The revelations from the 2022 Association of Financial Professionals (AFP) Payments Fraud and Control Survey Report highlight the vulnerability of businesses to the threats of payments fraud. The survey revealed that 71% of companies fell prey to such incidents in the previous year, with business email compromise (BEC) being the primary source of fraud.

Another striking finding of the survey was the impact of a remote work environment on payments fraud. Interestingly, 34% of respondents believed that the shift to remote work had contributed to an increase in fraud, while 47% perceived no significant impact. Despite the varying opinions on this matter, the consensus remains steadfast in asserting that the implementation of best practices and comprehensive training is paramount in reducing fraud risks within organizations.

The view of increased vulnerability of organizations to the cyber threat calls for an immediate need of crime insurance. Crime insurance policies are designed to safeguard businesses against financial losses resulting from various criminal activities, including fraud, embezzlement, and cybercrime.

It provides a layer of defense by offering coverage for direct financial losses incurred due to fraudulent activities. These policies may encompass coverage for funds transfer fraud, social engineering schemes, and other forms of financial deception that are prevalent in the modern business landscape.

What is Business Crime Insurance?

Business Crime insurance protects a business from losing money, valuables, or assets due to actions by its own employees or external individuals. This coverage is specifically designed to handle significant losses, especially those that may go unnoticed for an extended period.

Unlike other insurance policies that may have limited coverage and apply to specific locations, business crime insurance provides protection across the world. It differs from fidelity and burglary policies, which tend to have lower coverage limits, lower deductibles, and only apply to specific areas.

Simply put, a business crime insurance policy offers broader and more comprehensive protection against a range of potential financial losses resulting from various criminal activities.

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What are the Types of Crime Insurance?

A typical crime insurance policy is covered under a "named perils" basis that requires a cause of loss to fall within. The possible conditions are listed below:

  • Money and Securities: It encompasses non-employee theft, thereby addressing losses of money or securities due to theft, disappearance, or destruction. Further, it specifies different limits for money and securities located "inside" or "outside" the premises, offering protection for assets both on-site and in transit.
  • Employee Dishonesty: Also known as "employee theft," this coverage protects against losses caused by employee dishonesty, theft, or forgery.
  • Forgery and Alteration: It applies when checks, promissory notes, or other payment promises are forged by someone other than an employee. The policy provides coverage for legal fees in case of lawsuits related to refusing payment for a forged check.
  • Money Orders and Counterfeit Money: The concerned policy addresses financial losses arising from mistakenly accepting counterfeit money, money orders, or checks. Please note, this coverage is crucial to protect against losses resulting from fraudulent financial instruments, especially with sophisticated counterfeiting methods.
  • Funds Transfer Fraud: Protects against losses due to fraudulent instructions leading to fund transfers out of your account. Covers scenarios involving electronic, telephone, or fax instructions, as well as written instructions that are forged or altered without your knowledge or consent.
  • Additional Coverage Computer Fraud: An optional addition to your crime policy, covering losses resulting from the fraudulent transfer of assets through the use of any computer. Includes protection against Social Engineering Fraud, where employees are tricked into releasing funds voluntarily, often through phishing schemes.

Why is Business Crime Insurance Needed?

The need for business crime insurance arises because typical commercial property or business policies usually don't cover losses related to crime. Companies can get this insurance either as part of a comprehensive package policy or as a standalone policy.

The package policy, often called "special multi-peril insurance," combines different coverages to protect against crime, property loss, liability, and other potential risks. Businesses can also choose standalone crime insurance to specifically address certain types of crimes they may be vulnerable to. It's important to note that business crime insurance is not automatically included in a standard commercial business package policy – it needs to be explicitly added.

This type of insurance can be crucial for situations like robbery, employee theft, loss from forged checks, embezzlement through electronic payment systems, or unaccounted inventory disappearance during busy periods. Essentially, it provides financial protection for various crime-related incidents that a business is vulnerable to.

What are the Coverages Included in Crime Insurance?

Business crime insurance is generally divided into two key sections

  1. Internal Fraud and
  2. External Fraud

Both these types are aimed at providing comprehensive coverage for various types of losses arising from dishonest activities.

Internal Fraud

  • It encompasses situations where an identifiable employee, including contract employees, engages in theft or forgery either independently or in association with others.
  • The coverage extends to the loss of money, securities, or other property within the organization's premises.

External Frauds

External Frauds address losses caused by factors outside the direct control of the insured organization.

The sub-categories may include:

  • In Transit Theft

It covers the losses resulting from the disappearance, destruction, or wrongful abstraction of money or securities while being transported by the insured, any authorized person, or by an armored motor vehicle company.

It also includes theft of money temporarily within an employee's or partner's home.

  • On Premises Theft

It safeguards losses due to the disappearance, actual destruction, wrongful abstraction, or computer theft of money or securities from the insured's premises by a third party. It may include burglary/theft and money stored in safes.

  • Forgery of Instruments

It addresses direct losses caused by the forgery or alteration of cheques, drafts, promissory notes, bills of exchange, or similar written promises, orders, or directions to pay, whether made or drawn by the insured or by someone acting as their agent.

  • Counterfeiting

It pertains to the imitation of money, certificated securities, or authentic negotiable instruments by a third party. This imitation is intended to deceive, reaching a level of quality that leads the insured to act or rely on the forged items.

