Commercial crime insurance will give your business cover for losses that can arise from criminal activity such as theft, forgery, or embezzlement.
What Does Commercial Crime Insurance Cover?
A commercial crime insurance policy may provide cover for all risks, or for named risks. In any case, your policy may provide the following core areas of cover:
- Losses from third party criminal activity including robberies that take place on the business premises, or in transit.
- Fraudulent or dishonest employee activity, including credit fraud, forged cheques, embezzlement, and insider trading.
- Losses arising from receiving counterfeit money, and other forms of third party fraud.
While commercial crime insurance can also cover your business for losses resulting from cyber breaches, data theft, and social engineering attacks, dedicated cyber insurance can offer the most comprehensive cover.
Who Needs Commercial Crime Insurance?
All businesses should consider commercial crime insurance as part of their wider business insurance cover.
Take the time to assess the risks your business faces, including risks that are specific to your sector or industry. If there is the potential to make a significant loss as a result of theft or fraud, then commercial crime insurance could give your business essential cover for such losses.
High Risk Business Requirements
Any business offering financial services may be at a greater risk of insider fraud, and other forms of employee dishonesty. So while financial institutions will need some form of crime insurance cover, they are often required by law to get a specific type of cover known as a fidelity bond.
Fidelity bonds offer highly specific cover for certain forms of employee dishonesty. You can read our full guide to the difference between commercial crime insurance and fidelity bonds.
Understanding the Risks of Commercial Crime
If an opportunistic thief breaks into a shop and lifts some money from the till, the business losses may be significant, but they may be manageable.
But the losses arising from fraud, embezzlement, data breaches, and other forms of commercial crime can be utterly devastating for any business. Along with the financial losses, which could amount to five or six figure sums, your business may also suffer considerable reputational damages.
Consider former high street café chain Patisserie Valerie, for example. Investigations revealed that the company’s finance directors were inflating income while hiding debts. This resulted in the abrupt closure of 70 branches, the loss of 900 jobs, and personal losses of almost £200m for the company’s founder.
Why You Need Commercial Crime Insurance
It is important to note that commercial crime insurance does not itself prevent crime, and that a policy may not provide adequate cover for such an egregious case as this. However, this example demonstrates that:
- Commercial crime can occur in any sector, and is not exclusive to financial institutions.
- No business is too big to fall. If commercial crime can sink such an establishment as Patisserie Valerie, then it could sink your business too.
This is why all businesses and professionals should get comprehensive insurance cover for any potential losses that may arise from criminal activity. Your insurance may not prevent crime from taking place, but it could at least help your business to bounce back from cases of fraud, embezzlement, and theft.
At James Hallam, We Can Help Your Business Get The Cover You Need
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your business.
We will take the time to get to know you and your business, so that we can advise you on your specific business insurance requirements. We can then help you get the cover you need for the crime risks your business is facing, whether this means a broad crime insurance policy, a more specific fidelity bonds policy, or a dedicated cyber breach response policy.