Post written by Darryl Chidsey, CIC
Crime and Fidelity Insurance is often overlooked. It can sometimes be overshadowed by one of the three major lines of insurance, including Property, General Liability, and Auto. While one should not minimize the importance of these three lines of business, it’s important to remember that there are other areas that also need a business owner’s strong consideration. Crime and Fidelity is one of those areas.
Crime and Fidelity exposures are often closely related to the Commercial Property line, since money and securities are considered to be tangible property. However, the standard Commercial Property policy excludes money and securities, as well as fidelity types of losses caused by the insured’s employees. Many insurance policies will include a property-expanded type of endorsement. Most all of these property-expanded endorsements include a small amount of crime and/or fidelity coverage. Unfortunately, these expanded endorsements only contemplate some of the most common crime and fidelity exposures. In addition, the limits provided tend to be small and often are inadequate for the individual insured’s needs.
This is where Crime and Fidelity insurance can help. The standard policy contains eight insuring agreements that address both crime and fidelity coverages where most insureds have an exposure. These eight insuring agreements are:
- Employee Theft (includes coverage for ERISA)
- Forgery or Alteration
- Inside The Premises – Theft of Money And Securities
- Inside The Premises – Robbery Or Safe Burglary Of Other Property
- Outside The Premises
- Computer Fraud
- Funds Transfer Fraud
- Money Orders And Counterfeit Money
All insureds have many, if not all, of these crime and/or fidelity exposures. The beauty of this form is that you choose which of these insuring agreements you want to cover your insurance needs. You can choose one, all, or any combination of the eight for your policy. In addition, there are a number of endorsements that can be added to tailor coverage to meet your individual needs. Each of these insuring agreements are intended to address specific areas of crime or fidelity.
The Employee Theft Insuring Agreement is the one area of this form that every insured should consider. This is the only insuring agreement that provides coverage to the insured for acts against them by an employee. Historically, Employee theft claims do not occur frequently, but they do tend to be severe when they are discovered. Sadly, many times these claims are perpetrated by employees that the insured trusted, and therefore, never saw it coming. When discovered, these claims often have taken place over a long period of time, and as a result, are high dollar losses. When not properly insured, the cost to the business can be very high (to the point that it can cause an operation to go out of business). This is the one Insuring Agreement in the crime form that you want to pay close attention.
The other insuring agreements can be costly to an insured when coverage is absent or lacking as well. By simply paying attention to your exposures, and making sure you have insurance in place for them can help your business run smoothly in the event of a loss. Contact your independent agent who can tailor the proper Crime and Fidelity coverages to fit your insurance needs and provide the necessary peace of mind.