Crime insurance coverage can help safeguard your business if it suffers losses as a result of a commercial crime. To lower your risk exposures, it’s a good idea to think about the various forms of coverage available. The purpose of crime insurance is to safeguard an organization’s assets. A crime policy safeguards what matters most… your bottom line.
This post will lead you through the five different forms of crime insurance that any Chicago company should consider as part of its overall risk management plan.
1. Dishonesty on the part of employees
“Employee stealing” is another term for this. This would cover any money, securities, or other property lost or damaged as a result of employee dishonesty, theft, or forgeries. In the policy, the term “employee” is defined very precisely. It can include full-time, part-time, freelancers, volunteers, and so on. It excludes owners, business partners, and even certain senior executives.
As a result, you must verify that the term “employee” embraces the many types of workers in your firm.
Employee Retirement Income Security Act (ERISA) coverage is available under the Employee Dishonesty portion of a crime policy if you have an employer-sponsored retirement, pension, or health plan.
The Employee Retirement Income Security Act of 1974 is a federal law that establishes minimum standards for most freely established pension and health plans in the private sector, ensuring that participants are protected for at least 10% of the plan value.
Make sure the plan is added as additional insured on your crime policy, as this is a crucial step that is often overlooked. Otherwise, coverage may not apply. You can buy an ERISA bond individually, but if you already have crime coverage, you should be able to add the plan to the existing policy without any problems. Knowing what is covered by your cybersecurity insurance policy in Chicago will help you know the additional coverage you will need to protect your business completely.
How much does an employee dishonesty bond cost in the United States? Employee Dishonesty Bonds are quite inexpensive for the coverage they offer. For instance, if a business in Chicago wants to cover itself for $100,000 of losses, it could likely secure its bond for $300-$400 a year. Some Employee Dishonesty Bonds start at just $100 depending on what they cover.
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2. Money and securities
Money and securities coverage covers the loss of money or securities due to theft, disappearance, or destruction by non-employees. Money and securities located “within” or “outside” the premises are frequently subject to various limits.
Money or securities held at a business location mentioned in the policy are considered “within the premises.” While “outside the premises” refers to money or securities taken from your location, such as in transit, at an expo, or at a fundraiser, “within the premises” refers to money or securities taken from your location.
3. Money orders and counterfeit currency
If your business accepts counterfeit money, money orders, or checks, this insurance covers the financial loss. These types of crimes have become more common because of advances in printing and scanning technology. The Federal Trade Commission discovered that reports of phony checks have surged by 65 percent in the last several years.
4. Forgery and manipulation
If checks, promissory notes, or other promises to pay money are written on your account and forged by someone other than your employee, Forgery and Alteration coverage would apply. It may also cover legal fees for defending against claims if you are sued for refusing to pay a fraudulent check. Fraud in the insurance sector is only a fraction of the forgery and manipulation of figures going on in the business sector.
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5. Fraudulent funds transfers
This section of the crime insurance would cover losses caused by a third party’s fraudulent instructions to your bank, causing them to move funds out of your account. These can be caused directly by:
Electronic funds transfer instructions purporting to be from you are transmitted to your bank.
“Social Engineering Fraud,” also known as “Fraudulent Inducement,” is more widespread. This is when you or an employee is essentially duped into surrendering funds freely in some way. This is frequently accomplished through phishing scams or bogus email communications that look to come from reputable sources. Typically, this is not covered and must be reinstated through a separate endorsement. Funds Transfer Fraud coverage only applies to damages occurring from transfers made from your bank without employee involvement if Social Engineering Coverage is not added.
In today’s world, practically every financial crime involves the use of a computer in some form. This could lead to some coverage concerns. While crime insurance will cover some computer crimes that result in financial loss, the cyber policy is a preferable way to add this coverage. Most insurance agents advise firms to buy cyber insurance in addition to a crime policy and to make sure that the other insurance provisions in the plans are in sync.