What is business crime insurance? In today’s world, businesses, companies, and other institutions face many risks that can disrupt operations and jeopardize financial stability.
These threats can have devastating financial and operational impacts, from fraud and burglary to vandalism and cybercrime. To safeguard your business against these threats, investing in business crime insurance is essential.
This is because this coverage provides your business, company, or organization with the security and confidence to navigate these issues.
In addition, it provides peace of mind as it safeguards your assets and reputation. If you wish to learn more about this insurance, read through this article to discover what it is, how it works, the cost, and more.
What Is Business Crime Insurance?
This insurance is also known as commercial crime insurance, and it is designed to protect businesses from losses from business-related crime. In other words, this insurance protects your business against financial losses and interruptions that might occur as a result of criminal activities.
These activities range from theft, fraud, forgery, and cybercrime to other acts perpetrated by employees, customers, or external parties. As businesses operate in environments increasingly fraught with security risk, this insurance provides a critical safety net.
Furthermore, it is tailored specifically for losses that occur within the organization’s financial systems or physical assets due to criminal acts. Ultimately, it offers business owners the confidence to operate without the constant fear of devastating criminal activities, thereby enabling them to focus on growth and sustainability.
How Does It Work?
As you know, most commercial property or business policies do not cover crime-related losses, and that is why this insurance is ideal. Business owners, organizations, and other institutions can purchase this coverage as part of an industrial policy, also called special multi-peril insurance. This is a package of diverse policies designed to protect the business from crime, property loss, liability, and other types of potential loss situations a business could encounter.
However, companies can also buy this coverage as a standalone policy to add to the other insurance policies or packages they have purchased. Purchasing this coverage as a standalone policy makes it easy for the business to specify which types of crimes it wants the policy to cover.
This can be helpful for businesses that are vulnerable to certain types of business crime but not others. Regardless of how they obtain insurance, companies should note that business crime insurance is not automatically included in a standard commercial business package policy. It must be specifically added to ensure coverage.
What Does It Cover?
As stated above, this insurance is designed to protect businesses from losses from business-related crimes. However, here is some of the common coverage that this insurance offers:
- Employee dishonesty
- Forgery or alteration
- Theft of money and securities
- Robbery or burglary
- Computer and cyber fraud
- Funds transfer fraud
- Counterfeit money and check fraud
- Third-party theft or fraud
- Social engineering fraud
A business crime insurance policy typically covers the above-listed business crime. It is, however, worth noting that the coverage offered from one insurance company to the other might differ.
Nonetheless, you must go through the list of coverage that each insurance company offers to enable you to make the right choice for your business.
What Are the Exclusions?
Like every other insurance, business crime policy also comes with its terms and exclusions. Here are some of the common losses that this insurance doesn’t cover:
- Legal liability for third-party claims
- Indirect losses (e.g., loss of potential profit)
- Inventory shortages without evidence of theft
- Accounting errors or omissions
- Intentional acts by business owners or executives
- Losses due to war or government action
- Cyberattacks not covered under the policy’s scope
- Fines, penalties, or punitive damages
- Damage to physical property not relating to theft or burglary
How Much Does Business Crime Insurance Cost?
The cost of business crime insurance varies from one company to the next. This is also determined by a wide range of factors, which include:
Business Size
One of the factors that determines the price of this insurance is the size of your business.
Under this, the number of employees and the amount of access they have to financial information are also determined.
Security Protocols
The cost of this insurance is also determined by the security protocols in your company or organization.
Companies with high-standard security might likely pay less, while companies with lax security might have to pay more premiums.
Industry
The category of industry your business falls into will also determine the cost of this insurance.
Risk Profile
Insurers also consider the business’s history of insurance claims and projected revenues to enable them to determine the right coverage for your business.
Years of Experience
Lastly, your insurer will also consider how long the business has been in operation.
The above are some of the most common factors that will determine the cost of your commercial crime insurance.
However, this coverage typically costs between $500 and $5,000 per year while still depending on the above-listed factors.
Is it Worth It?
Business crime insurance is a valuable investment for any company, helping protect against risks like theft, fraud, and cybercrime. Without it, a business could face serious financial loss from criminal activities.
While there’s a cost involved, it’s often much less than the potential damage caused by a single incident. For peace of mind and financial protection, business crime insurance is a smart choice for businesses of all sizes.