Across the board, crime tops the list for the most frequent small business insurance claims. Some is vandalism, but most is theft from people inside and outside the business. Helping your small business insurance client manage crime and other risks is how you set yourself apart, help your customers grow, and develop a high-quality book of business.
Challenging economic times can drive up theft losses: somewhere within the human psyche is the ability for people to rationalize stealing from those who appear to have more than them. This can be anything from outdoor equipment or decorations to cash, merchandise, and supplies—things that are valuable or personally useful and easy to grab when no one is looking. Losses from this kind of theft can be substantial, though most tend to skew smaller.
The larger driver of theft is an opportunity, and it’s here that small business insurance claims can include huge losses—when someone sees an opportunity to bilk a company and puts a plan in action to do it. Embezzlement is a perfect example that happens a lot more than you might think:
Claim scenario: Check, please!
The company: A retail company specializing in consumer goods.
The crime: The company’s vice president of finance created false vendor invoices. Simply by altering checks, the employee was able to embezzle $1.2 million over a 10-year span. Alarmingly, crimes like these can persist for years, the business owner unaware until it’s too late.
The criminal mind: Impulse, opportunity, need, desire, excitement, and even arrogance drive crime. The harsh reality of embezzlement is it’s a crime typically committed by someone your customer trusts. This is why experts recommend all business owners, large or small, build accounting redundancies into all processes for handling money, ordering, invoicing, and inventory: the more people involved in these processes, the less likely anyone is to discover or create an opportunity to steal.
Crime insurance in action: Every employee with access to cash, checks, or financial information represents a crime and fraud exposure. Even directors, officers, and other high-ranking officials pose a threat to your client’s bottom line.
Four big benefits for small business insurance claims
Coverage for the misuse of funds—It is likely that multiple employees have access to company funds or financial information. In some cases, employees may abuse this access for personal gain. Crime insurance can protect your small business insurance customers from losses stemming from the misuse or illegal transfer of funds, ensuring the company can recover from internal criminal acts.
Extortion safeguards—While it can be difficult to imagine, employees and outside actors can extort a company for funds by holding a director or officer hostage or through other illegal methods. Without crime insurance, your small business insurance clients have no means to recoup these losses, which could devastate their bottom line.
Insurance for goods in transit—Goods in transit are particularly vulnerable to employee theft and, in some cases, organizations may not notice anything has been stolen until it’s too late. If the theft takes place outside of the business premises, it can be difficult to prove, often leading to drawn out and expensive legal battles. Crime insurance policies can provide ample protection for goods in transit and reduce the financial impact of loss.
Coverage for forgery and alteration—In some cases, employees have access to checks that they can easily alter for their own gain. Effective crime insurance policies provide coverage for losses that result from forgery or alteration of a check.
Educate your small business insurance clients about their risks and how a Business Owners Policy (BOP) can help them recover from the financial impact of theft. What’s more, a BOP can provide coverage from a variety of other exposures related to business interruption, data theft, stolen funds, and forensics.
Get your small business insurance clients protection they can count on. Coterie Insurance makes small business policies easy to quote, easy to sell, and easy to service. If your agency isn’t writing with Coterie yet, it’s time for you to embrace the easy. Become a producer today!
