At A.P. Reid, we consider consumer education to be one of our top priorities. An informed insurance buyer will made educated decisions about their insurance - ensuring that you avoid trouble down the road in the event of a claim. A.P. Reid customers benefit from the important information contained in our series of hundreds of Customer Information Bulletins. Below you will find a selection of these bulletins related to Business Insurance. Check back often as this selection will be updated from time to time.
Buying Crime Insurance for your commercial establishment can be a treacherous path. There is no such term as “crime” in insurance policies. “Crime” to the insurance industry is simply a phrase to describe a selection of individual coverages chosen by the policy holder. Fire Insurance Coverages that you buy for buildings, stock, and equipment provide very little in the way of crime coverages. Most Fire Insurance policies will extend to provide cover for an act of vandalism but not much more.
Insurance for acts of crime must be purchased separately, and are usually offered by insurance companies as individual coverages.
ROBBERY AND HOLDUP
Robbery & Holdup is the felonious taking of money, securities, and other property using force, violence, or the threat of violence. Premises cannot be robbed. Only people can be robbed. This means that if you carry Robbery and Holdup coverage, you have coverage only when the premises are open for business, and your business funds are in the custody of an employee. This also means that a criminal must enter the premises under these conditions and “rob” your employee of the funds using the threat of violence. This coverage appears on your policy as “Robbery/Holdup” or “Inside/Outside Holdup”. Coverage is minimal in its scope and the premium for $2,000 coverage is usually less than $25 per year. The Robbery and Holdup coverage can be extended to include Theft from Night Depository or Theft from the Home of a Custodian if funds are taken home by you or an employee at night. But, unless the cover is extended, only a robbery from the premises or a robbery on the way to the bank is insured.
BURGLARY
Premises that are closed for business are burglarized. Burglary coverage means that you have coverage when someone breaks into your premises at night when those premises are closed for business, and destroys property and feloniously takes property, money, or other negotiable securities. Unless you have a special burglar resistant receptacle for holding money overnight in the premises, most insurance policies exclude loss of funds left in the premises, but loss of stock, equipment, or other non-monetary property can be easily covered. Coverage for burglary damage or loss to stock and equipment is called “Mercantile Stock Burglary Coverage”. If you have been granted coverage for loss of funds left in the premises overnight, such coverage would be called “Broad Form Money and Securities”. Both coverages are sold in multiplies of $1,000 of coverage and you are free to select the limit of coverage appropriate for your business. Coverage in either case will not be recognized unless there are physical signs of forced entry into the premises. If your fire insurance is on a Broad Form basis, or an All Risk basis, you may not need to carry burglary coverage for your stock and equipment, because it is probably included in the fire coverage carried, but no fire coverage for buildings, stock, and equipment will recognize money or other negotiable securities as forming part of buildings, stock, or equipment.
STEALING
There is no insurance policy available for “stealing”. You must be able to identify how property went missing and have coverage for that specific criminal act. We as layman make certain assumptions. If a specific article was “there” yesterday and is “gone” today, we make an assumption that it was “stolen”. Insurance companies do no recognize this. You must be able to prove that your premises were burglarized, or you must have been robbed, before coverage, if you carry coverage, will trigger.
EMPLOYEE CRIMES
When the property or money has disappeared due to the criminal act of an employee, your crime coverage will not respond unless you carry an “Employee Dishonesty Bond”. All crime coverages as issued and priced by insurance companies are based on an outsider committing the criminal act, not an employee who is in an entrusted position. We strongly recommend that you carry a Bond. See our employee dishonesty bulletin for more information.
CONVERSION
Conversion is not a crime to insurance policies. If you have given property to someone and they have not returned the property as they should have, you are the victim of a conversion, and as such are not the victim of a “robber” or a “burglary”, and you have no coverage.
DAMAGE TO A BUILDING CAUSED BY A BURGLARY
If you are the owner of a building and carry only a specified perils form of fire coverage on your building, you probably need to enhance your building fire insurance coverage by including a small limit of insurance for damages done to the building during the course of a break-in. You may also be obligated to pay these repairs if you are a tenant in a building.
SAFE BURGLARY
This is a separate coverage that is available for damage or loss to your safe or the property contained within your safe. This coverage can be purchased separately, but usually is added, if you have a safe, to some other form of crime coverage being carried under the policy.
This information bulletin is not meant to be a replacement for actual insurance policy wordings that appear in your insurance contracts. It is meant as an aid to you in understanding what insurance definitions are, how the insurance industry looks at crime insurance, and how best to determine just what crime coverage you carry and should be carrying. As you can see, only specific and identifiable acts of crime can be covered by insurance policies. Acts of pilferages, mysterious disappearances, misappropriation of through false representative may all be acts of crime in the eyes of the law, but are largely uninsurable and must be considered risks of doing business.