Crime insurance covers liabilities which fall into two categories. One thing you need to remember when you consider crime insurance is that crime is a growth industry and there are always news types and new methods in crime. Businesses are constantly under threat of fraud and from unknown third parties as well as trusted employees. So businesses are obliged insure against crime to safeguard cash flow, investor confidence, employee morale and their own reputations.
The first one is money and security coverage and the second is employee dishonesty coverage. Protection against crime is a must for most businesses.In the first case the coverage is when you have been robbed of money and securities either by burglary, robbery, theft, disappearance and destruction. The second coverage is when loss is caused to a business through dishonesty such as embezzlement and theft. Computer fraud, wire transfer fraud, counterfeiting, forgery and safe burglary are also covered.
Crime insurance takes into account all the possible angles in which crime can be committed in homes and in offices. It explores the potential weakness in the financial controls in your company, the possible security breaches in your computer and communication networks as well as the actual perimeter security.
Recent research by the Association of Certified Fraud Examiners has shown that average businesses lose 6% of its total annual revenue from employee dishonest. If add this to other crimes such as shoplifting, robbery or burglary then small enterprises loose 20 times more than the larger corporations.
A study done by a leading international accounting firm shows that fraud and embezzlement is on the rise everywhere, including the UK. The study reveals that more than 80 % of the crime is engineered by employees; one in four employees has either committed or witnesses workplace fraud or abuse. One in four employees who commits a workplace crime or abuse has been in that company for over 10 years. One in three who witness a workplace crime or abuse; take the trouble to report it.
Generally most insurance providers cover dishonest, malicious actions of employees which cause loss to the company. The things which are also covered are the wrongful transfer of funds, legal liability of stockbrokers inability to complete a transaction due to fraud, loss of documentation or deceit. It covers cash letters and the expenses associated in reconstruction of cancelled items as well as reconstituting or removing computer programmes which have given rise to a payment. Of course, most crime insurance covers damage to premises and contents as a result of malicious mischief.
Insurance coverage should also be obtained against the receipt counterfeit negotiable instruments, issue of forged cheques, credit cards and bills of exchange. The theft of property and funds by computer fraud should be insured.