Commercial crime insurance

Commercial crime insurance protects businesses from financial losses caused by theft, fraud, forgery, and other dishonest acts. Depending on the type of coverage purchased, it can protect your business from losses caused by employee dishonesty, as well as certain criminal acts committed by third parties.

For example, commercial crime coverage may help cover losses if an employee steals money, inventory, or other business property, or if a fraudster tricks an employee into transferring funds through a social engineering scam. It can also help protect your business from the financial consequences of employee theft involving a customer or client.

There are two types of commercial crime coverage available to small businesses: first-party crime coverage and third-party crime coverage.

First-party crime coverage protects your business from direct financial losses caused by employee dishonesty, theft, fraud, forgery, and certain crimes committed by outside parties, such as social engineering scams and funds transfer fraud.

Third-party crime coverage, often called a fidelity bond or fidelity insurance, protects your customers or clients from losses caused by employee theft or other dishonest acts committed while employees are working on your behalf.

These coverages are typically purchased separately and generally not bundled together.

In some cases, first-party employee dishonesty coverage can be added to a commercial property policy, business owner's policy (BOP), or commercial package policy (CPP) as an endorsement.

Businesses concerned about social engineering scams, funds transfer fraud, or other cyber-related crime exposures may also need cyber insurance, as commercial crime and cyber liability policies often cover different types of losses.

Commercial crime insurance helps protect against financial losses caused by theft, fraud, forgery, and other dishonest acts. The specific protections available depend on whether you purchase first-party commercial crime coverage, which protects your business from covered financial crimes, or third-party crime coverage (fidelity insurance), which protects customers and clients from losses caused by employee dishonesty.

First-party crime insurance protects your business from financial losses caused by employee theft, fraud, forgery or alteration, and other dishonest acts.

Unlike third-party crime coverage, which protects customers and clients from employee dishonesty, first-party crime coverage helps reimburse your business for covered losses that directly impact your company.

Specifically, first-party crime insurance can help cover:

Third-party crime insurance coverage protects your customers and clients from financial losses caused by theft, fraud, forgery, and other acts committed by your employees.

Unlike first-party crime coverage, which protects your business from covered losses, third-party crime coverage helps reimburse customers or clients when they suffer a covered loss due to criminal acts by employees. ERISA fidelity bonds are often required by client contracts, especially for businesses whose employees handle client property, funds, or sensitive information.

Specifically, third-party commercial crime insurance can help cover:

While commercial crime insurance covers many aspects related to employee theft or fraud, it does have some exclusions. This includes:

Yes. If you carry commercial property insurance coverage, whether as part of a business owner's policy (BOP) or commercial package policy (CPP), you may be able to add certain types of commercial crime coverage through an endorsement. While commercial property insurance helps cover the cost of stolen, lost, or damaged business property, it typically doesn't cover losses caused by employee theft or dishonesty.

Small business owners can add employee dishonesty coverage, which covers employee theft of business property, to their commercial property policy, BOP, or CPP. 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.

Depending on your business's risks and coverage needs, you may also be able to purchase a standalone commercial crime insurance policy that provides broader protection against employee theft, fraud, forgery, and other covered crimes.

Commercial crime insurance and fidelity bonds are similar because both can help protect against losses caused by dishonest acts, such as theft, fraud, or employee dishonesty. However, they're not always the same type of coverage.

Commercial crime coverage is a broader category of protection that can include first-party crime coverage, which protects your business from losses caused by employee theft, fraud, social engineering scams, and other covered crimes. It can also include third-party crime coverage, often provided through a fidelity bond, which protects customers or clients from losses caused by employee dishonesty.

A fidelity bond is generally used for third-party protection and may be required by a client contract or regulation. The right type of coverage depends on whether you need to protect your own business from crime-related losses or provide protection for customers, clients, or other third parties.

Employee dishonesty coverage is one of the most common forms of first-party commercial crime coverage. It protects your business from losses caused by employees who steal money, property, or other assets, and is often included as part of a broader commercial crime policy.

Businesses can typically purchase employee dishonesty coverage as a monoline commercial crime policy or as an endorsement added to an existing commercial property policy, BOP, or CPP.

The amount and type of employee dishonesty coverage you need depends on your business operations, the value of your assets, and the level of access employees have to company funds, property, or sensitive information.

Commercial crime insurance isn't usually required by law, but clients, contracts, and industry requirements may require certain types of crime coverage.

For example, tech-focused businesses that handle client property, funds, or sensitive information may be asked to purchase a fidelity bond or third-party crime coverage as part of a contract. This coverage gives clients confidence they'll be reimbursed if an employee commits theft or fraud.

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

A fidelity bond is also required under the Employee Retirement Income Security Act (ERISA) for businesses that manage an employee benefit plan, such as a 401(k) plan. This type of bond protects plan participants by covering losses caused by fraud, theft, or other dishonest acts involving employee benefit plan assets.

The amount and type of crime coverage you need depends on your business operations and any requirements outlined in client contracts, leases, or regulations.

Commercial crime insurance costs can vary depending on your coverage needs, business operations, and level of risk. Reviewing policies from multiple insurers and taking steps to reduce your exposure to theft and fraud, such as implementing strict internal controls, can help you find affordable coverage without sacrificing important protection.

Compare quotes from multiple insurers. Rates, coverage options, and policy terms can vary between insurance companies. At Insureon, you can complete one online application to compare commercial crime insurance quotes from trusted providers and find coverage that fits your business.

Choose appropriate coverage limits. Higher coverage limits provide more protection but typically come with higher premiums. Review your business assets, employee access to funds or sensitive information, and any client or contract requirements to determine how much coverage you need.

Limit access to sensitive information. Reducing the number of employees who can access company funds, financial accounts, customer information, or valuable property can help lower your exposure to employee theft and fraud.

Maintain a strong financial profile. Your business and personal credit history may impact your ability to qualify for certain types of crime coverage and the rates you receive. Maintaining good financial records, conducting employee background checks, and responsible credit practices can help you secure more favorable terms.

By comparing coverage options and proactively managing your risks, you can find commercial crime insurance that provides the protection your business needs at a price that fits your budget.