A commercial crime insurance policy provides different kinds of protections against commercial crimes like employee dishonesty, forgery or alteration coverage, computer fraud, funds transfer fraud coverage etc. This policy protects a business owner or an employer against any such dishonest acts.
In the event of any such commercial crime, it becomes the duty of the insurer to protect the insured against the loss or damages. This policy also covers for the additional costs incurred by the insured in case of any event.
In general, the additional cost is the cost incurred by the insured after the waiting period of 48 hours after the event of any commercial crime as listed in the policy document. These costs are usually accounted beyond the usual operational costs. Additional costs are vital for the restoration of the business to its normal course of continuity or operations.
It is the duty of the insured to inform the insurers or the insurance company for any additional cost sustained as a result of any criminal act. The additional cost has to be discovered during the insurance period or the discovery period, and any such cost has to be immediately notified.
Following are the examples of the additional cost incurred by the insured in case of a commercial crime insurance:
- After an event of a commercial crime, the insured may need a temporary replacement of equipment. Such costs
can be accounted as the additional costs. Also, the temporary additional premises or office space required is also included under the additional cost.
- The insured may include the additional cost for bringing the external workforce on board or even the overtime employees.
- Additional cost can also include the cost required by the insured for transportation of the equipment’s or any documents.
- Any cost that the business incurs for reconstituting the data.
- Any cost incurred for the fees of a forensic expert who assist in production of proof of loss for insurance purposes.
- In case of any negative publicity of the insured, an additional cost of engaging a public relations firm is also considered.
An electronic cable and wire manufacturing company was located in Gandhinagar. The employee count for ‘Safe Electronics’ was 45. Employees in this cable manufacturing company worked in three different shifts. The company had various consignments to be shipped in the coming days, and hence the production process was carried out in full swing. One day, a worker named Raghu was working in night shift. As very few workers were present for the night shift work, he took an unfair advantage of this opportunity and stole 15 packages of cable wires which were supposed to be exported in the coming days.
However, Raghav’s act of fraud could not be saved, and he was captured. However, some of the cable packages were found damaged.
The owners of ‘Safe Electronics’ contacted the insurance company as they had a commercial crime insurance policy taken to safeguard their business. Upon investigation, it was found that, the employee had indeed stolen the cable packages with an intention of selling it in scrap and making money. As it was an employee related theft, the claim was settled successfully.
Since the stolen cable inventory was to be delivered to the third-party, the employers had to acquire overtime workers to get the task completed in time. This was the additional cost for the insureds which was related to the employee theft event that took place. The insureds informed the insurance company for this additional cost which took place in the given discovery period and were able to indemnify themselves against this additional cost as well.