Commercial Crime Insurance

What is commercial crime insurance?

Commercial crime insurance is a first-party policy that reimburses a business for direct financial loss caused by criminal acts such as employee theft, forgery, computer fraud and fake payment instructions. It pays the company itself for money it has lost, rather than paying a third party who sues you.

It sits alongside the covers on our liability insurance page but works differently. A liability policy responds to claims made against you. A crime policy responds when you are the victim. That distinction matters to boards, lenders and auditors, who increasingly ask what happens if a trusted person or a clever fraudster drains the company account.

What the policy covers

Crime policies are built from insuring clauses. You choose the clauses you need and a limit for each. The common ones are:

• Employee theft — theft of money, securities or other property by an employee, whether acting alone or with outsiders. Many wordings extend this to temporary staff and outsourced workers under your supervision.
• Forgery or alteration — loss from forged signatures or altered amounts on cheques and similar financial instruments.
• Computer fraud — unauthorised entry or change of data in your systems that causes money or property to be transferred.
• Funds transfer fraud — fraudulent instructions sent to your bank, pretending to come from you, that move money out.
• Social engineering fraud — an employee is deceived into making a payment, for example to a fake vendor bank account or on the instruction of someone impersonating a director.
• Money and securities — loss inside the premises or in transit.
• Client property — theft by your employees of money belonging to your clients, which matters for service firms and fund handlers.

Investigation costs and, in some wordings, the cost of reconstituting data may also be included.

What is not covered

• Losses caused by the owners or partners themselves, and in most wordings by persons who hold a large controlling stake.
• Loss discovered before the policy started, or outside the discovery period.
• Indirect or consequential losses such as lost profit, interest or reputational damage, unless specifically added.
• Losses that can be proved only by an inventory shortfall or a profit-and-loss comparison.
• Employees already known to have committed a dishonest act before joining or during service.
• Pure cyber events such as ransomware, system downtime and data breach costs. These belong under cyber insurance.

Who needs crime insurance

Any business where a small number of people can move large sums. That includes manufacturers with busy accounts payable teams, traders handling many vendors, NBFCs and fintechs, real estate developers collecting customer receipts, hospitals, schools, logistics firms and listed companies. Family-run businesses that have grown fast are especially exposed, because approval controls often lag behind the size of the payments.

A simpler option, fidelity guarantee insurance, covers employee dishonesty alone. A crime policy is broader and usually suits companies with digital payment flows.

How limits and premium are decided

Insurers look at the whole control environment, not just turnover. The main factors are:

Social engineering cover is usually granted as a smaller sub-limit and insurers may ask detailed questions about verification of vendor bank changes. Deductibles and sub-limits vary by insurer, so compare them clause by clause.

How a claim works

1. Notify the insurer as soon as the loss is discovered, and within the time the policy requires.
2. Report the matter to the police and your bank, and ask the bank to attempt a recall of any transferred funds.
3. Preserve records, emails, system logs and payment trails. Do not settle privately with the suspected employee without the insurer’s consent.
4. Work with the insurer’s surveyor or forensic accountant to establish the loss.
5. Submit the proof of loss with supporting documents; recoveries made later are shared as the policy states.

How MILES helps

• We map your payment process and show which insuring clauses match your real exposures.
• We compare crime wordings from several insurers, focusing on the definition of employee, discovery basis, social engineering sub-limits and exclusions.
• We help you fill the proposal accurately, so the controls you describe are the controls you actually run.
• We place the cover and coordinate it with your cyber, D&O and fidelity policies to avoid gaps and overlaps.
• When a loss happens, our claims team helps you notify correctly and assemble the evidence the insurer needs.

Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.