Commerical Crime Insurance
Commercial crime insurance provides protection from financial losses related to a business-related crime, including theft by employees, forgery, robbery, and electronic crime. Crime insurance is also referred to as fidelity insurance since crime policies cover losses caused by employee theft.
The coverage.
Internal fraud.
Employee theft Cover= It includes loss of securities, money, or other property by theft or forgery by the employee of the company.
External Fraud
- Premise Cover: It includes losses from destruction, wrongful abstraction, and theft of securities or money from the policyholder’s premises by third parties.
- Transit Cover: It comprises of losses from disappearance, destruction of money, or security outside the policyholder’s premise by a third party.
- Depositors’ Forgery Coverage: It includes losses or damages which arise due to losses from instruments like cheques that are fraudulently drawn by a third party on account of the policyholder.
- Counterfeiting fraud: Imitation by a Third Party of Money, Certificated Securities, or an authentic Negotiable Instrument intended to deceive and of such quality as to be taken as the original and upon which the Insured has acted or relied
- Funds Transfer Fraud: means the criminal and intentional deprivation of the Insured’s funds resulting directly from Fraudulent Instructions given to a financial institution to transfer, pay or deliver funds of the Insured from a Bank Account.
- Computer Fraud Coverage: It comprises losses that a policyholder has to endure due to computer fraud made by third-party along with the expenses which the policyholder has to incur due to a violation of the computer.
- Social engineering fraud: also known as fraudulent impersonation, business email compromise, or impersonation fraud — refers to a variety of techniques used by fraudsters to deceive and manipulate victims into transferring funds.
Major Exclusions:
- Knowingly continuing to employ a person who is known to be committing a fraudulent act
- Major shareholder exclusion (percentage varies from policy to policy);
- loss caused by the dishonest acts of a partner
- Cost of reproducing information contained in any loss of damaged manuscripts, records, accounts, microfilms, Credit risk
- Fees, costs, or other expenses incurred in establishing the existence or amount of loss
- Premises Damage
- Proprietary information, trade secrets, intellectual property
- War and Terrorism
Coverage trigger.
The common form of coverage is a “loss discovered” form. Under this form, coverage applies to loss that is discovered during the policy period regardless of when the act/ loss took place. There are normally two instances that trigger the discovery of loss: Firstly, when the insured first becomes aware of facts, even if all the facts about the loss are not yet known, and secondly when legal action is taken against the insured. The insured must provide the insurer with written notice as soon as practicable, but no later than 30 to 60 days after discovery occurs. The burden of proof of coverage for loss rests solely with the insured.
Difference – Cyber and Crime Insurance
Crime policies cover direct losses of your funds, whereas cyber policies cover economic damages arising through a failure of network security or privacy controls which may cause indirect losses.
| CYBER INSURANCE | CRIME INSURANCE |
| THIRD-PARTY | Employee theft |
| Privacy liability coverage | Premises and transit loss |
| Regulatory action | Forgery or alteration |
| Notification cost | Computer fraud |
| Crisis management | Funds transfer fraud |
| Call centers | Money orders and counterfeit currency fraud |
| Credit/identity monitoring | Credit card fraud |
| FIRST PARTY | |
| Theft and fraud coverage | |
| Network/business interruption | |
| Extortion | |
| Data loss and restoration |