Crime Insurance: Cost, Coverage & Providers
Nathan Weller is an Insurance Expert focusing on insurance for small business. He has 15 years experience in insurance operations, FNOL, and claims handling.
Commercial crime insurance is an insurance policy for losses to your business from criminal acts, such as employee dishonesty or third-party fraud. Commercial crime can be bundled with existing coverage or purchased as a standalone policy. Standalone crime insurance generally costs on average between $650 to $2,500 yearly.
Small business ownership has an inherent crime risk from internal employees and external thieves. Finding the right balance between coverage and cost with the ideal provider is what CoverWallet does best. Get a free, multicarrier quote within minutes.
Crime Insurance Coverage & How It Works
Crime insurance is a policy you should consider for protecting your business from financial losses resulting from criminal activity. Most commercial property insurance policies don’t cover theft or employee-related crime. But crime insurance, which can be purchased as a standalone policy or added to an existing business owner’s policy (BOP), does provide coverage.
Typically, crime insurance has two areas of coverage. First-party coverage is for a loss to your business from criminal activity. Third-party coverage protects your business from another business or entity claiming that your business carried out a criminal act. Several examples of a covered loss are:
- 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 starts transferring 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 crimes: Criminal acts by an executive are usually not covered.
- Coordinated acts: Criminal acts by business partners in coordination with an employee.
- Cybercrimes: Cybercrime is standalone insurance.
- Wrongful terminations: 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
When providing a quote for commercial crime insurance, insurers will 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 | Annual Average Cost |
|---|---|---|
$500,000 | $2,500 | $1,353 |
$1 million | $2,500 | $1,439 |
$3 million | $2,500 | $2,238 |
These quotes are for a standalone policy. Bundling with an existing policy should save you some money.
Commercial Crime Insurance Providers
After researching many providers who offer commercial crime insurance, we recommend these top providers:
Provider | Best For |
|---|---|
A business owner who wants to shop online and compare prices from multiple providers | |
Businesses hiring employees with a criminal record | |
Nonprofit organizations | |
Businesses that want to bundle coverage with a BOP | |
Businesses working with several independent contractors | |
Businesses that value tailored policies for their business needs |
CoverWallet
CoverWallet is an online brokerage providing quotes from multiple carriers. It’s the best choice for crime insurance for businesses who prefer to be able to shop for quotes online without visiting multiple sites.
CoverWallet sends your information to carriers with an appetite for covering your line of business. Its approach helps ensure your price will be competitive.
Hiscox
Hiscox focuses on businesses with fewer than 1,000 employees. It’s also an industry leader in crime insurance research and statistics. As such, it has the information it needs to write a policy that will be right for your business.
Offering crime insurance that can be bundled with another policy or as a standalone policy, Hiscox is one of the few carriers stating it’ll cover businesses with employees with a history of theft.
The Hanover
The Hanover is a respected carrier with more than 150 years of experience in offering insurance and an A rating from AM Best. It specializes in offering insurance for small businesses, nonprofits, and government entities with less than 2,000 employees.
Quoting and binding is handled through an agency that will review your needs and create a policy to fit your specific risk exposure.
The Hartford
The Hartford offers the CrimeSHIELDSM Advanced Policy. CrimeSHIELDSM is an “all-in-one comprehensive” policy that includes restoration expenses for any computer systems impacted by crime and the cost of investigative services. This policy targets midsize to large businesses with a limit of up to $5 million.
AIG
AIG offers a specialized crime insurance policy called CrimeGuard Choice with what it describes as a “modular format.” This format allows the business to choose which coverage it desires from a broad range of options and definitions for various employees, including volunteers. This policy is available in every state and Washington, D.C.
Chubb
Chubb has more than 100 years of experience writing domestic and international insurance. Chubb’s commercial crime insurance is called, The Chubb PrimarySM. This policy covers theft from all classes of employees as well as independent contractors. Police notification isn’t required.
Who Needs Commercial Crime Insurance
Every business should consider commercial crime insurance. A 2018 study on embezzlement by Hiscox found that the average loss to a business through embezzlement was $357,650. Of the examples of embezzlement identified, 21% involved an employee’s theft of cash or company property.
This cost to your business explains why a 2022 market study by Allied Market Research found that globally, there’s a growing interest in crime insurance, and crime insurance cost is rising across the board.
What Type of Commercial Crime Insurance Should You Buy?
There are several types of commercial crime insurance and it depends on the needs of your business and what type of losses you want covered.
Discovery Policy
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 find that in June that back in January, your cashier pocketed an extra $5 in cash from every transaction.
Loss Sustained Policy
The loss sustained policy provides coverage only for losses discovered and occurred during the policy period. There’s usually some sort of extended time for discovery.
Fidelity Bond
Finally, your agent may propose a fidelity bond. A fidelity bond is a type of surety bond. It’s also a type of commercial crime insurance. However, a fidelity bond is more limited coverage, focused on employee-specific crimes.
Bottom Line
Most commercial property insurance policies don’t cover theft claims, especially employee-related theft claims. Commercial crime insurance provides coverage for the gap of 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.
There are many options available for crime insurance. It’s essential to get the right policy for your business. CoverWallet is an excellent option since it works with major national carriers and will help you shop for the best rate on the right coverage. Get a no-obligation quote in a few minutes.
