Commercial crime insurance policy covers losses to a business organization due to criminal activities. These activities include employee dishonesty, theft, embezzlement, fraudulent fund transfers, computer fraud, and forgery. An insured can protect his business with the help of a commercial crime insurance policy through the following ways:

Protection against Employee Theft:

The commercial crime insurance policy pays the insurer for the loss or damage to money, securities and other property resulting directly from the theft committed by an employee. The employee may be acting alone, or in involvement with other persons, the commercial crime insurance policy protects against the losses.

Protection against Forgery or Alteration:

The commercial crime insurance policy pays for the loss resulting directly from forgery or alteration of cheques, drafts, promissory notes, similar written promises, orders or directions to pay a sum certain in money. These losses arise from fraudulently drawn instruments such as cheques from the Insured’s accounts by a third party. As a business owner, getting your business insured with this policy protects against such frauds.

Protection against the theft of money and securities from the premises:

  1. A business owner can protect his premises with the help of this policy. The commercial crime insurance policy pays for the loss of money and securities from inside the premises due to,
  • Theft by a person present inside such premises
  • Loss resulting directly from disappearance or destruction
  1. The commercial crime insurance also pays for loss from damage to the premises or its exterior. The damage to the premises can be directly from an actual or attempted theft.
  2. This insurance also pays for the damage to a locked safe, vault, cash register, cash box or cash drawer located inside the premises

Read More: What are the Common Exclusions of Cyber Risk insurance?

Protection against robbery or safe burglary of other property inside the premises:

The commercial crime insurance pays for the loss or damage to other property arising due to

  • Actual or attempted robbery of a custodian
  • Actual or attempted safe burglary

Similarly, loss arising due to damage to the premises or its exterior or a locked safe or a vault, from an actual or attempted robbery or safe burglary of other property is also covered in commercial crime insurance policy.

Outside the premises protection

This insurance policy provides protection against money, securities or other property located outside the premises, in the care and custody. The protection is provided against theft, disappearance or destruction.

Protection against computer fraud

This insurance policy provides protection against money, securities or other property resulting directly from the use of any computer. The fraudulent activity can be transferring the property of the insured to,

  • A person outside those premises
  • A place outside those premises

The commercial crime insurance policy also pays for the loss of funds from the insureds financial institution due to fraudulent transfer practices.

Th insured has to understand that the commercial crime insurance policy will not protect his business against the following exclusions:

  • Loss arising due to war, rebellion, insurrection, revolution, military action or governmental intervention
  • The cost of reproducing information contained in lost or damaged accounts, manuscripts or records
  • Loss of income
  • Loss of trade secrets
  • Fees or expenses in suing or defending any legal proceedings

Read More: What are the different types of Losses Covered by Cyber Risk Insurance?

Case 1 on Application of Commercial Crime Insurance

A management institute in Mumbai was well known for its teaching and placements. Along with the in-house faculty, the institute also hired experienced visiting faculty from various industries. However, an employee from the human resource department opened a bank account in his friend’s name and deposited huge amounts into that account in the name of visiting faculty fee. An amount of fifty thousand rupees was at stake.

The educational institute would have lost all fifty thousand rupees had it not purchased a commercial crime insurance policy. The fraud came into open, the HR personnel got fired, and the institution recovered all its money due to successful claim settlement.

Case 2 on Application of Commercial Crime Insurance

Mohan, a 28-year-old employee of an IT firm, was an adamant employee. His attitude was lazy, he showed no enthusiasm, and he never met his deadlines.  After his fellow team members complained to the Manager, Mohan was given the warning to improve or to get himself fired. One month passed, but Mohan showed no improvements. His lazy attitude continued, and ultimately his Manager fired him. After being fired, Mohan used his Manager’s password and gained access to his system. He initiated transactions using his bank routing code and received fake reimbursements made to the company’s customers.

The company came to know about this fraud and immediately informed its insurance company. The insurance company sent a surveyor to investigate the matter. The loss was covered under the commercial crime insurance policy.

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