Why do you need Crime Insurance?
Some businesses think that just because they don’t have a physical point of sale, they don’t need crime insurance. Others see crime insurance as overkill since their business doesn’t really handle cash and isn’t especially transactional in nature.
It’s easy to underestimate the severity and likelihood of crimes that a business can be victimized by. It’s even easier to overlook what an insurance policy covers. But that’s why we’re here!
Maybe you do process customer transactions often. Or maybe you have ongoing relationships so you set up auto billing systems with vendors and clients. If not, paying vendors manually would likely be an employee’s job, right? It’s also possible your books are managed by just one or two people — maybe one of those people even has the power to initiate payments. Any valuables at the office? How about your employees…do they ever visit clients’ offices?
There’s is a hidden risk facing businesses that often goes unnoticed until it suddenly tears through a firm’s finances: employee theft. According to a 2017 study workplace crime by employees costs US business $50bn annually.
Most businesses are exposed to the risk of criminal activity. The Association of Certified Fraud Examiners report that U.S. Businesses will lose an average of 5% of their gross revenues to fraud.
Wire fraud is a whopping $30 to $50 billion problem annually and is reaching historic levels in the U.S. and around the world. The FBI claims that the number of wire fraud scams reported by title companies spiked 480% in 2016.
Most businesses are exposed to the risk of criminal activity. One study revealed that organizations around the world lost an estimated $3.7 trillion to fraud schemes in 2014 alone. To put things in perspective, that’s just shy of Germany’s GDP in 2014.
What is Crime Insurance?
Crime insurance is designed to protect the company from loss caused by certain illegal activities. Unlike many other commercial insurance policies, it has little to do with defending against lawsuits from third parties. This policy instead reimburses the company itself for losses of money, securities or other tangible property that it directly experiences.
The exposures commonly addressed by these policies include:
- Employees stealing money from the company or clients.
- Inadvertently accepting forged checks or counterfeit money.
- Non-employees stealing from the company’s office or from the premises of the company’s bank.
- Robbery of valuables while in transit under the care of a messenger or armored car.
- Computer and wire transfer fraud.
Some carriers even offer risk management solutions and online portals that can help guide you on best practices for loss control at no additional cost.
While these policies are similar to fidelity bonds, not all Crime Insurance policies will comply with the ERISA’s requirements for bonding your employee benefit plans. Be sure to ask the Founder Shield team if you’re unsure of what coverage is afforded by your policy.
How it Works
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