Commercial Crime Insurance protects your business against financial losses caused by theft, burglary, robbery, forgery, and fraud.
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No business is immune to the threat of criminal acts. Even with countless safety and security measures in place, it is unlikely that owners can monitor their business 100% of the time. Consider Commercial Crime Insurance to protect your business from crimes as common as employee theft to larger threats like forgery.
What is Commercial Crime Insurance?
Commercial Crime Insurance provides protection for businesses from financial losses resulting from criminal acts. This includes forgery, robbery, burglary, theft, and employee dishonesty.
Although standard commercial property insurance provides some protection from criminal acts, this coverage is limited and most importantly, it does not cover losses resulting from employee dishonesty. This is where Commercial Crime Insurance comes into play. Although no employer wants to believe their employee would steal from them, it is better to be prepared for these offenses. This is especially true for businesses in the sports and fitness industry since they typically have employees interact with customers on a regular basis. These employees have access to valuable equipment, goods, cash, and information. As a result, the business is even more susceptible to theft.
- Your cash register is located at the refreshment bar of your gym. While manning the register, your employee pockets some of the customer payments. Your Commercial Crime Insurance would cover this financial loss.
Why do sports and fitness businesses need Crime Insurance?
Sports and fitness businesses are vulnerable to criminal acts in a number of ways. For instance, the locker rooms found in many fitness centers are designed for privacy and such a setting increases the likelihood of theft. If your facility stores inventory, supplies, or cash on site, these may be at risk for theft or robbery.
Additionally, your employees will likely handle monetary transactions with the many patrons of your business facility and have access to your business’s safes, lockboxes, or cash registers, increasing the likelihood of theft.
What does Crime Insurance Cover?
Commercial Crime Insurance generally includes coverage for the following items:
Employee dishonesty. Any loss or damage to money, securities, or other property caused by employee theft or forgery. If a business is aware that an employee has previously stolen from the business, losses caused by that employee may not be covered.
- One night, the employee responsible for locking up your dance studio steals the sound system while no one else is around. Your insurer would cover the financial loss of this offense.
Forgery or alteration. If checks, promissory notes, or other promises to pay money are drawn on your account and forged by someone, Commercial Crime Insurance will cover the losses. This insurance also will provide payment for legal fees to defend against lawsuits if you are sued for refusing to pay for a forged check or promissory note.
- Your company checkbook is stolen, and the thief writes out some checks to herself and deposits them. Commercial Crime Insurance would cover the losses resulting from this check forgery.
Theft of money or securities from inside the premises. This covers the loss of money or securities from theft, disappearance, or destruction when the money or securities are located on your business premises. It also covers damage to the building or premises, as well as damage to any locked safe, vault, or cash register resulting from actual or attempted theft. This coverage is for non-employee thefts.
- The trainer employed in your fitness center is busy instructing a client on weightlifting techniques. During this distraction, another client takes petty cash from the front desk. Commercial Crime Insurance covers this financial loss.
Robbery or safe burglary of other property inside the premises. Robbery is a more specific form of theft which is the taking of property by force or under the threat of force. Safe burglary is the taking of property from inside of a locked safe. This covers the loss of other property (not including money or securities) from your business premises via robbery or safe burglary by non-employees. It also covers damage to the building, premises, or locked safe that occurs during a robbery or safe burglary.
- A robber threatens your employee with a knife in order to steal expensive equipment from your fitness center. The loss of this robbery would be covered by your Commercial Crime Insurance.
Loss of money or securities outside the premises. This covers theft, disappearance, or destruction of money and securities and robbery or attempted robbery of property while outside your business premises and in the care of a messenger or armored car company.
- While on the way to the bank to make a deposit on behalf of your business, you make a pitstop at a gas station. While you are inside the gas station’s convenience store, someone breaks into your car and steals the cash you were going to deposit. Even outside of your business premises, this loss is covered by your insurance policy.
Computer fraud. Losses or damage from the fraudulent transfer of your money, securities, or other property to a place outside your business premises or bank resulting from the use of any computer.
- Someone breaks into your offices overnight and accesses your inventory management system. They place an order for thousands of dollars worth of fitness equipment to be sent to an outside warehouse. Your insurer would cover the financial loss of this offense.
Funds transfer fraud. Losses resulting from fraudulent instructions provided to a financial institution that leads them to transfer funds out of your account.
- Someone steals your office mail and gains access to your business’s bank account information. The thief visits the bank and is able to transfer your company funds into his personal checking account. This loss is covered by your Commercial Crime Insurance.
Money orders and counterfeit money. Losses resulting from counterfeit money orders or counterfeit money that your business has accepted.
- Your yoga studio accepts payment for a year membership and later discovers that the bill is a counterfeit. Your insurance would reimburse you for the loss.
Additional coverages are also available for an extra premium, such as:
- Property of clients. This covers the theft by one of your employees of the money, securities, or other property belonging to your clients. This coverage can be useful if your trainers, instructors, and other employees travel to client sites. If one of your employees is accused of stealing from a client while performing work for your business, your business can be covered for this loss.
- Extortion and kidnapping. If a criminal kidnaps and threatens to injure or kill a director, manager, employee, or partner of a business, this coverage will cover the ransom required by the extortionist. It will also cover ransoms due to extortionists who threaten to harm your business premises or property. Kidnap and ransom insurance is also available as a standalone policy.
What are the key exclusions to Crime Insurance?
There are a number of exclusions to Crime Insurance. The exclusions most relevant to sports and fitness businesses include:
- Crimes, theft, or other actions that you or your business partners commit.
- Liabilities you may incur to third-parties due to crime-related losses.
- Losses resulting from the unauthorized use or disclosure of confidential client information, including credit card or financial information.
- Accounting errors.
- Loss of income due to stolen property or business interruptions from crime.
- Employees who have been caught stealing in the past by an employer are excluded. (Once you have discovered that an employee has stolen something, any later thefts they commit will not be covered).
- Damage to your building or property due to vandalism.
Discovery vs. Loss Sustained
Crime coverage can be written on either a loss sustained basis or a discovery basis.
As the name suggests, crime insurance written under a loss sustained basis covers losses sustained during the policy period. Discovery of the loss must occur during the policy period or within one year after the policy expires.
Crime insurance written under a discovery basis covers losses that are sustained at any time, but discovery of the loss must happen during the policy period or up to 60 days after the policy expires. This is helpful for losses from crimes such as extortion and embezzlement, which are often discovered much later after the offense occurs.
Although it is impossible to control whether or not your business becomes a victim of crime, you can control how you protect your business against loss from these criminal acts. Commercial Crime Insurance is especially important for businesses in the sports and fitness industry because of the number of patrons dealt with on a regular basis. In fact, any business that hires employees and deals with monetary transactions would be wise to consider Commercial Crime Insurance.