Insuring Against Theft

No business is immune from being a victim of theft. Whether it is a break-in where cash and computers are stolen, tools and equipment disappearing from a job site, or the theft of data, robbery can come at a business from many angles and can cause a serious disruption to your operation and bottom line.

Commercial insurance can often help a business recover from a theft; still it is important to consider exactly what is at risk to ensure it is properly protected. This is critical because not all business property is covered the same way in a commercial insurance policy.

Business Property: Business property is a broad category of coverage that can be found in most commercial packages and business owner’s policies (also known as a BOP). It protects the most common types of property used to operate a business such as office furniture, computer equipment and inventory. The amount of business property coverage should depend on what your business owns to operate the business, including inventory as well as any property in your care, custody or control that belongs to others.

Coverage Limitations: As with all insurance policies there are coverage limitations and exclusions that business owners should know about. This includes limitations on equipment used away from the business location, exclusions for data theft, limitations on money stolen by an employee or the outright disappearance of cash or securities.  

Coverage Solutions: Short of contraband, there is typically a coverage option for nearly all business property, but some items need to be specifically insured versus covered under the broad coverage limit of business property.  Some of these nuances of insurance can seem complicated. This is where a licensed insurance professional can help protect your business as they can identify the finer points and limitations of your specific insurance program once they get to understand your operation.

Here are just a few of the coverage solutions designed to meet the needs of a business:

Money and Securities: Given the highly susceptible nature of theft for money and securities, insurance companies will limit the amount recoverable on a policy. To get an adequate amount of coverage for this exposure, you need to specify how much money and securities coverage your
business needs.

Inland Marine: Inland Marine is used to cover business property that is being transported or in the care, custody and control of others. An inland marine policy could apply, for example, if your business signs a contract specifying that you take ownership of an order as soon as it leaves the factory. This would include while in transit but not yet in your possession. If the order is stolen or damaged while in transit, then the inland marine coverage could help recoup the loss. Without it, coverage would be in question on most commercial policies.  

Employee Dishonesty/Employee Theft: Most standard commercial policies specifically exclude or limit the loss of money and/or securities if the theft was committed by an employee. Coverage can be purchased back under Crime Coverage or Employee Dishonesty Coverage.

Cyber Theft: Data breaches and cyber thefts are all over the news now and with good reason. Its prevalence is becoming more common and the ramifications more severe. Cyber theft is not typically covered on a standard business policy, but instead would need a separate cyber liability policy. This coverage can help recover the expenses associated with retrieving stolen records, notifying clients of the breach and possible fines.

What to Do After a Theft
Call the police and file a report immediately. A police report will be required for any theft claim. Once you have made the report, be sure to obtain the name and contact number of the reporting officer as well as a copy of the report if it is available.

Report the claim immediately to your insurance agent or company. This will open the claim and get experienced claims adjuster assigned to help walk you through the process.

Create an inventory of items stolen. Ideally this would be done in advance as you can’t report property stolen if you don’t know what you had in the first place. Creating a list for both the police and insurance company is harder than it may seem, especially when an item is gone.  You will need to provide a description, year purchased, cost and serial number if available.  

A good place to start would be to pull information from your depreciation schedule from a tax return. The list can be compiled using a spreadsheet and amended as you add or dispose of property (as long as it is securely backed-up to the cloud or off site). Some insurance companies are offering apps to help manage this process. You can also supplement your list with digital photos and videos that are also backed up.

Learn from the theft. There have been instances where a theft was so easy that it occurred multiple times. This is not only extremely frustrating but can also be expensive given multiple claims means multiple deductibles and an increase in premium or the risk of being non-renewed.

Theft is a loss that can leave a business owner feeling angry and even vulnerable. Insurance can help your business move on, at least financially, and get you back to what you do best—your business.

Lyle Fulkerson is president and CEO of HPM Insurance in Bedford and Amherst. He is also chairman and managing member of Kane Insurance in Portsmouth, Rye and Stratham. For more information, visit HPMinsurance.com or Kaneins.com. He can be reached at 603-673-1201 (HPM) or 603-433-5600 (Kane).