Commercial crime insurance
Can help reimburse specified losses from employee theft, fraud or forgery, depending on the coverage purchased.
How the coverage can help
Money stolen. A loss to recover.
The incident
Employee theft
An employee pays fictitious vendors and takes the company’s money.
Potential policy response
Loss reimbursement
Employee theft coverage may reimburse your business for the covered loss.
The policy must include the type of theft or fraud involved. Conditions, exclusions and limits apply.
The fit
Who it’s for
Businesses handling money, inventory or payments should review theft and fraud exposures. Employee theft, unauthorized transfers and payment impersonation are distinct coverage questions. Start with who can move funds and how payment instructions are verified.
The protection
What it can cover
- Employee theft.
- Employee-theft coverage addresses specified direct losses caused by employees stealing from the business. For a lean startup, include who can create vendors, approve expenses or access funds in the discussion. Contractor and temporary-worker definitions can change who is included.
- Forgery and fraudulent transfers.
- Computer fraud, funds-transfer fraud and forgery are distinct coverage sections. Match the wording to how money could leave your accounts. A payment being electronic is not enough to establish coverage.
- Deception that leads to a payment.
- For a fake vendor invoice or impersonated founder request, look for explicit social engineering coverage. Compare its own limit and verification conditions; it may be an optional addition rather than part of the base policy.
Follow a claim
From the incident to the insurance.
Scenario 01
An employee diverts company funds.
What happened
An employee sets up fictitious vendors in your payment system. They approve invoices and take the payments.
What the business faces
Your team discovers the payments went to the employee. Company funds are missing, leaving a direct financial loss.
Where this policy may help
Employee theft coverage may reimburse the stolen funds. The loss must meet the policy’s terms and conditions.
Scenario 02
A familiar vendor sends new bank details.
What happened
An email appears to come from your software vendor. It asks your finance lead to use new bank details.
What the business faces
Your team pays the invoice to the new account. They later discover the request came from an impersonator.
Where this policy may help
Social engineering coverage may apply, with verification rules. Ordinary computer fraud cover may not suffice.
Illustrative scenarios. Whether a policy responds depends on the claim, policy terms, limits and exclusions.
Know the difference
Different policies. Different jobs.
Different policies address different losses. These comparisons explain where to look; they do not mean every coverage mentioned is available through Komodo.
Commercial crime insurance
Addresses specified theft and fraud losses.
Cyber
Addresses data and security incidents and related expenses.
What to check Compare employee theft and payment impersonation line by line across both quotes. Avoid both a coverage gap and paying twice for protection that already meets your needs.
Commercial crime insurance
Can address specified losses involving money, employee theft and fraud.
Property insurance
Can address theft of physical property under its own terms.
What to check Use property insurance for the physical assets it covers. For cash, funds and employee theft, review the relevant crime section rather than relying on general property-theft coverage.
Commercial crime insurance
Addresses the theft and fraud losses specified in the policy.
A fidelity bond
May cover employee dishonesty or serve a specific purpose, such as protecting an employee benefit plan.
What to check A bond required for an employee benefit plan serves a specific purpose. Do not assume a company crime policy satisfies that requirement or that the bond protects all company funds.
Good questions
Before you decide
What is commercial crime insurance?
Commercial crime insurance may reimburse specified direct losses involving money, securities or other property caused by covered theft, fraud or forgery.
Who needs it?
Businesses that handle money, inventory or payments should review their exposures, particularly where employees can move funds or access property. The appropriate sections depend on those activities.
What does it cover?
Available sections may address employee theft, forgery, computer fraud, funds-transfer fraud or theft of money and securities. Not every policy includes every section.
What is social engineering fraud?
A criminal impersonates a vendor or executive to persuade someone to send money. Coverage may require a specific provision or endorsement, with its own limit and conditions.
What isn’t covered?
Review exclusions, who qualifies as an employee, indirect-loss provisions and the policy’s discovery and reporting requirements. Coverage for a loss found after expiry depends on those terms, not the expiry date alone.
How is it different from cyber?
Crime focuses on specified theft and fraud losses; cyber focuses on specified data and security incidents. Payment fraud can raise questions under either, so compare the actual coverage provisions.
Do clients require it?
A client contract may require coverage for theft of client property by your employees. Confirm that the policy includes the requested third-party coverage and limits.
What does a claim look like?
Illustrative example: a bookkeeper diverts company payments to a personal account. Employee-theft coverage may reimburse a qualifying loss, subject to limits and reporting conditions.