Understanding Commercial Crime Insurance and Its Significance for Businesses
All entrepreneurs know that they have to give practicality more weightage over emotions while running a company, if they want it to sustain and progress in the long run. Taking blind leaps of faith without a practical approach will do your organisation no good; instead it may land it in a huge pit of loss. Although it’s important to trust the people you work with, you can never tell when your business assets become vulnerable to fraud, theft, and other dishonest acts, which could be committed either by third parties, or even your own employees. Therefore, a business insurance policy like Commercial Crime Insurance becomes indispensable in such situations.
Scope and Applications of Commercial Crime Insurance
This may not always be the case, but real life commercial crime events that have taken place in the past sure prove that sometimes, your seemingly faithful employees or senior staff may be engaging in fraudulent activities behind your back. And these crimes need not necessarily be a one-time occurrence - they may recur multiple times before they are finally discovered! There are numerous criminal activities that are covered under commercial crime insurance. They are as under:
- Destruction or theft of office property by employees
A company’s securities, money, or other property can get lost or damaged as a direct impact of employee theft. This crime could be the work of a single employee on their own, or could be done in collusion with other individuals or entities. Commercial crime insurance equips the insured with financial coverage against losses incurred due to such theft.
- Forgery or alteration of important business documents
If forgery is done on important documents such as drafts, cheques, promissory notes, written promises, etc. or they are altered in some manner, it can contribute to hefty losses. But if the business is insured with a commercial crime insurance policy, it can stay safe against the losses that can result from such fraudulently drawn instruments.
- Computer fraud
If the organisation’s money, securities, or other property are lost due to the direct usage of computers, then commercial crime insurance can cover this as well. This criminal activity carried out by the means of a computer may be intended to transfer the insured’s property to any person or place outside the premises. The policy also offers payment against loss or embezzlement of funds from the financial institution of the insured occurring due to fraudulent transfer practices.
Apart from such computer frauds, businesses can also come under cyber attacks at any point of time. A corporate cyber insurance policy can shield them from the losses these attacks can trigger.
- Safe burglary or robbery of other property within the premises
Commercial crime insurance can come to a company’s rescue when damage or loss is inflicted due to attempted or actual safe burglary, or attempted or actual robbery of a custodian. Moreover, if there is any damage to the company premises, its exterior, or to a locked vault or safe due to a safe burglary or robbery attempt or incident, it will also come under the scope of this policy.
- Disappearance, destruction, or theft outside the premises
When insured with a commercial crime insurance policy, a business can stay protected from the disappearance, destruction, or theft of securities, money, or other property in care and custody that is located outside the company premises.
What Is Not Included in a Commercial Crime Insurance Cover?
Below are some of the common exclusions of this policy that you should be aware of:
- Damage due to war, rebellion, fights, revolt, revolution, engagement or confiscation by the government, military act, etc.
- Losses due to fraud or theft committed by the company’s business partner.
- Loss associated with the expense of reproducing restrained data.
- Loss of or damage to business accounts, records, etc.
- Loss of income.
- Costs incurred as a result of engagement in or defence of any legal cases.
What Additional Coverage Can the Insured Opt For?
Similar to most other insurance policies, the insured can avail additional benefits by paying an extra premium for more precise coverage. For example, the coverage can be extended to include data reconstruction costs, legal fees, fees of investigative experts, care custody, etc. Furthermore, one can also obtain coverage for financial fraud done from pension schemes, provident funds, and other employee benefit policies.
Normally, commercial crime insurance plans are restricted to the operational areas of the business, but you can also avail universal coverage. A point to be noted is that not all insurance providers can provide all the features and covers. You must take into account the uniqueness of your company and its specific needs before buying a policy. Contact us at Raghnall Insurance Brokers to explore the best insurance and risk management solutions
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