Crime Insurance / Fidelity Bond

Overview

Crime insurance (also known as a fidelity bond or commercial crime policy) protects businesses against losses caused by dishonest or criminal acts, whether committed by employees or third parties. While standard property insurance covers losses from fire, weather, and similar perils, crime insurance addresses the financial harm from theft, fraud, forgery, embezzlement, and cybercrime. It is a critical coverage for businesses that handle money, sensitive data, or valuable property on behalf of others.

How It Works

Commercial crime policies are structured around multiple insuring agreements, each covering a specific type of criminal act:

• Employee dishonesty / fidelity: Covers losses caused by employee theft, embezzlement, or fraud. This can be written on a blanket basis (covering all employees) or a scheduled basis (covering named individuals).
• Forgery and alteration: Covers losses from forged or altered checks, drafts, or other financial instruments
• Theft of money and securities: Covers the disappearance, destruction, or theft of money and securities from the insured's premises or while in transit
• Computer fraud: Covers losses from unauthorized access to the insured's computer systems to transfer money or property
• Funds transfer fraud: Covers losses from fraudulent instructions to transfer funds from the insured's accounts
• Social engineering fraud: Some policies now cover losses from deceptive communications (phishing, impersonation) that trick employees into transferring funds

Crime policies are typically written on a discovery basis, meaning the loss must be discovered during the policy period regardless of when the criminal act occurred.

Compliance Relevance

Crime insurance is increasingly required in COI compliance, particularly for vendors with access to funds or sensitive areas:

• Property management companies: Owners require crime coverage from managers who collect rents, pay expenses, and manage operating accounts
• Janitorial and security vendors: Companies with after-hours access to the property should carry fidelity coverage
• Financial service vendors: Any vendor handling money on behalf of the certificate holder should demonstrate crime coverage
• Minimum limits: Contract requirements typically range from $250,000 to $5,000,000 depending on the vendor's access to funds

Crime insurance is documented on a separate evidence of coverage or in the ACORD 25 Description of Operations. Compliance platforms should support crime coverage as a trackable line for applicable vendor categories.