Fidelity Bonds for Small Businesses
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Commercial crime insurance

Commercial crime insurance offers protection from employee theft or fraud that impacts a client.

What is commercial crime insurance?

Commercial crime insurance often refers to a fidelity bond. This coverage financially protects your business from criminal acts committed by employees against customers or clients.

If one of your employees (or anyone else working on your behalf) steals from a customer or client, crime insurance provides them with reimbursement for the amount that was stolen.

You may also see this coverage called employee dishonesty coverage or a business service bond.

What does commercial crime insurance cover?

The criminal acts typically covered by a commercial crime policy include:

  • Theft of money or property
  • Fraud, including computer fraud and funds transfer fraud
  • Forgery
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What kinds of businesses need commercial crime coverage?

Any small business that handles financial transactions with customers could benefit from a crime insurance policy. It can cover losses when employees misuse sensitive financial data, such as a client's credit card or Social Security number.

Many finance and tech companies invest in fidelity bonds because their employees can access stored personal data. Other industries that may need commercial crime insurance include cleaning businesses, which rely on janitorial bonds to protect against employee theft of client property.

If your employees handle financial records and transactions, or if they are trusted with valuable client property, you and your business partners could use this coverage as part of your risk management program and to gain client trust.

Is there anything not covered by a commercial crime insurance policy?

Commercial crime insurance doesn’t cover noncriminal business mistakes, such as accounting errors. (This is covered by errors and omissions insurance, also called professional liability insurance.) It also doesn’t cover:

  • Employees with criminal records known to the employer
  • Crimes by business owners or senior management
  • Indirect financial losses, such as business interruption, loss of income, or legal expenses
  • Data breaches
  • Theft or vandalism committed by non-employees

When is commercial crime insurance required?

In the tech industry, your clients may require you to purchase fidelity bonds in the terms of a contract. This coverage gives them peace of mind that they'll be reimbursed in the event of employee theft or fraud.

Similarly, clients may ask cleaning companies to secure janitorial bonds before they'll allow your staff on their business premises.

They’re also mandatory under the Employee Retirement Income Security Act (ERISA) for businesses that manage an employee benefit plan, such as a 401(k).

The amount of coverage you need depends on your client's requirements, typically outlined in a contract.

Add protection for your own company to a BOP

You probably already carry commercial property insurance coverage, included in a business owner's policy (BOP), to cover the cost of stolen, lost, or damaged business property. However, this policy does not include protection against employees who steal from your business.

Small business owners can add employee dishonesty coverage that covers employee theft of business property to their BOP. This endorsement provides coverage if an employee steals from your cash register, forges your signature, or makes off with valuable computers or other equipment owned by your business.

Updated: April 29, 2022
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