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COMMERCIAL CRIME & FIDUCIARY LIABILITY INSURANCE

WHY COMMERCIAL CRIME?

Theft of money by an employee or outside party - over time or at one time - is not covered by your Professional Liability Policy. Don't think your General Liability Policy will cover a large loss from employee dishonesty or fraud either.  Business Owners Policies may have a small amount of c overage as well, but do you know if the coverage is adequate for your  company size.

COVERAGE

Several different types of crime coverage are addressed:  employee dishonesty coverage; forgery or alteration coverage; computer fraud coverage; funds transfer fraud coverage; kidnap, ransom, or extortion coverage; money and securities coverage; and money orders and counterfeit money coverage.

LOSS FACTS

The average loss from fraud is $145,000 -  with one in five losses over $ 1 Million**.  And yes, your business may have a loss under $140,000, but can you replace the lost premium dollars?  Computer Fraud can also occur via malicous software or computer hackers redirecting funds.

According to the Association of Certified Examiners**, losses within a 7-month period can total approximately $50,000.  If a theft period goes on for 24 months, the average loss is $150,000**.  It can be months or years before you discover fraud. 

Internal Controls are just one part of your risk management plan.  Most companies find out about a fraud scheme from an anonymous  tip **.  Offenders in this category are typically first time criminals with a clean employment history and are between the ages of 31 and 45 years**.

 **Association of Certified Examiners 2014 Report to the Nation  (http://www.acfe.com)

FIDUCIARY LIABILITY INSURANCE

COVERAGE  

Fiduciary liability insurance is designed for the financial protection of fiduciaries of employee benefit plans against legal liability arising out of their role as fiduciaries, including the cost of defending those claims that seek to establish such liability. Covering the legal expenses of defending against the claim and the financial losses the plan may have incurred due to errors, omissions or breach of fiduciary duty, the policy can help defend against fiduciary related claims including mismanagement.

LOSS FACTS

Consider the costs to defend your company for:

failure to offer adequate diversification options, charging excessive fees, or acting in a way that presents a conflict of interest on employees’ retirement plans (401)k.

 • if administering health and other welfare plans, including inadequate policy communications or errors in counseling or providing interpretations to employees that result in lost benefits

 •errors in administering plans including computing errors, such as improper enrollment or terminations, that result in lost benefits

Other types of coverage are available.  Fidelity bonds are required by law (ERISA bonding). This is a form of insurance is used for dishonesty situations. When dishonest / fraudulent administrators or trustees have financially harmed an employee benefit plan.  Bonds can be used for the benefit of the plan and the plan's beneficiaries. The bond will not protect the trustees themselves from liability claims and therefore the fiduciary liability insurance comes into play.

If you are an insurance agent, or in another profession and carry E & O insurance,  many E & O policies exclude your work /professional services on behalf of your own employees.  General liability policies aren’t broad enough either to protect you.

Need to comply with ERISA?  

See compliance information:  http://www.dol.gov/ebsa/compliance_assistance.html

Offering or Establishing an ERISA Plan –?    http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html

DISCLOSURE

Information provided is an outline of coverages only.  Each risk has distinct coverage characteristics and should be discussed with an agent.
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