Businesses face a multitude of threats every day and the risk of falling victim to fraud, burglary, vandalism or cybercrime should not be underestimated. Protecting your business with crime insurance is essential for peace of mind.
What is crime insurance?
Criminal activity poses a risk to all businesses, irrespective of their size. Recognising potential risks within a business and establishing resilient response strategies is more important than ever.
While your business should take steps to mitigate risk by proactively addressing the vulnerabilities within your operations that could be exploited by criminals, it is impossible to eliminate risk altogether. Criminals are adept at exploiting weak links in security, risk management, audit, and compliance processes.
Crime insurance is your backup plan for when they succeed. Any losses from criminal activity will be borne by the insurer, subject to the terms of the contract.
The kind of events that crime insurance protects against are:
- Employee theft including embezzlement, or misappropriation of funds by employees.
- Fraudulent activities such as forgery, alteration, or counterfeit currency.
- Social engineering fraud.
- Theft involving force or illegal entry into business premises.
- Cyber-related crimes such as hacking, data breaches, or electronic theft.
- Extortion involves bodily harm, property damage, or reputational harm unless a ransom is paid.
- Employee dishonesty results in a monetary or reputational loss.
- Theft, disappearance, or destruction of money, cheques, and securities on the business premises or during transportation.
469,000 businesses in the UK were victims of crime last year, the most common of which was theft. Media attention in recent years has concentrated on the increase in cybercrime, with less focus on offline crime. However, the latter remains a significant threat to businesses, as demonstrated by the graph below.
Source: https://www.newgate.uk.com/blog/business-crime-statistics-2023/
Which industries benefit from crime insurance?
There are very few, if any, industries that wouldn’t be better protected with crime insurance. Whether you work in healthcare or hospitality, retail or technology, the risks of falling victim to criminal activity exist. If any of the events listed above resonate as potential risks to your business, then you should probably have crime insurance.
Crime insurance: a hypothetical case study
ShopSmart is a relatively small independent retail store specialising in electronics and gadgets. The business owner noticed discrepancies in inventory records, significant shortages in high-value items, and anomalies in the cash register over several months. These indicators pointed to internal theft.
Upon investigation, it was discovered that an employee had been systematically stealing merchandise and manipulating sales records to cover up the theft. The thefts had a substantial impact on the store’s revenue and inventory levels.
ShopSmart’s comprehensive crime insurance policy covered employee dishonesty and theft-related losses. This meant that the company’s owner could make an insurance claim for the damages incurred due to the employee’s fraudulent activities.
The company received a payout to cover the following losses:
- The value of the stolen electronics and gadgets, as documented in the inventory records and verified through the investigation.
- Revenue lost as a result of the stolen inventory and the impact of decreased sales due to missing high-value items.
- Fees associated with hiring forensic accountants and private investigators to uncover the extent of the theft and gather evidence for the insurance claim.
- Legal fees for advice and representation related to legal action taken against the employee responsible for the theft.
For this small retail business, crime insurance provided essential financial protection that helped the company remain solvent when faced with significant losses due to criminal activity.
Protect your business with crime insurance
Crime insurance mitigates business risk by offering a safety net against unexpected criminal incidents originating from both internal and external sources. It is an invaluable element in your company’s risk management arsenal, whatever industry you operate in. However, it is imperative that the policy is customised to suit the unique needs of your business.
Finding a policy with the right amount and type of cover and navigating policy jargon is not always easy. It’s always helpful to consult a professional who has the experience and knowledge to ensure that a policy offers the protection your business requires against the different types of crime-related risks you face.
One of our insurance specialists would be happy to chat with you about your crime insurance needs. Contact us for an appointment today!
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