Crime insurance covers losses resulting from criminal acts, including employee dishonesty and third-party fraud. It covers an important gap in commercial property insurance. Most business owners need some crime coverage, but a few industries like retail and financial advisors face greater risk. Standalone crime insurance costs between $240 and $4,000.
Hiscox has a commercial crime package you can add to your business owner’s property. The coverage is designed specifically for small business owners. Plus, you work directly with the company, which keeps costs down.
Top Crime Insurance Providers
|Hiscox||Business owners who want broad commercial crime coverage added to their BOP|
|Insurance321||Business owners who want to get matched to the appropriate carrier without submitting multiple applications|
|Farmers Insurance||Business owners who want an agent to evaluate their crime risk|
|Nationwide||Businesses that need both on- and off-site crime coverage|
|The Hanover||Business owners who offer employee benefits and need ERISA bonds|
Hiscox is a large insurance provider that specializes in small business lines. It’s been writing insurance policies in the United States for more than 100 years, and that experience means it can offer crime insurance coverage to businesses in most industries.
The company’s crime insurance is an add-on to its business owner’s policy (BOPS). BOPs are already a smart purchase for small business owners because they offer essential coverage at a lower premium. Adding crime insurance adds to your overall saving. Plus, Hiscox has a simple application and sends quote instantly.
Insurance 321 is an online insurance marketplace that put business owners in touch with agents and carriers that can quote their risk fast. Once you submit your information, a representative confirms it and connects you with the appropriate carrier.
This system reduces the time business owners have to spend submitting insurance application. Insurance 321 sends your information to a carrier when it has the appetite, reducing the likelihood of a decline. That makes it a good choice for business owners who want affordable crime insurance but don’t want to submit multiple applications for multiple quotes.
Farmers Insurance is probably best known for its personal lines product, but the company also sells commercial lines geared toward small business owners. It distributes its small business insurance, including commercial crime coverage, through a network of local agents.
Working with an agent to get crime coverage can be beneficial for small business owners. Not every business owner needs a standalone crime insurance policy. Farmers Insurance agents can evaluate your risk and suggest appropriate crime insurance limits for your unique business.
Nationwide is one of the world’s largest insurer. It offers a BOP to business owners with up to $5 million in revenue. Business owners can choose to add commercial crime coverage to their BOPs or purchase a standalone policy, depending on their industry and limits.
One highlight of its crime insurance is the option to cover property in your office and out in the world. This makes it ideal for business owners who conduct business offsite, like consultants, caterers, temporary staffing agencies, event planners and vendors, and mobile health care providers.
The Hanover can insure more than 500 small commercial classes, which means most businesses should be able to quote its commercial and government crime policy. The basic policy offers affordable protections, but The Hanover also has an excess crime endorsement that lets you add coverage.
In addition to crime insurance, The Hanover offers two bonds that business with employee benefits should consider: ERISA [Employee Retirement Income Security Act of 1974] Fidelity Bond and Investment Advisor Fidelity Bond. These bonds protect your retirement plan in cases of fraud or dishonest acts committed by the person who handles it.
What Crime Insurance Is
Crime insurance is a policy that covers financial loss after criminal activity, such as theft, fraud, forgery, and kidnapping. Most policies cover dishonest acts committed by both employees and outside actors. Bundling crime insurance with other commercial insurance usually costs less than buying the policies separately. In general, crime insurance costs between $240 and $750.
Many business owners assume their property insurance covers theft. Unfortunately, that’s not the case. Two common commercial property forms only cover perils named in the policy, and theft, burglary, and robbery are not listed. Even when they are included, standard forms exclude dishonest acts by employees and others associated with your business like directors, officers, and members.
What Crime Insurance Covers
Crime insurance can’t stop a thief from taking your property. However, it does cover the loss by paying up to your coverage limits for funds and property stolen by employees or outside factors.
Most crime insurance policies pay for (listed with examples):
- Employees’ dishonest acts: An employee takes cash from the register or pockets inventory
- Forgery & alteration schemes: A contractor changes the numbers on his or her paycheck
- Computer fraud: Hackers funnel your accounts to their accounts
- Illegal fund transfers: A thief submits a fake transfer order to your investment firm
- Kidnapping, extortion & ransom: A blackmailer threatens to reveal proprietary information
- Money & securities: A vandal sets a fire that destroys negotiable securities
- False money order & counterfeit money schemes: A customer pays for his or her shipment with a fake money order or similar form of payment
What Crime Insurance Doesn’t Cover
While crime insurance covers dishonest acts by employees, it does not cover those committed by you or your partners. It also excludes mistakes like accounting errors and your liabilities in another party’s criminal loss. For instance, crime insurance most likely doesn’t cover information technology (IT) professionals whose mistakes lead to a data breach.
A crime insurance policy is not appropriate for financial institutions like banks, credit unions, and investment companies. In most case, they need a fidelity bond to meet regulatory requirements. This introduces a new set of risks for the insurer that a crime policy cannot address. While not insurance, bonds act as a guarantee for clients. Banks aren’t the only industry where businesses sometimes need bonds. Learn more about Types of Surety Bonds.
Crime Insurance Coverage Costs
One affordable option for crime insurance is to add the coverage to an existing policy. Small businesses typically add it to a BOP, but they could also add it to a directors and officers insurance policy. Standalone policies tend to be more expensive.
