Crime Coverage in Business Risk Management

Picture of By Paul Z. Martin, CIC, CPCU
By Paul Z. Martin, CIC, CPCU

Paul Martin is the Director of Insurance Content and Mentorship for the National Alliance for Insurance Education & Research. Paul works with industry professionals to deliver high-quality insurance content and education for the Academy. During his career, Paul worked as an adjuster, underwriter, special agent, company manager, and independent agent. Paul has been an insurance educator in Texas for over twenty years.

When an insurance agent or underwriter considers the risks of a customer suffering a crime loss, many issues are important and can vary widely from account to account. One of the common elements is that other insurance policies typically sold to businesses don’t provide the protection a customer may expect.  For example, while theft insurance is certainly a feature of property insurance, the policies don’t cover the theft of money. 

Let’s consider the biggest issues facing a business and their exposure to crime losses.

Property Concerns: Beyond Traditional Definitions

A primary concern in crime coverage is identifying the types of property at risk. While tangible assets are commonly considered, it’s essential to recognize that “money”—in all its forms, including currency, bank funds, and digital assets—requires special attention. Traditional property insurance policies often fall short in this area, particularly regarding the theft of money. Crime insurance emerges as a vital solution, offering protection against the direct loss of monetary assets that businesses may overlook.

People: Identifying Potential Perpetrators

Understanding the source of potential criminal actions is another crucial aspect. Whether the threat originates from within the organization, such as employee theft, or from external actors, crime coverage provides targeted protection. Identifying the likely perpetrators enables businesses to select coverage options that best mitigate their specific risks, ensuring comprehensive protection against both internal and external threats.

Perils: The Nature of the Crime

The methods by which crimes are committed against businesses are diverse, ranging from physical burglary and robbery to digital crimes such as hacking and fraudulent transfers. Recognizing the array of perils is essential in crafting a defense strategy. By understanding the possible avenues of attack, businesses can adopt proactive measures to mitigate their vulnerability and strengthen their overall security posture.

Protection: Empowering Prevention

Finally, the efficacy of a business’s prevention efforts plays a pivotal role in crime loss control. Integrating robust security measures, including alarms, locks, safes, and secure accounting procedures, can significantly reduce the risk of crime losses. These preventive strategies not only safeguard the business but also influence the rating process for crime insurance policies, often resulting in more favorable terms.

The Importance of Crime Insurance Expertise

The role of crime insurance in business risk management cannot be overstated. It addresses a critical gap left by traditional insurance policies, providing specialized protection against a wide range of criminal activities. For insurance professionals, deepening their understanding of crime coverage and its integration into a holistic risk management approach is crucial. It equips them to offer the most effective solutions to their clients, protecting them against potential financial crises resulting from criminal acts.

Active engagement with crime coverage not only enhances an agent or underwriter’s expertise but also demonstrates a commitment to ethical practices and the advancement of the profession. By fostering a culture of continuous learning and applying forward-thinking strategies, we can effectively protect our clients and contribute to the success and resilience of businesses in an increasingly complex risk environment.

Learn how to help commercial clients navigate critical issues, such as cyber threats and crime from both property and casualty perspectives.

Images generated using OpenAI. (2024). ChatGPT [Large language model].

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