Few things are worse than employees stealing from your company. But the statistics tell the sad truth: American businesses lose an average of $50 billion per year from commercial crime. And depending on the type of company you operate–for example a cannabis dispensary that’s cash-only or a retailer with lots of inventory—your business could be disproportionately affected. Commercial crime insurance can protect you against these losses—and adding this policy to your business’s insurance coverage is a necessary expense that mitigates your overall risk exposure.
In this article, we’ve rounded up some of the best commercial crime insurance companies and we’ll explain what a commercial crime insurance policy covers (and what it doesn’t), and provide expert guidance on how to protect your business against this devastating criminality.
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What is Commercial Crime Insurance?
Even if your business hasn’t suffered any thefts so far, commercial crime is a lot more common than you might think. In fact, employees cause 90% of all significant theft losses, with 75% of employees having stolen at least once from their employer. While a Business Owners Policy (BOP) and Commercial Property Insurance will cover property and liability risks, only commercial crime insurance will protect you against losses related to criminal behavior.
A commercial crime insurance policy provides coverage against theft, funds transfer fraud, forgery, property damage such as vandalism, burglary, and other similar losses of money or assets committed by internal employees. It can also cover digital crime, for example if business information, money, or property is targeted by hackers or con artists.
There are two main types of commercial crime insurance: first party coverage and third-party coverage.
- First-party commercial crime insurance. This kind of policy protects your business from losses that occur as a result of criminal activity. Examples of first-party commercial crime include petty theft, shoplifting, embezzlement, larceny, and skimming. It can be as basic as taking money from the cash register to more premeditated crimes such as forging signatures, inflating expense reports, and funneling funds through fraudulent accounts.
- Third-party commercial crime insurance. Third-party crime coverage will protect your business if it suffers direct losses due to criminal activity carried out by someone outside your company. To qualify as a third party, the perpetrator can’t own or be employed by the business, nor can they serve as the executive shareholders of the company. If you have a business model that relies on a lot of contractors, third-party crime insurance is a smart investment.
There are some common exclusions in crime policies that limit what’s covered. Typically, commercial crime insurance doesn’t cover loss of income, crimes committed by executives and business partners, and third-party liabilities. Commercial crime insurance also doesn’t cover cybercrime. You’ll need a separate policy to protect yourself against cybercrime-related losses, such as data breaches and cyberattacks.
How are Commercial Crime Insurance Policies Triggered?
It’s always good to establish how to get reimbursed when you file a claim. When you start out, your insurance provider will help tailor your commercial crime policy to best meet your business’s specific needs. A key part of designing a commercial crime policy is identifying your “named perils”—literally, the exact categories of crimes that your policy covers. In this phase, you’ll determine whether you want blanket coverage or scheduled coverage. Blanket coverage will reimburse you for a specified amount or an overall limit for a particular loss. In scheduled coverage, you list out specific items and their value. You also need to identify how you would like your policy to be triggered. A commercial crime insurance policy can either be triggered by “discovery” or “loss sustained.”
- Discovery trigger. This protects you against losses discovered during the policy period. In a discovery-triggered policy, it only matters when the crime was discovered, not when it was actually committed.
- Loss-sustained trigger. Your policy only covers losses that occurred and were discovered during the time the policy is active. Loss sustained coverage typically offer an extended discovery period of up to one year, since it can take a long time to find out exactly what was taken and when.
Best Commercial Crime Insurance Companies
In the digital age–where everything from doctor visits to grocery shopping happens online–it’s tough to distinguish what makes one insurance company better than another. One Google search of “commercial crime insurance,” and you’ll see a mind-numbing number of agencies eager to sell you inexpensive policies that all offer similar looking protection against employee theft. Leaving such an important decision to a roll of the dice can leave you with inadequate coverage when you’re at your most vulnerable. So, how do you choose the right agent or broker that’s going to get you the best premium rates and the appropriate level of coverage—and, of course, be there when you need them? Learning how to pick the right commercial crime insurance provider is just as important as getting proper protection.
The best insurance policy is the one that’s best for you. There are so many options out there, it’s really best for you to decide what your requirements are first. Do you want an online only provider? Do you want options to tailor and bundle policies at discount rates? Do you want an agent who really understands your unique risk profile? Or, do you want to just get it done fast? The providers below have been reviewed by Advisorsmith and each offers different features that serve different needs.
Chubb. An extensive network of agents and brokers, a wide variety of policies, superior ratings, and industry experience make Chubb well worth the time to get a quote. While Chubb can be pricier than other insurance companies and getting online quotes is limited, it provides very comprehensive crime insurance coverage and highly qualified agents or brokers with the ability to understand companies’ unique needs.
CoverWallet. As part of the professional services firm Aon, Coverwallet is another online-only insurance broker that, while not an insurer on its own, provides free quotes from many different insurance companies all at once—which is super convenient and time-saving. With over 30 kinds of insurance, CoverWallet offers the ability to tailor your coverage to your unique needs, whether you want to bundle various policies or eliminate options you don’t need (and don’t want to pay for).
Embroker. This online-only insurance industry newcomer may not be as long-established as other providers, but its ease-of-use, low premiums, and industry-specific policies have earned accolades from Goldman Sachs and CB Insights. Embroker’s online business model makes it accessible 24/7, with real-time claims tracking that sets its customer service apart from the rest. Embroker specializes in industries that are non-traditional or “difficult-to-place,” such as cannabis, aviation, and crypto.
The Hartford. This long-time property and casualty insurer has a strong focus on small business coverage, with a solid commercial crime policy. Its high ratings from AM Best and Standard & Poors reflect its strong financial foundation—exactly what you want when you file a commercial crime claim. Though The Hartford doesn’t do business in Alaska, Hawaii, and New Jersey, it does offer a quick online quote process and a robust product offering.
Hiscox. With its slogan “Big coverage for small business,” Hiscox has established itself as a leading provider of business insurance. Its commercial crime policy is a newer offering, and it may not provide the full complement of coverage you need at the best price so you may end up working with multiple providers to get full protection. However, Hiscox does offer discounts for new customers and insurance bundles, as well as good online options.
How to Protect Your Business Against Crime
Commercial crime insurance is part of a multi-pronged loss-prevention strategy that includes several layers of safeguards against theft. In fact, your insurance broker will want to know what other measures you’ve taken in your business’s safety protocols to defend against theft. This would include things like a security system, surveillance cameras, and other methods of monitoring your business (without undue invasion of privacy of employees).
Protecting your business against crime also includes having processes in place that not only discourage theft—such as paying fairly and offering perks and benefits—but also things like actively encouraging employees to report potential crimes without fear of retaliation, such as anonymous tip line. Building in processes that reduce the potential for theft, such as having more than one person handle money and sensitive information, can also curtail crimes.
