acts: Criminal acts by business partners in coordination with an employee are not covered.
- Cybercrime: Cyber liability insurance is stand-alone insurance.
- Wrongful termination: An employee claiming wrongful termination and other discriminatory acts are covered by employment practices liability insurance (EPLI).
- Multiple offenses: Typically, the first theft by an employee is covered, but if the employee develops a history of stealing from your business, then the policy will most likely stop providing coverage.
Commercial Crime Insurance Costs
Because of the nature of this insurance, obtaining a commercial crime insurance policy will usually be more involved than getting, say, general liability insurance. It is not uncommon for this type of insurance to require working with an agent.
When providing a quote for commercial crime insurance, insurers consider many factors, including who handles the money, the number of employees, history of theft with current employees, and the line of business.
Coverage Limit | Deductible | Estimated Average Cost |
|---|---|---|
$500,000 | $2,500 | $1,450 annually |
$1 million | $2,500 | $1,600 annually |
$3 million | $2,500 | $2,500 annually |
These estimates are for a stand-alone policy. Bundling with an existing policy should save you some money.
What Type of Commercial Crime Insurance Should You Buy?
There are several types of commercial crime insurance, and the best one for you depends on the needs of your business and what type of losses you want covered.
Who Needs Commercial Crime Insurance?
Every business should consider commercial crime insurance. Not only is employee theft all too common, but it can cost a business more than a normal theft. For example, a study found that theft by an employee costs retailers three times the amount of a shoplifting incident.
This cost to your business explains why a 2022 market study by Allied Market Research found that globally, interest in crime insurance is growing—along with the cost of crime insurance premiums.
Commercial Crime Insurance Providers
After researching many providers who offer commercial crime insurance, we recommend these top providers:
- Hiscox: Best overall provider for commercial crime insurance
- The Hanover: best for nonprofit organizations
- The Hartford: Best for customizable crime insurance
- Chubb: Best for businesses that work with independent contractors
Hiscox: Best Overall Provider for Commercial Crime Insurance
Pros
- Industry leader in crime insurance research
- Get online quotes for crime insurance
- Global coverage
Cons
- Does not maintain a 24/7 customer service or claims hotline
- Customer complaints are higher than expected
- Coverage unavailable for attorneys, claims adjusters, and the financial sector
Standout Features
- Covers employee theft, including for employees with a prior background
- Written on a discovery policy that includes automatic coverage for any subsidiaries
- Broad definition of “employee” that includes interns, students, directors/officers, and even volunteers
- Options to upgrade specific coverages within the policy, like increasing forgery coverage from $2,500 to $10,000
Financial stability: Hiscox has its roots as a brokerage going back over 100 years, but in recent history, it has moved into small business insurance. AM Best rated Hiscox an A (Excellent).
The Hanover: Best for Nonprofit Organizations
Pros
- Includes robbery coverage
- 24/7 claims reporting
- Mobile app for policy and claims management
Cons
- No online quotes
- Must work with a local agent for quotes and some policy assistance
Standout Features
- Access a team of licensed attorneys and paralegals to help with crime-related losses
- Dedicated policy program for nonprofits that includes crime insurance
- Definition of “employee” includes temporary workers
- Great for nonprofits that spend time away from the office, with coverage for third-party off-premise theft for organizations that have employees that spend significant amount of time offsite at client locations
Financial stability: The Hanover is a respected carrier with over 150 years of experience in offering insurance. The Hanover’s AM Best rating is A (Excellent).
The Hartford: Best for Customizable Crime Insurance
Pros
- Strong financial position
- Centuries of experience with insurance
- Investigative expenses are covered
Cons
- Difficult to get a quote online for crime insurance
- Does not have a mobile app for commercial policyholders
Standout Features
- CrimeSHIELD™ is an “all-in-one comprehensive” policy targeting businesses with revenue up to $5 million
- To ensure the coverage is right for your business, CrimeSHIELD™ has two different insuring agreements to choose from, plus over eight different optional coverages
- Number of optional coverages like credit, debit, charge card, depositor’s forgery, and alteration coverage
- Offers an ERISA Fidelity Bond with limits of up to $2 million
Financial stability: The Hartford is a global company with centuries of experience in the insurance industry. It has a strong financial rating, as AM Best rated The Hartford an A+ (Superior).
Chubb: Best for Businesses That Work With Independent Contractors
Pros
- Police notification is not required
- No collusion exclusion on theft of client funds
- Premises and transit coverage
Cons
- Getting an online quote for crime insurance is difficult
- No mobile app for commercial insurance
- No same-day coverage
Standout Features
- Chubb PrimarySM is the company’s commercial policy, and the definition of “employee” includes independent contractors
- Loss-discovered policy form helps extend coverage reporting and eligibility
- Broad coverage for all commercial risks and company sizes
- Claim and computer investigation expenses are covered under the policy
Financial stability: Chubb is another established carrier with a very long history. It has an established, global reputation of being financially sound, as Chubb’s AM Best rating is an A++ (Superior).
Bottom Line
Most commercial property insurance policies do not cover theft claims, especially those involving employee-related theft. Commercial crime insurance provides coverage for this gap in coverage for crime-related losses to your business. Since the average crime-related loss is over $300,000, the cost of not having commercial crime insurance is too great to ignore.
Crime insurance is an important but overlooked way to keep a business safe from employee theft. Hiscox understands the importance of crime insurance and has even spent years studying the effects of employee theft on small businesses. It has a policy designed for small businesses to protect them from this type of crime, and you can get a policy online in just minutes.
