Crime Insurance refers to theft of money and/or securities from a business. There are a variety of Crime Insurance categories including:
Employee Dishonesty: Covers theft of money, securities and other property by an employee. These types of losses are commonly carried out through theft of small amounts over time.
Forgery or Alteration: Pays losses incurred through the direct result of forged or altered checks, drafts or Promissory notes.
Money and Securities: Theft or destruction of cash or securities either at your location(s) or in transit.
Computer and Funds Transfer Fraud: Losses due to money transferred, paid or delivered because of fraudulent computer entry. The impacted computer equipment must be owned or operated by the insured.
Money Orders and Counterfeit Currency: Loss incurred from accepting in good faith counterfeit currency or fraudulently issued money orders.
Client Property: Coverage required by a client for money or property in your possession. Financial institutions will often require this coverage for contractors and vendors.
ERISA Compliance: ERISA requires that 401(k) and other types of employee benefit plans be bonded for an amount not less than 10% of the plan’s assets subject to a maximum of $500,000 ($1,000,000 if employer securities are involved). This coverage can be combined with Employee Dishonesty or written inexpensively on a separate ERISA Bond coverage form.
Exposures to crime losses have changed over time. Electronic transactions have reduced the cash exposure for many types of businesses. However, this transition has increased the risk from fraudulent electronic transactions.
Employee Dishonesty or Theft claims continue to be a serious problem for businesses. These losses are well hidden and typically take place in small amounts over a long period of time. The result can be a large loss once the crime is discovered several years into the process.
An effective risk management approach is to combine internal controls with some level of insurance coverages. Good internal financial controls are the best method for preventing and limiting the loss potential from theft. For example, good controls can reduce the opportunity for employee theft and therefore act as a deterrent. Click here to view a prevention guide offered by Chubb. Insurance coverages should also be considered for additional protection. Crime coverages can also be cost effectively obtained as part of a Package or Businessowner’s policy as well as on a stand-alone basis. Please feel free to contact us with any questions regarding this important exposure consideration.