Crime Insurance: Cost, Coverage & Providers

Commercial crime insurance is a specialized coverage that pays for losses resulting from criminal acts, including employee dishonesty, and third-party fraud. It covers an important gap in commercial property insurance and is essential in certain industries that face a greater risk for crime, such as retail and financial advisors. Standalone crime insurance costs between $240 and $4,000.

Every small business owner needs to consider the crime risk they face from internal employees, external thieves, and cybercriminals. Finding the right balance between coverage and cost with the perfect provider is what CoverWallet does best. Get a free, multicarrier quote within minutes.

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Commercial Crime Insurance Providers

Top national insurance companies offer crime policies based on small businesses’ risk profiles, which are often defined by their industry. A risk profile includes information about the type of business, total revenues, employee supervision, and internal security measures. You want to look for an insurance provider that has experience in your industry and spends the time to review how your business at risk for crime.

CoverWallet

CoverWallet is the best choice for crime insurance for professionals working in finance, real estate, and escrow companies. Its extensive network of partner carriers makes placing tough risks faster and easier than it is with most brokers. One application yields multiple carrier options so that business owners can compare terms and pricing.

This process also reduces the time business owners have to spend submitting an insurance application. CoverWallet sends your information to a carrier when it has the appetite, ensuring competitive pricing for your industry. 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.

Hiscox

Hiscox is a terrific choice for recreation and hospitality businesses needing crime insurance coverage. Hiscox has decades of experience in this industry and understands the unique needs of recreation and hospitality companies.

The company’s crime insurance is an add-on to its business owner’s policy (BOP). 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 savings. Plus, Hiscox has a simple application and sends quotes instantly.

Farmers Insurance

Farmers Insurance is a solid choice for retail and restaurant locations where cash transactions create a major risk for internal loss from employees. The company also has experience writing crime coverage to protect against counterfeit currencies and forgeries.

Moreover, Farmers distributes its small business insurance, including commercial crime coverage, through a network of local agents. Working with a local agent who understands the area crime beneficial for restaurants and retailers in brick-and-mortar locations. Farmers agents can evaluate your risk and suggest appropriate crime insurance limits for your unique business.

Nationwide

Nationwide is the right choice for business owners who work at clients’ locations, such as cleaners, consultants, caterers, and house sitters, where fidelity bond, sometimes called crime bond insurance, may be required. Commercial crime insurance doesn’t pay when your business is responsible for theft, but crime bond insurance does.

As the bond issuer, Nationwide guarantees that your business will not cause your client a loss while working for them. However, if an employee does steal from your client, then Nationwide pays your client and then expects repayment from you.

The Hanover

The Hanover is a good choice for small businesses providing employee benefits requiring Employee Retirement Income Security Act (ERISA) compliance because it offers an ERISA fidelity bond and an investment advisor fidelity bond. These bonds protect your retirement plan in cases of fraud or dishonest acts committed by the person who handles it.

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.

What Crime Insurance Is

Crime insurance coverage pays for financial losses to a business that are the result of criminal activity, such as theft, fraud, forgery, and kidnapping. Covered criminal activities are often committed by either employees or outside agitators. Examples of common crime insurance claims include larceny or embezzlement by nefarious employees or loss of inventory by thieves.

Unfortunately, many business owners assume their property insurance covers thefts like this, which leaves them with an uncovered act. Theft, burglary, and robbery aren’t covered events on the common commercial property policies. Even when these events are included, most policies do not pay for dishonest acts by employees and others associated with your business like directors, officers, and members.

What Crime Insurance Covers

Crime insurance coverage pays for losses up to your coverage limits for funds and property stolen by employees or outside actors. There are various ways in which employees or thieves can steal from a small business. Criminal acts are often not covered by standard general liability insurance or most business property policies.

Most commercial crime insurance policies pay for criminal actions, such as:

• Employees’ dishonest acts: An employee takes cash from the register or pockets inventory.
• Forgery & alteration schemes: A contractor changes the numbers on their paycheck.
• Computer fraud: A hacker funnels your accounts to theirs.
• Illegal funds 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 their shipment with a fake money order.

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 an information technology (IT) professional whose mistake leads to a data breach. For that, you’d need to get IT insurance.

A crime insurance policy is not appropriate for financial institutions, like banks, credit unions, and investment companies. These organizations face a set of risks that a crime policy cannot address. In most cases, they need a fidelity bond to meet regulatory requirements. While not insurance, bonds act like a guarantee for the client.

