The Value of Commercial Crime Insurance
Despite efforts to hire trustworthy employees and implement robust security measures to prevent external fraud, criminal activities may still occur. Whether a deceitful employee embezzles company funds or a corrupt third party steals valuable inventory, impacted organizations can suffer serious financial losses.
That’s where commercial crime insurance can help. Also known as fidelity insurance, this coverage can reimburse organizations for losses caused by various business-related crimes.
This article highlights the value of commercial crime insurance by explaining typical policy features and outlining key coverage benefits.
Common Policy Features
The primary form of coverage included in a typical commercial crime policy provides financial protection for losses caused by employee dishonesty, which may encompass the following criminal activities:
Theft of money, securities or other commercial property—entails employees stealing, robbing or burglarizing company funds or valuables (e.g., tools and equipment) while these assets are on-site or during transit.
Forgery or alteration—involves employees counterfeiting or falsifying corporate documents or other legal instruments with the intent to defraud. An example would be an employee forging company cheques for personal gain.
Computer or funds transfer fraud—pertains to employees manipulating corporate computer systems or participating in fraudulent fund transfers, such as sending deceitful instructions to a bank that trick the institution into wiring company assets to a personal account.
In addition to securing coverage for losses stemming from employee dishonesty, organizations may purchase policy endorsements for further financial protection against business-related crimes. Such endorsements may help cover losses from criminal activities committed by third parties, such as corrupt contractors or vendors (e.g., a contractor swiping an employee’s corporate credit card and repeatedly forging their signature to make several fraudulent transactions).
Some policy endorsements can help compensate organizations’ clients if they are affected by business-related crimes (e.g., an employee stealing valuable items from a customer while working at their home). Such endorsements are generally provided through fidelity bonds. Employers can consult insurance professionals to discuss their particular commercial crime policy endorsement options.
Key Coverage Benefits
Commercial crime insurance can be beneficial for organizations that frequently engage in cash, credit or electronic transactions; store valuable items on-site or occasionally transport them off the premises; have inventory or stock that could be susceptible to theft; or hire employees who will have access to expensive equipment or goods on the job. Here are some key coverage benefits for organizations to consider:
Financial stability—A primary advantage of commercial crime insurance is that it can help organizations prevent business-related crimes from wreaking havoc on their finances. Since criminal activities can often generate substantial losses, maintaining financial stability during these incidents is vital.
Enhanced credibility—Stakeholders are likelier to trust organizations with appropriate risk management and loss control measures, including a robust insurance portfolio. By securing commercial crime insurance, organizations can demonstrate to their stakeholders that they are committed to protecting their operations against criminal activities.
Peace of mind—Commercial crime insurance can ultimately help ease any stress regarding the risk of criminal activities. In conjunction with adopting adequate employee vetting and security protocols, purchasing this coverage can provide peace of mind, equipping organizations with the resources and protection needed to navigate even the most challenging crime scenarios.
Commercial crime insurance can make all the difference in helping organizations reduce the fallout from business-related crimes, allowing them ongoing operational success.
Find out more about how to protect yourself from these risks here, or reach out to CMB Insurance Brokers for more information. We can provide you with valuable insights and guidance: call CMB at 780.424.2727 or click here to get a quote.