Crime
A Business Risk You Can Insure
Crime is a business risk. Sometimes petty. Occasionally a severe financial loss.
It rarely announces itself. By the time you notice, the loss is already done.
We help you see where that risk sits proactively before it costs you.
Definition
What Is Crime Insurance?
It may be a stolen laptop, cash taken in transit or employee fraud that remains concealed for years.
Business crime insurance generally protects three areas. Assets, money and losses caused by employee dishonesty.
We help you determine which losses you can absorb and which should be transferred to an insurance policy.
Money
When Money Is Exposed
Money is most vulnerable when it is being handled, stored or moved.
Money insurance covers the theft or loss of cash and other defined monetary items from your premises or while in transit. Cover is usually subject to strict security requirements, including a SABS approved safe, limits outside business hours and the use of authorised or armed cash carriers.
The sum insured should reflect the largest amount that could be lost in a single event, not the average amount normally held. We assess how money moves through your business, identify where it is most exposed and structure cover around the maximum probable loss.
Fidelity Guarantee
Employee Theft
The person stealing from your business may already have the keys.
Employee theft, often called Fidelity Guarantee, covers direct financial loss caused by employee dishonesty. It may involve stolen property, manipulated payments, fictitious suppliers or fraudulent computer transactions. As these crimes are committed from within the business, they can remain undetected for months or even years.
Perspective
The potential loss is rarely limited to what one employee handles in a day. Your sum insured should reflect the maximum amount that could be stolen before the fraud is discovered.
Think like a compromised CFO. How much could they steal before an internal audit exposes them?
We examine access, authority and financial controls to establish the exposure and structure cover around a realistic worst case loss. Trust your people. But insure the risk.
In Depth
The Full Picture
The person stealing from your business may already have the keys.
Employee theft protects a business against direct financial loss caused by fraud or dishonesty committed by an insured employee for improper financial gain.
The loss may involve money, stock, property or fraudulent transactions. As the perpetrator understands your systems, controls and approval processes, the theft can continue unnoticed for months or even years. By the time it is discovered, a series of small transactions may have become a catastrophic loss.
General Information Only
Chadwicks provides general information about insurance. The cover suitable for you depends on your contractual responsibilities and specific risks and is determined by the policy wording, schedule and endorsements, including all relevant terms, conditions, exclusions and limits. Please review these documents with your broker or insurer before making any insurance decisions.
Scope Of Cover
What's Covered
Cover may respond to direct financial loss caused by an employee who deliberately acts dishonestly to obtain an improper financial benefit for themselves or another person.
Employee theft can take many forms.
- Creating fictitious employees, suppliers or subcontractors
- Diverting customer or supplier payments
- Manipulating banking details or electronic transfers
- Stealing cash, stock or other business property
- Forging cheques, invoices or supporting documents
- Processing unauthorised refunds or credit notes
- Colluding with suppliers, customers or other employees
- Concealing shortages through accounting entries
- Misusing access to financial or stock control systems
- Teeming and lading, using later receipts to conceal earlier theft
The policy is intended to cover dishonesty, not every mistake or unauthorised act. Poor judgement, negligence, exceeding authority or failing to follow instructions may not be covered unless the conduct satisfies the policy's definition of fraud or dishonesty.
Definitions
Who Is An Employee?
The definition is determined by the policy.
It generally includes people working for the insured business under a contract of employment or apprenticeship. Directors, members, partners, temporary staff, contractors, consultants and outsourced service providers may not qualify.
This matters. A person can have access to your money, systems or property without meeting the policy definition of an insured employee. Every category of person with that access should be identified and tested against the wording when assessing your risk exposure.
Cover Structure
Named Or Blanket Cover?
Cover can sometimes be arranged for specified employees or across a broader group of employees.
Named employee cover may appear economical, but theft does not always come from the person considered most likely to steal. A supposedly low risk employee may exploit overlooked access or collude with someone in a more senior position.
Blanket cover provides broader protection, but the correct structure depends on the policy wording, workforce and nature of the exposure.
