Crime Insurance
Coverage for losses caused by employee dishonesty, forgery, computer fraud, funds transfer fraud, and theft of money, securities, and property.
What It Is
Crime Insurance, sometimes called a commercial crime policy or fidelity bond, covers an organization for loss of money, securities, and other property due to dishonest acts by employees and certain third parties. Policies are typically written on ISO Crime form (CR 00 20 or CR 00 21) or on carrier proprietary forms.
Standard insuring agreements include Employee Theft, Forgery or Alteration, Inside the Premises (theft of money and securities), Outside the Premises (in the custody of a messenger), Computer Fraud, Funds Transfer Fraud, Money Orders and Counterfeit Currency, and Social Engineering Fraud (often by endorsement).
Coverage may be written on a Discovery basis, paying losses discovered during the policy period regardless of when they occurred, or a Loss Sustained basis, paying losses that both occurred and were discovered during the policy period.
Why It Matters for Brokers
Employee theft and social engineering fraud have grown into seven-figure exposures for businesses of all sizes. The average employee dishonesty loss exceeds $100,000 and many take 18+ months to discover. Cyber-enabled theft, especially funds transfer fraud through compromised email, regularly costs mid-market clients hundreds of thousands per incident. A standard property policy excludes employee dishonesty entirely, and cyber policies often sub-limit social engineering. Brokers who fail to recommend crime coverage or fail to add Social Engineering Fraud face direct E&O claims when uninsured losses arrive.
Real-World Example
A 75-employee distributor receives a spoofed email from what appears to be the CEO directing the controller to wire $385,000 to a vendor. The funds are sent and unrecoverable. The crime policy includes a $250,000 Social Engineering Fraud sublimit. The carrier pays $250,000 less a $10,000 deductible, leaving the client with $145,000 of uninsured loss. The broker had recommended raising the sublimit to $500,000 in writing and the client declined, which protects the agency from an E&O claim.
Common Mistakes
- 1Selling employee theft limits based on payroll instead of the actual cash and inventory exposure, leaving high-cash businesses underinsured.
- 2Omitting the Social Engineering Fraud endorsement, which is often where the largest losses occur and is excluded from base policies.
- 3Choosing Loss Sustained basis without confirming prior coverage, which can create a gap for losses discovered after a coverage change.
- 4Failing to schedule subsidiaries and acquired entities, which can void coverage for entities the named insured assumed were covered.
How brokerageaudit.com Handles This
Submission Intake captures crime exposure data including cash on hand, employee count, and wire transfer volume to right-size limits. Policy Checker validates the bound crime policy against the application for sublimits, including Social Engineering Fraud, and Document Pipeline files signed declinations when clients reject recommended limits.