6.5 Commercial Crime Coverage
Key Takeaways
- Commercial Crime coverage protects money, securities, and property against employee and outsider criminal acts.
- Forms are triggered by Discovery (loss discovered during the policy period) or Loss Sustained (loss occurred during the policy period, discovered during term or within one year after).
- The nine ISO insuring agreements cover employee theft, forgery, inside/outside premises, computer fraud, funds transfer fraud, counterfeit money, and extortion.
- Burglary requires visible marks of forced entry on a locked building; robbery requires threat or use of violence.
Last updated: July 2026
6.5 Commercial Crime Coverage
Commercial Crime Insurance protects businesses against loss of money, securities, and other property from criminal acts by employees or outsiders. It is written as a monoline policy or as a coverage part in a Commercial Package Policy.
Form Triggers
- Discovery Form: Covers losses discovered during the policy period, regardless of when the criminal act occurred.
- Loss Sustained Form: Covers losses that occurred during the policy period and were discovered during the policy term or within one year after policy expiration.
Legal Definitions of Crime Perils
- Theft: The broadest term — any unlawful taking of property.
- Robbery: Taking property from a person by threat or use of violence, or by creating fear of bodily harm.
- Burglary: Unlawful taking of property from inside a locked building by a person who forcibly enters or exits, leaving visible marks of forced entry/exit (broken locks, jimmied doors).
- Safe Burglary: Taking property from a locked safe or vault by forcible entry leaving visible marks.
The Nine ISO Crime Insuring Agreements
| # | Insuring Agreement | Covers |
|---|---|---|
| 1 | Employee Theft | Money, securities, and property taken by fraudulent or dishonest acts of employees |
| 2 | Forgery or Alteration | Forgery or alteration of checks, drafts, or promissory notes drawn on the insured’s accounts |
| 3 | Inside the Premises — Theft of Money & Securities | Theft, disappearance, or destruction of money and securities inside the premises, plus damage to the premises |
| 4 | Inside the Premises — Robbery or Safe Burglary of Other Property | Robbery of a custodian or safe burglary of property other than money and securities inside the premises |
| 5 | Outside the Premises | Money and securities in transit outside the premises in the care of a messenger or armored vehicle company |
| 6 | Computer Fraud | Loss resulting from unauthorized entry to the insured’s computer system or fraudulent computer instructions |
| 7 | Funds Transfer Fraud | Fraudulent instructions directing a financial institution to transfer funds from the insured’s account |
| 8 | Money Orders & Counterfeit Money | Counterfeit money orders or counterfeit currency accepted in good faith |
| 9 | Extortion — Commercial Entities | Money paid to extortionists threatening to damage the insured’s property or persons |
Government Crime Coverage
Governmental entities use specialized crime forms covering public-employee dishonesty, money and securities, and forgery, structured similarly to commercial forms.
Adjuster Notes
- The key adjuster task is determining which insuring agreement applies and whether the form is discovery or loss sustained.
- Employee Theft is limited to money, securities, and "other property"; it does not cover employees’ own property.
- Burglary requires visible marks of forced entry — a merely unlocked door is not burglary.
Limits and Employee Theft Mechanics
- Employee Theft is written on a per-loss or per-employee aggregate basis. A per-employee aggregate means one limit applies to all dishonest acts of one employee across the bond period.
- Coverage applies to "money, securities, and other property" — employees' own property and trade secrets are not covered.
- Most policies exclude losses the insured knew of more than a set period (often 90 days) before discovery, and losses whose perpetrators had prior dishonest acts the insured knew about.
Inside and Outside the Premises
- Inside the Premises — Theft of Money & Securities covers theft, disappearance, or destruction of money/securities inside the premises or a bank depository, plus damage to the premises caused during the attempted theft.
- Inside the Premises — Robbery or Safe Burglary of Other Property requires either a robbery of a custodian or a safe burglary; mere theft of unsafed property does not trigger this agreement.
- Outside the Premises covers money and securities in transit while in the custody of a messenger (the insured's employee) or an armored motor vehicle company; an armored car company bond covers the carrier's own liability.
Government and Public Entity Crime Forms
Governmental entities use ISO governmental crime forms covering:
- Public employee dishonesty (public official bonds overlap with fidelity).
- Money and securities inside and outside the premises.
- Forgery or alteration of public checks.
Adjuster Workflow
- Identify the insuring agreement triggered (employee theft, inside premises, outside premises, computer/funds transfer).
- Establish discovery vs. loss sustained timing and whether the loss falls within the policy period or extended discovery window.
- Verify the definition (robbery requires threat/violence; burglary requires visible forced entry; safe burglary requires a locked safe).
- Apply the applicable limit (per-loss vs. per-employee aggregate).
Test Your Knowledge
Under a Discovery Form crime policy, when must a loss occur to be covered?
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Test Your Knowledge
Which insuring agreement covers fraudulent instructions directing a bank to transfer funds from the insured’s account?
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D
Test Your Knowledge
What distinguishes burglary from other theft for crime coverage?
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D