  • Funds Transfer Fraud

It involves the criminal and intentional deprivation of the insured's funds resulting directly from fraudulent instructions given to a financial institution for the transfer, payment, or delivery of funds from a bank account.

  • Computer Fraud

It encompasses the criminal and intentional deprivation of the insured's property due to fraudulent input of electronic data directly into computer systems or the fraudulent modification/destruction of electronic data by a third party without authorized access. These acts are committed with the intention of obtaining improper financial gain, either for the third party or in collusion with another.

Crime Insurance Exclusions

When considering a crime insurance policy, it's crucial to be aware of certain exclusions that may limit coverage.

Here are the main exclusions to remember:

  • Knowingly Employing Fraudulent Individuals

The coverage may stand void if an organization continues to employ an individual known to be committing fraudulent acts.

  • Consequential Loss

Coverage may not extend to consequential losses, meaning losses resulting indirectly from the covered event.

  • Major Shareholder Exclusion

Depending on the policy, there may be an exclusion related to major shareholders, specifying a percentage. This excludes coverage for losses caused by dishonest acts of a partner.

  • Credit Risk

It excludes losses arising from credit risk, safeguarding against financial losses due to the default of a debtor.

  • Fees and Expenses

Fees, costs, or other expenses incurred in establishing the existence or amount of loss are typically excluded.

  • Premises Damage

Losses related to damage to the insured premises may be excluded under certain circumstances.

  • Proprietary Information, Trade Secrets, Intellectual Property

Exclusions may apply to losses related to proprietary information, trade secrets, and intellectual property.

  • War and Terrorism

Generally, crimes resulting from war and terrorism are excluded, as these fall under specialized insurance categories.

The Benefits of Crime Insurance

Statistics show that companies may lose around 5% of their revenue to fraud annually. Therefore, crime insurance may prove beneficial in preventing the risk.

  • Misuse of Funds Coverage

It offers protection against employees misusing or illegally transferring company funds, ensuring your finances are safe from internal criminal acts.

  • Extortion Safeguards

It guards against extortion attempts, where individuals may illegally demand funds by holding key figures hostage or using other unlawful methods.

  • Reimbursement for Computer Fraud

It provides crucial protection against money or securities lost due to computer fraud, an important element in a comprehensive cyber risk management strategy.

  • Insurance for Goods in Transit

It safeguards goods in transit, reducing vulnerability to employee theft. This coverage is vital, especially when theft occurs outside the organization's premises, preventing lengthy and costly legal battles.

  • Coverage for Forgery and Alteration

It offers effective protection against losses resulting from the forgery or alteration of checks, addressing the risk of employees misusing accessible checks for personal gain.

Crime insurance is a valuable tool to mitigate financial risks associated with various forms of criminal activities, providing peace of mind for leaders and safeguarding the organization's bottom line.

Get a Business Crime Insurance Quote Now?

In today’s world, a significant portion of financial crimes are executed using computers, giving rise to potential coverage challenges. Although crime insurance may cover certain computer-related offenses resulting in financial losses, it is advisable to enhance coverage through a cyber insurance policy. Most insurance agents recommend businesses to acquire cyber insurance in conjunction with a crime policy, ensuring seamless coordination between the various insurance clauses.

BimaKavach can help you address queries regarding the business crime insurance. Get in touch with us for more information including a Business Crime Insurance Quote.


  1. Why is business crime insurance needed?

Business crime insurance is necessary because typical commercial property or business policies often don't cover losses related to crime. It provides financial protection for situations like robbery, employee theft, forged checks, electronic embezzlement, or inventory disappearance, addressing various crime-related incidents that businesses may face.

2. What coverages are included in crime insurance?

Business crime insurance is generally divided into two key sections: internal fraud and external fraud. Internal fraud covers losses caused by identifiable employees, while external fraud addresses losses caused by factors outside the direct control of the insured organization, including In transit theft, on premises theft, forgery of instruments, counterfeiting, funds transfer fraud, and computer fraud.

3. What are the crime insurance exclusions?

Crime insurance exclusions include knowingly employing fraudulent individuals, consequential loss, major shareholder exclusion, reproduction costs of information, credit risk, fees and expenses, premises damage, proprietary information, trade secrets, intellectual property, and exclusions related to war and terrorism.

4. Can business crime insurance be combined with other policies?

Yes, businesses can include crime insurance as part of a comprehensive package policy, often referred to as "special multi-peril insurance," which combines coverages to protect against crime, property loss, liability, and other risks.

5. Is business crime insurance worldwide?

Yes, Business Crime Insurance provides protection worldwide, unlike other policies with limited coverage and specific location restrictions. This global coverage ensures businesses are protected regardless of their geographic spread.

6. How Does business crime insurance differ from fidelity and burglary policies?

Business crime insurance differs from fidelity and burglary policies as it offers broader coverage with higher limits and deductibles. It is not limited to specific areas and provides comprehensive protection against a range of potential financial losses resulting from criminal activities.

7. Is cyber coverage included in business crime insurance?

While some aspects of computer crimes may be covered under business crime insurance, it is recommended to add specific cyber insurance coverage to address the increasing threat of financial crimes committed using computers. Coordination between crime and cyber policies is crucial for comprehensive protection.

8. How can businesses obtain business crime insurance?

Businesses can obtain business crime insurance either as part of a comprehensive package policy or as a standalone policy. It needs to be explicitly added, and businesses can work with insurance agents to tailor coverage to their specific needs and vulnerabilities.



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