Friday, November 15, 2013

Insurance Against Commercial Crimes

Standard corporate insurance policies do not provide cover for criminal acts common in the corporate world such as forgery, computer fraud, fund transfer fraud, robbery and other forms of theft. As crime-related losses are not typically covered by most insurance policies, crime protection insurance is necessary for any business but the majority of businesses do not have enough crime protection.

Fraud and embezzlement can occur even in the best work environments. Any employer needs to be concerned with employee dishonesty and any business handling cash or securities needs protection from robbery or theft. Therefore, companies should consider taking crime insurance or fidelity insurance to manage loss exposures resulting from criminal acts. Typically, crime insurance policies allow businesses to file claims for criminal acts of employees or other third-party offenses that have the potential to cause financial ruin.

As the loss exposure can vary significantly depending on the business, insurers prefer to insure losses suffered from criminal acts under separate commercial crime insurance which allow companies to cover losses that are not insured under other insurance policies. For instance, specialized crime insurance products are available for car companies, mining concerns, ATM companies, security guards and check cashers. Similarly, for investment companies, and investment advisories, insurance covers for fiduciary dishonesty exposures are available.

Commercial crime insurance covers money, securities and other business assets primarily against the following criminal acts:

Employee Theft: loss of money, securities or other property resulting from theft committed by an employee.

Forgery or Alteration: loss from forgery or alteration of checks, drafts, promissory notes that are made or drawn on an account by someone acting as agent and forgery losses caused by a person other than an employee.

Inside the Premises: theft of money and securities - helps cover loss of money and securities by theft, disappearance or destruction and damage to a premises or building and damage to a locked safe, vault, cash register, box or drawer from an actual or attempted theft or unlawful entry. The theft and damages are caused by a person other than an employee.

Inside the Premises: robbery or safe burglary of other property - covers robbery of a custodian or safe burglary and damage to the premises or building or safe other than money and securities by a person other than an employee.

Outside the Premises: loss of money and securities or other property, outside the premises, in the care and custody of a third person resulting from theft, disappearance or destruction.

Computer Fraud: loss of or damage to money, securities and other property resulting from the use of a computer to fraudulently cause a transfer of that property from inside the premises to a person or a place outside the premises.

Funds Transfer Fraud: loss of funds by a fraudulent instruction directing a financial institution to transfer, pay or deliver funds from an account fraudulently transmitted by someone.

Money Orders and Counterfeit Money: loss resulting from accepting in good faith, in exchange for merchandise, money or services: money orders that are not paid upon presentation or counterfeit paper currency that is acquired during the regular course of business.

The coverage of these policies also include possible crimes arising from potential weaknesses in a company’s financial controls, such as creation of fictitious employees, dummy accounts payable, non-existent suppliers to outright theft of money, securities and property.

As technological advancement makes it increasingly simple to commit crimes in the workplace, business employers should secure themselves by getting adequate crime protection.