Crime Insurance

What one has, another one wants. Usually we find legitimate means to get what we desire. However, there are the few among us who go the route of merely taking from others, especially from businesses. Crime is one of the many, serious exposures to loss where insurance protection is needed. Since other forms of coverage, such as property and inland marine policies, offer such limited protection against crime-related losses, crime insurance is necessary.

Crime insurance coverage may be purchased as a separate policy, or it may be added as a supplement to other coverage. Crime losses are handled in two distinct ways. One is on a discovery basis. It refers to a crime loss that is first discovered during a given period of crime insurance coverage. The actual loss may have occurred at an earlier time. The other method is a loss sustained basis which responds to losses both sustained and discovered within the policy period. It also handles losses that are sustained during the policy period and discovered within one year after the end of that policy period.

While all businesses are vulnerable to crime loss, their vulnerability differs. One business may be most threatened by internal sources of loss (dishonest employees) while others face a larger threat from burglars. Crime coverage is structured so a given business can select limits of protection that best fits its circumstances. Typical coverage includes the following:

Coverage	Applies To Loss Involving:
Employee Theft	The unlawful taking of money, securities and other property by employees.
Forgery and Alteration	Outsiders that forge or alter checks, drafts, notes or other written promises, orders or business account directions
Inside the Premises	Theft, disappearance or destruction of money and securities from within the insured premises or its banking premises. Also covers premises damage caused by theft attempts.
Inside the Premises–Robbery or Safe Burglary of Other Property	Robbery of a person in charge of the property or safe burglary of other property that occurs inside the premises. Also covers damage caused by robbery attempts.
Outside the Premises	Theft, disappearance and destruction of money and securities that occur outside the premises when that property’s in the custody of a messenger or an armored car company.
Computer Fraud	Money, securities and other property fraudulently transferred from the insured premises or banking premises by electronic means.
Funds Transfer Fraud	Funds lost as a direct result of fraudulent instructions directing a financial institution to transfer, pay or deliver funds from a transfer account.
Money Orders and Counterfeit Money	Counterfeit money accepted in good faith in exchange for purchases. Also covers money orders accepted by a business which are then rejected when presented to issuer for payment.

However, companies that offer this coverage have to protect themselves from illegitimate claims. The sad reality is that businessowners and their employees are in the best position to steal or commit fraud. Therefore, there are many situations that do not qualify under a Crime Insurance Policy.

Ineligible situations include the following:

Acts Committed by the insured business (including business partners and employees).
Acts of Employees when the insurance company learned that an insured businessowner knew about the acts before the Crime Insurance Policy was obtained.
Acts of Employees, Managers, Directors, Trustees or Representatives. However, this exclusion does not apply to the policy’s Employee Theft provision.
Loss caused by unauthorized use of confidential business information.
Governmental Action (such as property seizure, forfeiture or destruction).
Indirect Income Loss (due to loss of access to money, securities or other property).
Legal Fees, Costs and Expenses related to any legal proceedings.

Other situations that are barred for coverage include securities trading and losses that can only be proved by warehouse receipts or inventories. The latter situations aren’t covered because such information can be easily manipulated to make it seem that a loss has occurred.

The reality is that businessowners have to make suspicious assumptions against both insiders and outsiders when it comes to protecting their assets. Fortunately, Crime Insurance Coverage is available to help meet such sources of loss.

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