January 28, 2016
Author: Anna Maahs, Account Administrator
Crime is an exposure that all businesses, small and large, are vulnerable to. According to a study from the Association of Certified Fraud Examiners (ACFE), the typical organization loses 5% of their revenues each year due to fraud! What is more, is that they found it is often smaller organizations that tend to suffer disproportionately large losses due to occupational fraud.1 These statistics are alarming as most property and inland marine policies actually limit or exclude coverage for losses due to fraud, crime, and employee dishonesty. Crime insurance coverage can be purchased by a business as a means to protect the organization from potential crime related losses. Crime coverage can be implemented as either a separate policy, or certain endorsements may be available to supplement other coverages you may already have.
Some businesses have an increased exposure to internal sources of loss, such as dishonest employees, while other businesses have greater vulnerability to outside sources like buglers and robbers.2 There are numerous types of crime coverages available. The following table explains several of the most common examples of crime coverage one might consider adding to their insurance portfolio depending on the businesses evaluated exposures2 :
|Coverage||Applies To Loss Involving:|
|Employee Theft||The unlawful taking of money, securities and other property by employees|
|Forgery and Alteration||Outsiders that forge or alter checks, drafts, notes or other written promises, orders or business account directions|
|Inside the Premises||Theft, disappearance or destruction of money and securities from within the insured premises or its banking premises. Also covers premises damages caused by theft attempts.|
|Inside the Premises-Robbery or Safe Burglary of Other Property||Robbery of a person in charge of the property or safe burglary of other property that occurs inside the premises. Also covers damage caused by robbery attempts.|
|Outside the Premises||Theft, disappearance and destruction of money and securities that occur outside the premises when that property’s in the custody of a messenger or an armored car company.|
|Computer Fraud||Money. securities and other property fraudulently transferred from the insured premises or banking premises by electronic means.|
|Funds Transfer Fraud||Funds lost as a direct result of fraudulent instructions directing a financial institution to transfer, pay or deliver funds from a transfer account.|
|Money Orders and Counterfeit Money||Counterfeit money accepted in good faith in exchange for purchases. Also covers money orders accepted by a business which are then rejected when presented to issuer for payment|
Motor carriers, as with any other business, have exposure to crime type losses. The first type of crime coverage listed in the above table, is employee theft. This is one of the most common exposures a business has. If you have employees, you have exposure to employee dishonesty losses and crime coverage that can be used to minimize a company’s risk. For example, this type of coverage would be useful in the event that an employee driver would steal a load they are hauling for your company or an accountant that embezzles company assets. Please note that anyone who does not meet the definition of an “employee” would not be covered, so pay special attention to the definition of an employee on your policy as well as any other exclusion that could apply.
These are just a couple of circumstances a motor carrier could face as a result of a crime loss. The sad reality is that business owners do need be aware of the exposures their company has to crime losses from both their own employees and outside sources. Fortunately, crime insurance is available to help alleviate the burden of risk to your business.
Has been with Cottingham & Butler since 2011
- “Report to the Nations on Occupational Fraud and Abuse: 2014 Global Fraud Study: Summary of Findings.” Association of Certified Fraud Examiners. ACFE. Web. 19 Jan. 2016.
- “Crime Insurance.” ReferenceConnect. The Rough Notes Company, Inc., 2013. Web. 19 Jan. 2016.