Commercial Crime Insurance Policy - Coverage, Benefits and Exclusions

Employees have access to a company's internal records, data and are also aware of the loopholes in the company's systems. Thefts, Frauds and Forgeries by employees remain a concern for Companies with potential for huge losses. Robust Internal Control measures helps in mitigating such a risk, but there is a need for loss protection when a loss happens. This is where a Commercial Crime Insurance Policy comes into play, by providing compensation for such frauds.

A Commercial Crime Insurance Policy provides the following coverages:

Employee Theft Coverage

A Commercial Crime Insurance Policy provides compensation for direct losses of Money, Securities or Other Property Caused by Theft or Forgery by any Identifiable Employee of the Insured Company acting alone or in collusion with others.

Premises Coverage

A Commercial Crime Insurance Policy provides compensation for direct losses caused by the actual destruction, disappearance, wrongful abstraction or Computer Theft of Money or Securities within or from the Premises, Banking Premises or night depository chute or safe maintained by any bank or trust company.
Coverage under this Insuring Clause also include:

1. loss of or damage to other property by Robbery or attempt thereat within the Premises,
2. loss of or damage to such property contained within any safe which results from Safe Burglary or attempt thereat within the Premises,
3. damage to a locked safe, cash drawer, cash box or cash register within the Premises by felonious entry or attempt thereat or loss by felonious abstraction of such container from within the Premises; and
4. damage to the Premises resulting from such Safe Burglary or Robbery

Transit Coverage

A Commercial Crime Insurance Policy provides cover for direct losses caused by the actual destruction, disappearance or wrongful abstraction of Money or Securities outside the Premises while being conveyed by the Insured, Insured's Employee, an armoured vehicle company or any other person authorised by the Insured to have custody of the Money or Securities.

Depositors Forgery Coverage

Under the Depositors Forgery Coverage Section, the Commercial Crime Insurance Company is liable for direct losses caused by forgery or alteration of any cheque, draft or a similar bill of exchange to pay a certain sum of money by the Insured including:

1. any cheque or draft made or drawn in the name of the Insured payable to a fictitious payee
2. any cheque or draft procured from the Insured or the Insured's employee by anyone impersonating another and made or drawn payable to the one impersonated; and
3. any cheque or draft made or drawn by the Insured payable to bearer as well as to a named payee without authority of the payee.

Counterfeit Currency

Another important Commercial Crime Insurance Policy Coverage relates to Counterfeit Currency. The Policy pays for loss sustained by the Insured resulting from the receipt of Counterfeit Currency by the Insured in good faith and in the ordinary course of business.

Electronic Fraud

A Commercial Crime Insurance Policy provides coverage for direct loss sustained by the Insured caused by Theft of Money or Securities held by an Insured, committed by the Third Party's unauthorised access to the Computer System of the Insured.

Commercial Crime Insurance Policy Coverage can be extended with the help of the following add-on covers:

1. Legal Fees: The Insurance Company pays for the reasonable legal fees incurred by the Insured to defend a claim or a lawsuit resulting from a Loss covered under the Insurance Policy under the Legal Fees Extension.
2. Care, Custody and Control: The Care, Custody and Control Endorsement under a Commercial Crime Insurance Policy pays for the direct loss resulting from Theft of Money or Securities or Property belonging to a Third Party which is in the Care, Custody and Control of the Insured.
3. Public Relation Expenses: Public Relations Add-On Cover pays for expenses to avail services of a PR firm to protect reputation of the Insured which may be jeopardised following a Crime incident.
4. Investigative Specialist Cost: The Investigative Specialist Extension pays for the costs to hire an Investigative Specialist to investigate a covered loss incident.
5. Extended Discovery Period: The Extended Discovery Period extension grants an extended discovery period of 90 days to the Policyholder after the expiry of the Insurance Policy to report the Claim to the Insurance Company.  It is necessary that the covered incident took place within the Policy Period.

The following factors influence the cost of a Commercial Crime Insurance Policy in India:

1. Industry and Business Type: Different industries and businesses have varying levels of risk exposure when it comes to commercial crime. Some industries, such as financial institutions or jewelry stores, are more prone to theft or fraud, resulting in higher insurance premiums. Insurance Companies assess the industry and type of business you operate to determine the risk level and determine the premium accordingly.
2. Claims Experience: The claim experience of the Insured is an important factor which determines the cost of a Commercial Crime Insurance Policy. Higher the claims paid under the expiring Policy, higher will be the renewal premiums.
3. Coverage Limits and Policy Terms: The Coverage Limits that you choose for your Commercial Crime Insurance Policy directly impact the Cost of Commercial Crime Insurance Policy. Higher Coverage Limits result in higher Insurance Premiums.
4. Security Measures: Insurance Companies carefully evaluate the security measures in place to protect against theft and fraud. This includes physical security measures like Surveillance Systems, Alarm Systems, and Access Controls, as well as Cybersecurity measures to safeguard against Computer Fraud and Data Breaches. Businesses with robust security measures benefit from lower Insurance Premiums for their Commercial Crime Insurance Policy.