Business Crime Insurance

Business crime insurance is a type of insurance policy that a business can buy to protect itself from losses from business-related crime. Protection through the policy can cover cash, assets, merchandise or other property loss when a someone perpetrates fraud, embezzlement, forgery, misrepresentation, robbery, theft or any other type of business-related crime on the company.

Business crime insurance is available because most commercial property or business policies do not cover crime-related losses. Companies can purchase business crime insurance as part of a commercial package policy, also called "special multiperil insurance," which is package of different policies to protect the business from crime, property loss, liability and other types of potential loss situations a business could encounter. A business can also purchase business crime insurance as a standalone policy to add to the other insurance policies or package it has purchased. Purchasing as a standalone policy allows the business to specify which types of crimes it wants the policy to cover, which can be useful for businesses that are vulnerable to certain types of business crimes but not others. However they purchase insurance, companies should be aware that business crime insurance isn’t automatically covered in a commercial business package policy unless they specifically include it in the package.

Business crime is a significant liability for companies. According to the Association of Certified Fraud Examiners (ACFE), U.S. organizations are liable for more than $400 billion every year, from fraud and abuse alone. The problem is widespread, although small businesses are most vulnerable to business crimes, in part because they have fewer personnel to enact safety and auditing procedures and in part because the small sizes of these businesses mean that owners and managers tend to trust their employees personally, since they are in more contact with the employees every day. Considering that the average across the companies studied by the (ACFE) was a loss of $9 per employee per day, this loss is more significant and damaging to smaller companies with fewer resources than to larger companies. As innovations in business operations technology explode exponentially, these innovations create more opportunity for small business owners to be defrauded with this technology, either by employees or outsiders.

Business crime insurance protects the assets, operations and reputation of businesses of all sizes, and is especially important for businesses that deal in cash or in online payment systems, whether those use credit cards or other types of payment methods. A business crime insurance policy will usually have different limits of coverage for losses incurred on the property of the business vs off-property. 

A business insurance policy would pay out to a business that lost cash that was stolen from a cash register by an employee, money embezzled by an employee through an electronic payment system, merchandise stolen by a robber, money lost by forged checks or payment authorizations, inventory that walked out the door during a busy time of day or any other similar situations.