When you’re starting a new business, it can seem like there are a million different choices for insurance policies to cover your company. While most businesses do a good job acquiring the basics like general liability insurance and workers’ compensation insurance, there are some coverages, such as commercial crime insurance, that can go a bit overlooked.
If you’re operating a small or mid-sized business, it might not seem like crime insurance coverage is a high priority, but you would be surprised at how many exclusions there are in other forms of insurance regarding criminal acts. If you want your company protected from a variety of potential crimes, committed by a wide range of people and entities, you need to look into commercial crime coverage.
But what exactly does this form of insurance cover? What is the ideal combination of crime insurance coverages for your business? In this article, we’ll break down the details of commercial crime insurance, helping you determine if it’s a coverage you want to pursue for your business.
Losses due to crime are not covered by the vast majority of commercial property insurance policies, and your general liability coverage won’t cover them either. With crime insurance, your company is covered from many common forms of business crime, whether committed by your employees, your customers, your suppliers, etc.
Crime insurance policies can vary quite a bit from provider to provider, with each offering a slightly different set of coverages. In the most general sense, these break down to first-party and third-party coverages. First-party crime insurance covers losses to your business caused by a covered crime.
Third-party crime insurance covers accusations made by others (e.g., customers, vendors, or cleaning crews) that they suffered a loss due to a criminal act related to your company.
One common misconception about commercial crime insurance is that it’s mostly for larger companies or those that deal with a considerable amount of crime risk. The truth of the matter is far from that, as even very small businesses are well-advised to at least look into a crime insurance policy.
Generally speaking, you should pursue crime coverage if your company fits any of the following descriptions:
As you can see, these descriptions fit most small and mid-sized businesses, so crime insurance is certainly not just for “big business.”
There is a wide variety of potential claims that fall under the umbrella of a typical commercial crime insurance policy, but for the most part they fit into a few general categories. As you read through these categories, think about how much risk your company has for each of them.
There are some crimes and crime-related incidents that are not covered by commercial crime policies though, and it’s smart to know what these non-covered claims are ahead of time. While this type of insurance does cover quite a few types of common business crimes, it typically does not apply in the following situations:
As you can probably imagine, the costs for commercial crime coverage vary considerably based on the nature of your business, the size of your company, the level of risk you’re exposed to, how strong your security systems are, and other factors. No matter what, it’s almost always much cheaper to acquire crime insurance as part of a business owner’s policy (BOP) or commercial package policy (CPP) than as a standalone policy.
While BOPs and CPPs save a decent chunk of money for any of the coverages available under those policy formats, that’s especially true for commercial crime insurance. Just as a rough guideline, you can often save 25%–50% by packaging crime coverage into a BOP or CPP as opposed to buying it separately.
Aside from simply covering your risks with crime insurance, wouldn’t you also like to take measures to prevent crimes from taking place to begin with? Here are a few tips to keeping your risk level as low as possible:
There are quite a few entrepreneurs who operate under the misconception that commercial crime insurance isn’t necessary for small businesses. In reality, it’s arguably even more vital for small and medium-sized businesses that don’t have the resources to develop an extensive on-site security system, as opposed to a large corporation that has all the bells and whistles in regards to security.
Whether you decide to acquire commercial crime insurance or not, we hope this article answered all your questions about this type of coverage, and we wish you the very best with your business!