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.
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 |
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.
The discovery policy provides insurance for losses discovered during the policy period, regardless of when the loss occurred. For example, you could purchase a crime insurance policy in March and discover in June that back in January, your cashier pocketed an extra $5 in cash from every transaction. A discovery policy would cover the loss that occurred in January, even though you didn’t purchase the policy until March.
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
The Hanover: Best for Nonprofit Organizations
The Hartford: Best for Customizable Crime Insurance
Chubb: Best for Businesses That Work With Independent Contractors
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.