Crime Insurance Coverage Costs & Deductible
The chart shows how much crime insurance costs based on coverage amount and deductible. Selecting lower limits or a higher deductible can reduce your overall premium. The examples are estimates. Insurers look at a number of factors to determine your premium, and each company has its own method of calculating the final figure.
Some of the factors that impact your crime insurance premium are:
- Number of employees
- Security measures
- Business property value
- Annual revenue
In general, the more business property and employees you have increases your risk of theft and fraud. Taking steps to secure your business through purchasing burglar alarms, installing antispyware software, and securing valuable documents reduces your risk and, sometimes, your premium.
Who Needs Crime Insurance
Insurance is designed to help a business survive a loss. Whether or not you need a particular type of insurance depends on whether or not your face the risks the policy covers. For crime insurance, that means evaluating how likely it is for someone to steal from your business.
Some industries face a greater likelihood of theft and fraud because of how they typically operate. For instance, businesses with high foot traffic, valuable inventory, and cash on the premises are often targeted as are business with access to valuable client information. However, it’s not just your industry that makes theft more likely. Any business that hires employees increases its risk of theft too.
For example, crime insurance is a smart idea for:
- Restaurants: Cash in the register can end up in an employee’s pocket easily as can patron’s credit card numbers
- Retailers: Store owners may need coverage in case of counterfeiting, check fraud, and shoplifting
- Medical offices: A criminal can use the information in medical files to steal a patient’s identity
Events like these can cost small businesses a lot of money. According to a 2018 report from the Association of Certified Fraud Examiners, the median loss to fraud for businesses with fewer than 100 employees was $200,000. Corruption, billing, check, and payment processing were all major sources of risk. Businesses with crime insurance, however, can recover some of the money they lose.
Coverage Related to Crime Insurance
Businesses need crime insurance coverage because standard commercial property excludes both employees’ dishonest acts and the theft or destruction of bills, notes, securities, and currencies. However, crime insurance does not cover liability.
These policies can cover your liability when bad actors affect your business:
- Directors & officers insurance: Used to cover accusations of mismanagement, misuse of the business, or lack of corporate governance
- Fiduciary liability insurance: Used to cover accusations of a breach of fiduciary duties in handling employee benefits; does not fulfill the bonding requirement in ERISA
- Employment practices liability insurance: Used to cover accusation of wrongful termination, harassment, discrimination, and other claims stemming from the hiring and employment process
- Errors and omissions insurance: Used to cover accusations that your or your employees’ negligence cost clients money; sometimes called professional liability insurance
Additionally, business owners who offer employee benefits are required to carry an ERISA fidelity bond by federal law. An ERISA fidelity bond covers losses to retirement plans caused by fraud or dishonest acts.
Tips on Getting Crime Insurance
Like any insurance policy, you need to apply for crime insurance coverage. That typically involves working with an agent, filling out insurance applications, and comparing offers.
Ask for Crime Insurance Coverage
Crime insurance isn’t included automatically in business insurance policies. Small business owners generally have to add it to their BOPs through an endorsement. While this gives you an opportunity to choose the appropriate coverage, you still have to request crime insurance.
Talk To Your Agent About Limits & Sublimits
Crime insurance limits are generally low for endorsements of around $25,000, and there are often sublimits or maximum amounts insurers pay for specific losses. Let’s say our aggregate limit, or the total your insurer will pay for the entire policy term, is $25,000, but your sublimit for forgery is only $5,000. Once you hit that sublimit, your insurer stops covering money lost through forgery. This may not be enough for your risk, so make sure your agent walks you through specific sublimits.
Manage Your Risk
Insurance companies factor in your claims history when determining your premium, so it’s important for you to reduce your crime risk whenever possible. Simple steps like using security cameras, installing antivirus software, and performing background checks can reduce your premium.
Crime Insurance Frequently Asked Questions (FAQs)
While we tried to answer your questions in this article, you may have more that are specific to your business. A few examples are listed below, but please post yours in the comment section below or send them to our forum.
Are Crime Insurance & Fidelity Insurance the Same Thing?
Crime and fidelity insurance are similar except that crime insurance typically offers broader coverage. Fidelity insurance is limited to crimes committed by employees. This leaves out nonsalaried board members and volunteers. Also, some fidelity policies only cover certain assets. Stolen money might be covered, but stock certificates may be excluded.
Does Crime Insurance Cover Cybercrime?
Crime insurance can cover the funds lost when a cybercriminal attacks your business like illegally transferred funds after a phishing scam. However, crime insurance coverage does not include any of the costs that stem from a data breach, such as client notification and forensic accounting. For that, you need cyber liability insurance.
Why Do I Need Crime Insurance If I Have Property Insurance?
Most small businesses need crime insurance coverage even if they have commercial property insurance. Standard property policies cover damage to buildings caused by burglaries but not necessarily the stolen property. Without crime insurance, you’re on the hook for stolen property, money, and securities. Moreover, crime insurance covers employees’ dishonest. Property insurance does not.
The Bottom Line
Business owners are often surprised to discover that employee theft isn’t covered by commercial property. Unfortunately, most learn this when it’s too late. Adding commercial crime insurance to your other coverage doesn’t have to cost a lot, and it can help you recover from a wide variety of fraud scenarios.
Hiscox, a small business insurance specialist, lets you add crime insurance and other key coverage to your business owner’s policy. Plus, it offers monthly payment plans and a 14-day, money-back guarantee.