Do You Need Crime Insurance?

Your store or office is already, you think, fully insured.  Your business has a state-of the art-security system and you even opted for burglary insurance.  So what can you gain from crime insurance?  Probably more than you think. 

Say you own a fine goods store, with a display of beautiful furs gracing your Christmastime windows.  You arrive at your shop to find that, well, they�re gone.  No damage: they�re just gone.  Maybe an employee short on cash has made off with your valuable furs.  You unlock the door and head for the phone to cash in your burglary policy.  The same policy that says, in fine print, that it only covers crimes with evidence of forced entry.  Uh-oh.   

Better reread those policies.  General insurance policies usually exempt employee theft.  The primary strength of crime insurance is that it provides coverage should you be the victim of dishonest employees. 

But the scope of crime insurance is broader than employee theft.  For additional premiums you can cover just about any commercial risk.  Some will include coverage for theft not just by employees but also directors and partners.  Others cover some cases of identity fraud, in which a business is defrauded by a person claiming to be an employee or agent (such as a delivery person).  For the truly security-conscious, you can even be protected against the failure of government or public officials to perform their duties. 

One underutilized aspect of crime insurance is protection from the loss of irreplaceable items.  An author may wish to ensure his working manuscripts; a software company may insure all of its data and customized software.  Such protection can help you stay afloat should a security breach cause a halt in the operation of your business. 

How much is that manuscript worth?  If a hacker takes down your site, how much have you really lost?  How much is it going to cost to replace a two thousand dollar laptop when it stored 10 years of company records?  An advisor can help you address these specific issues without sending you off to Lloyds�s of London. 

There is a tradeoff for all this extra coverage, though.  The premiums can seem high, and the insurance company will want to review your security.  Typically, they will insist that valuable items and cash are stored in a safe, that an approved alarm system is installed and maintained, and that you keep a meticulous inventory of the insured merchandise.  For very high-risk businesses (like jewelry shops), they may even limit the hours of operation and certain security procedures. 

Many businesses already have a safe, though, and a good alarm system.  If your business does, make sure you discuss such existing security measures with your advisor when they work out your coverage and premiums.  Often, business owners find that the cost of crime insurance is well worth the extensive coverage it provides.

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