Fidelity bonds are not the same as surety bonds used for licensing requirements by individuals who provide professional services and contractors.

Crime Insurance Bond

A crime insurance bond is a fidelity bond used by a business where employee dishonesty is a serious external concern. Any business where operations require your employees to work in another person’s office or home should consider getting crime bond insurance to both protect against losses and to give consumers confidence that their transactions and money are protected.

A crime insurance policy is not appropriate for financial institutions like banks, credit unions, and investment companies. In most cases, 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.

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 (D&O) policy. Standalone policies tend to be more expensive than crime insurance coverage added to other policies.

If you need or choose a fidelity bond instead of commercial crime insurance coverage, expect to pay anywhere from 0.5% to 2% of the bond value.

Sample Commercial Crime Insurance Coverage Costs & Deductible

The table shows estimates for how much crime insurance costs based on coverage amount and deductible. Selecting lower limits or a higher deductible can reduce your overall premium. Moreover, insurers look at several factors to determine your premium, and each company has its own method of calculating the final figure. As a result, rates vary among states and insurance carriers.

Some of the factors that impact your crime insurance premium are:

• Number of employees: A higher number of employees increases exposure to someone slipping through the cracks and isn’t readily identified as an internal thief.
• Security measures: Cameras, security alarms, automated bookkeeping, and point of sale systems can reduce the risk of crime and thus commercial crime insurance premiums.
• Business property value: Valuable items are targets for theft. As such, small businesses selling luxury watches tend to pay more than one that sells low-end brands.
• Annual revenue: Risk is defined by revenue, with most insurance companies increasing premium costs as revenues go up.
• Industry: Certain industries and companies are more likely to attract crime, particularly those with large cash transactions, low internal checks and balances, and valuable inventory.

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 often lower your premium as well.

Who Needs Crime Insurance?

Some businesses are more prone to crime because of the nature of their operations. When considering crime insurance, a business owner needs to consider two separate areas of attack: internal employee actions and external criminal activity.

Industries that face a greater likelihood of theft and fraud include those with high foot traffic, valuable inventory, cash on the premises, and 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 for theft, too.

Commercial crime insurance is a smart idea for:

• Restaurants: Cash in the register can end up in an employee’s pocket easily; the same can be said for patrons’ 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
• Check cashing offices: High volume cash transactions make it easy for internal employees to skim off the top as well as making them a target robbers

Theft 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, and check-and-payment processing were all major sources of risk. Businesses with crime insurance can recover some of the money they lose.

Coverages 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. This means a small business owner needs other insurance policies to protect against liability risk gaps.

These policies can cover your liability when internal bad actors affect your business:

• D&O insurance: Covers accusations of mismanagement, misuse of company, or lack of corporate governance.
• Fiduciary liability insurance: Covers accusations of a breach of fiduciary duties in handling employee benefits. This policy does not fulfill the bonding requirement in ERISA.
• Employment practices liability insurance: Covers accusation of wrongful termination, harassment, discrimination, and other claims stemming from the hiring process.
• Errors and omissions (E&O) insurance: Covers accusations that your or your employees’ negligence cost clients money. This policy is 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 Commercial Crime Insurance

Like any insurance policy, you need to apply for crime insurance coverage. That typically involves working with an insurance agent or broker, filling out applications, and comparing offers.

1. 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 endorsements. While this allows you to pick and choose the appropriate coverages, you have to request crime insurance.

2. Talk To Your Agent About Limits and Sublimits

Crime insurance limits are generally low for endorsements―about $25,000―and often have sublimits, or maximum amounts insurers pay for specific losses. Say your aggregate limit, or total your insurer pays 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 and adjusts your coverage to cover your risks appropriately.

3. Manage Your Risk

Insurance companies factor in your claims history when determining your premium, so you need to reduce your crime risk whenever possible. Simple steps like using security cameras, installing antivirus software, and performing background checks can reduce your premium. Ask your insurance agent about ways to reduce your risk and overall exposure to crime.

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.

Are crime and 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 actions while property insurance does not.

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 coverages doesn’t have to cost a lot, and it can help you recover from a wide variety of fraud scenarios.

With so many options and nuances involved with commercial crime insurance policies, getting the right partner for your business to make the right decision is essential. CoverWallet works with major national insurance carriers to help you shop for the best rate on the right coverage. Get a no-obligation quote in a few minutes.

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