Crime insurance is designed to protect the assets of an organization. A crime policy especially focuses to protects what is important most in the balance sheet.

This article will take you to the best five types of crime coverage your business must consider in risk management strategy.

It is necessary to keep in mind that a crime insurance policy is called on a “named perils” basis. This means that the cause of the loss MUST fall within one of the sections of the policy for coverage to apply.

1. Employee Dishonesty

This can also be called “employee theft”. This will cover loss or damage by money, securities, or other property caused by employee dishonesty, theft, or forgery. It also covers full-time, part-time, independent contractors, volunteers, etc. It does not cover owners, business partners, and even some top managers. 

A critical, and important step to consider, is to ensure the plan is added as an  Additional Insured on your crime policy, otherwise, coverage may not apply. The addon with a crime policy you also typically have broader coverage for other types of theft as outlined below.

2. Money and Securities

Money and securities coverage applies to non-employee thefts and covers the loss of money or securities from theft, disappearance, or destruction. The policy usually focuses on different limits for money and securities located “inside” or “outside” the premises.

“Inside the premises” have money or securities located at a business location mentioned in the policy. While “outside the premises” include money or securities away from the business location.

3. Money Orders and Counterfeit Money

This includes the financial loss if your business erroneously accepted money, money orders, or checks. High-tech printing and scanning capabilities may increase the risk of these types of crimes. The FTC researched that reports of fake checks have increased 65% over the past few years.

4. Forgery and Alteration

Forgery and Alteration coverage applies if checks, promissory notes, or other promises to pay money are not completed on your account and forged by someone other than your employee. It can also include coverage for legal fees to defend against lawsuits if it will be punishable for refusing to pay for a forged check.

5. Funds Transfer Fraud

This type of crime policy will cover losses resulting from fraudulent instructions provided to your bank by a third party that allow them to transfer funds out of your account. These can be directly caused by:

  1. Electronic, telephone, or fax which possible to have been sent by you or an employee, but was fraudulently sent to someone else without your knowledge or consent.
  2. Written instructions you or an employee issued but subsequently changed or written instructions that seemed to have been issued by you or your employee, but it is fraudulently issued to someone else, without your knowledge or consent.

Computer Fraud: Crime Policy or Cyber Policy?

Computer Fraud is an optional coverage person can add to your crime policy. It will protect the business from losses from the fraudulent transfer of your money, securities, or other property from outside your business premises or bank resulting from the use of any computer.

Bonus Advice

Prefer to check with your bank or financial institution for the types of fraud protection they can offer on your business account. In addition, to opt for a good risk management program for your business, your bank must be the next step of defense in stopping fraud on your account. 

The banking industry is actively and diligently working to defend against fraud. The Financial Crimes Enforcement Network (FinCEN) has issued three COVID-19 related advisories between May and July 2020 that will ask financial institutions to remain alert to COVID-19-related fraud by understanding the current fraud and red-flag indicators that may indicate this illicit activity 

Media reports on cyber fraud insurance claims are on the rise. Risk prevention, education, and training are important components of reducing your risk of falling victim to these crimes. However, we are all human and mistakes are made. Desperate criminals out there are depend on that and waiting to attack.

Crime insurance is the best way to protect your business and balance sheet from the impact these losses can have on your business.