Unfortunate as it may be, crime is a constant threat in today’s world. When considering the threats and risks that may befall a business, it is important that criminal activity be considered. Many employers may believe that they are not vulnerable or not being targeted, but the truth is that criminals should be considered a major and consistent threat to a variety of potential victims. As such, it is to the benefit of organisations of all shapes and sizes to consider a commercial crime insurance policy.
Specifically, commercial crime insurance provides protection in the event that money, property or funds are stolen by a variety of different types of perpetrators, such as employees or outside parties. This type of cover also protects organisations in the event that they are liable for the theft of money or property from a client.
In addition to the traditional means of theft, robbery and burglary from an organisation’s premises, there are many other ways by which organisations may be stolen from. Over the years, criminals have developed a diverse and sophisticated array of attack methods. In response, commercial crime insurance spreads its protection across a variety of different scenarios, including:
- Employee crime—Commercial crime insurance covers losses or damages related to money, securities or other property due to theft or forgery committed by an organisation’s employees. It is worth noting that a policy may not apply in the event that an employer was aware of an employee having previously stolen from the organisation.
- Fraudulent transfers—A commercial crime insurance policy may cover situations when an outside perpetrator uses a computer to fraudulently transfer goods or funds outside of an organisation’s premises or bank. It may also cover incidents when perpetrators may not necessarily use a computer, but use any method to intentionally provide improper instructions to a financial institution with the intention to fraudulently transfer funds from the organisation.
- Social engineering—An emerging method of stealing that organisations should be aware of, social engineering refers to a type of theft in which the perpetrator attempts to impersonate a person of stature and authority—such as a senior leader—in order to gain access to financial information, money or property. These crimes can result in major losses, but commercial crime insurance may be able to alleviate the damage.
- Forgery or alteration—Financial documents, such as cheques or promissory notes may be coming and going from an organisation’s premises on a daily basis. If a cheque or other promise of payment is forged or altered by a party who is not an employee, a commercial crime policy will cover an organisation’s losses. Financial aid will also be provided for legal costs in the event that claims are filed against the organisation for refusing payment related to the fraudulent document.
While commercial crime insurance policies may provide a wealth of protections across a variety of incidents, it is also important that organisations understand the limitations of their cover. It should be understood that many costs that may be related to a crime are not covered by commercial crime insurance, such as:
- Costs related to crimes committed by an organisation or its partners, or by employees colluding with partners
- Losses or damages related to data breaches or the loss of other information, such as trade secrets or customer lists
- Legal costs not related to forgeries
- Lost income resulting from stolen property or business interruptions related to a crime
- Accounting errors
In addition, crimes committed by organisational leaders may also not be covered.
In conclusion, it should be understood that there are many ways that an organisation can have money or property stolen. A single act of theft, forgery or fraud can result in irreparable damages for organisations, but a commercial crime insurance policy can make all the difference.
For more information about protecting your organisation from criminals, contact us today.