CRIME INSURANCE

Crime Insurance Explained

Crime insurance provides businesses with financial protection against losses resulting from criminal acts such as theft, fraud, embezzlement, forgery, and other dishonest activities committed by employees or third parties. This type of insurance is particularly useful for businesses that handle cash, sensitive data, or valuable assets, as it helps cover losses that may not be included in standard commercial property insurance policies.

General Coverages

Pursuant to your particular policy language, coverage provisions, and exclusions; employment practices liability policies can include coverage for:

• Employee Dishonesty (Fidelity Coverage) – Protects against theft, fraud, or embezzlement committed by employees.
• Forgery or Alteration – Covers losses from forged checks, altered financial documents, or fraudulent electronic transfers.
• Theft of Money and Securities – Provides coverage for theft, disappearance, or destruction of cash and securities, both on-premises and in transit.
• Burglary and Robbery – Protects against loss of money, securities, or property due to burglary (forced entry) or robbery (theft by force or intimidation).
• Computer Fraud – Covers losses from cybercrimes, such as hacking, phishing, or fraudulent wire transfers.
• Funds Transfer Fraud – Protects businesses from unauthorized electronic fund transfers made through deception or cyber manipulation.
• Social Engineering Fraud – Covers losses due to scams where criminals deceive employees into voluntarily transferring funds.
• Counterfeit Currency and Credit Card Fraud – Protects against losses from accepting counterfeit money or fraudulent credit card transactions.

Each policy can be customized based on the specific risks a business faces, ensuring adequate protection against financial crimes.

Claims Scenario

A manufacturing company, ABC Industrial Solutions, regularly processes large wire transfers to suppliers overseas. The company’s finance department receives an email appearing to be from a long-time vendor, requesting an update to their banking details for future payments. The email looks legitimate, even including the vendor’s logo and a signature from their usual account representative.

Believing the request to be genuine, the company’s finance manager updates the vendor’s bank details and processes a $500,000 payment for outstanding invoices. A week later, the real vendor contacts ABC Industrial Solutions, asking about the missing payment. The finance team quickly realizes they have fallen victim to a social engineering fraud—a sophisticated cybercriminal had impersonated the vendor using a spoofed email. The funds are now in an untraceable offshore account.

How Cyber Insurance Helps:

Luckily, ABC Industrial Solutions has a crime insurance policy that includes funds transfer fraud and social engineering fraud coverage. The company immediately notifies its insurer and provides documentation.

After a thorough review, the insurer determines that the loss is covered under the policy’s social engineering fraud clause. The insurance company reimburses ABC Industrial Solutions for the $500,000 loss, minus the policy’s $25,000 deductible.

Contact CastleWise to discuss Crime Insurance coverage.