Business Crime Insurance Coverage

What does a crime insurance policy cover?

Q: What is Employee Dishonesty / Fidelity / Crime Insurance?

A: Employee Dishonesty / Fidelity / Crime Insurance reimburses organizations from loss of money, securities, or inventory resulting from a crime.

Every company, regardless of size, is a potential target for crime. Experts acknowledge that this is one of the fastest-growing, most prevalent problems facing Canadian businesses today. In addition, in a Private Company Survey conducted by Chubb Insurance Company of Canada, they discovered that 1 in 3 companies is concerned about employee theft and 21% of the organizations surveyed have experienced some form of employee fraud in the past 3 years…

Real Canadian Crime Insurance Claims:

• Employee steals property and cash from an employer
• Controller confesses to writing company cheques to himself totaling over $90,000
• The office bookkeeper of a small plastics manufacturer-issued cheques payable to a shell company (she created) from company funds of approximately $100,000 over a period of 3 years

In addition, the changing economic environment, advancements in technology, and international expansion make the threat of loss more ominous than ever before.

There are many ways to mitigate/manage your organizations exposure to crime losses including purchasing crime insurance as noted by lawyer, Cherrine Chow, of Baker & McKenzie LLP, in her recent article entitled: Fidelity insurance – a mechanism through which employers can seek to recover losses arising from employee-related fraud. A comprehensive Crime Insurance policy is an absolute necessity for corporate managers concerned with protecting their company’s assets today and in the future. You can take preventative measures through the implementation of a comprehensive risk management program, which could include a review of internal controls, inventory management/protection protocols, and a properly structured Crime Insurance policy.

A Business Crime Insurance policy can provide coverage for the following scenarios:

• Employee Theft: Losses of money, securities, and other property caused by theft or forgery by an employee.
• Premises cover: Losses sustained due to the destruction, disappearance or abstraction of money and securities within or from the Insured’s premises by third parties.
• In Transit cover: Losses sustained due to the destruction, disappearance, or abstraction of money and securities outside the Insured’s premises by a third party, while being conveyed by the insured or any authorized person.
• Forgery cover: Losses resulting from instruments that have been fraudulently drawn upon the company’s accounts by a third party.
• Computer Fraud cover: Losses resulting from the unlawful taking or fraudulently induced transfer of money, securities, or property through the use by a third party of a computer network and facilities either owned and operated or leased and operated by an Insured.
• Funds Transfer Fraud cover: Losses sustained by an Insured resulting from fraudulent instructions issued to a financial institution by a third party directing them to transfer or pay or deliver money or securities from the Insured’s bank account without the Insured’s knowledge and consent.
• Counterfeit Currency Fraud cover: Losses sustained by the Insured where the insured accepts in good faith and in the ordinary course of business either counterfeit currency or a postal or money order supposedly issued by the post office but not paid upon presentation.
• Credit Card Fraud cover: Losses sustained by an Insured resulting from the forgery or alteration of any written instruction by a third party, required in connection with any credit card issued to an Insured to any employee or partner of an Insured that is a partnership.
• Client cover: Losses sustained by a client resulting from theft fraud or dishonesty by an employee, not in collusion with the client’s directors or employees.
• Expense cover: covers investigative costs or computer violation expenses incurred in establishing the existence and amount of any direct loss in excess of the deductible.