The important question is not merely who handles the money. It is who can create, approve, conceal or benefit from a dishonest transaction.
So, the safe choice is to opt for a Blanket Basis of cover.
Collusion
Collusion Changes The Risk
Most internal controls assume one person will act alone. Serious employee fraud often defeats those controls through collusion.
An employee may work with:
Your cover should be checked carefully where a loss involves both insured and uninsured people. Definitions, exclusions and causation requirements can determine whether the policy will respond.
Sum Insured
Setting The Sum Insured
The limit should reflect the largest direct financial loss the business could suffer before the dishonesty is discovered, not the largest amount an employee can steal in a single day.
Consider:
- The amount of money employees can access or transfer
- Authority to create or amend suppliers
- Payment and refund limits
- Access to stock, valuable property and sensitive documents
- The possibility of collusion
- How frequently accounts and reconciliations are independently reviewed
- How long a fraudulent transaction could remain undetected
- Staff turnover and changes in responsibilities
- Access retained after resignation or dismissal
- Transactions performed by outsourced service providers
- Whether one employee can initiate, approve and reconcile the same transaction
A low limit may cover an obvious once off theft while leaving the business exposed to the more damaging risk, say a fraud repeated and concealed over a long period.
Prevention
Prevention Matters
Insurance transfers part of the financial consequence. It does not replace internal control.
Effective controls may include:
- Separating the creation, approval and reconciliation of payments
- Independently verifying changes to banking details
- Applying dual authorisation to payments and refunds
- Restricting system permissions according to role
- Reviewing dormant users and removing former employees immediately
- Conducting regular stock counts and reconciliations
- Enforcing compulsory leave and job rotation in sensitive roles
- Protecting whistle blowers and investigating irregularities promptly
- Monitoring unusual transactions, overrides and after hours activity
- Having financial controls independently reviewed
Controls reduce the opportunity for theft and improve the likelihood of detecting it before the loss becomes catastrophic.
Discovery
When Dishonesty Is Discovered
Move carefully. An immediate accusation or dismissal may compromise evidence, recovery prospects or the insurance claim.
The business should:
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Preserve financial records, emails, access logs and supporting documents.
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Restrict access without altering or destroying evidence.
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Notify the broker and insurer as soon as reasonably possible.
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Follow the policy's claims and notification requirements.
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Obtain appropriate forensic, employment law and criminal law advice.
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Record the loss and the method used to calculate it.
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Avoid admissions, settlements or recovery agreements without advice.
Policies may contain strict discovery, notification and proof of loss requirements.
A claim can involve far more than showing that money is missing. The business may need to establish who acted, what they did, how the loss occurred and that the conduct meets the policy definition.
Closing Thought
Trust Is Not A Control
Most employee theft is not committed by someone the business expected to steal. Access is usually granted because the employee was trusted.
Trust your people. but think like a thief when assessing your risk.
Verify your controls.
And insure the loss your business cannot afford to carry.
Theft
Theft And Burglary
A locked door does not make the risk disappear. It often determines whether the policy responds.
Theft insurance covers the loss of business property following theft or attempted theft, usually subject to evidence of forcible and violent entry into or exit from the insured premises. Threat of violence or armed hold up also usually triggers the policy. Stock, equipment, machinery and other business assets may be covered, depending on the policy wording.
Cover is often conditional on specified security measures such as an approved alarm, armed response, burglar bars, security gates or particular locks. If those protections are not installed, maintained or activated as required, a claim may be compromised.
The sum insured should reflect the largest realistic loss from a single incident, including concentrations of high value stock or equipment, not merely the average value held. We help you assess what could be stolen, how criminals could gain access and whether your security arrangements satisfy the policy before the break in tests them.
General Information Only
Chadwicks provides general information about insurance. The cover suitable for you depends on your contractual responsibilities and specific risks and is determined by the policy wording, schedule and endorsements, including all relevant terms, conditions, exclusions and limits. Please review these documents with your broker or insurer before making any insurance decisions.