A property policy with no theft exclusion still will not pay when your bookkeeper steals from you. It covers the wrong thief.

The exclusion that creates the gap

Commercial property forms cover theft by an outsider — someone breaks in overnight and takes your equipment, and that is a property claim. What those forms exclude is dishonest acts by your own employees. That is written into the form deliberately, not by oversight.

So the burglar is covered and the office manager is not.

Why that matters more than it sounds

Employee theft rarely looks like a burglary. It is small amounts over a long time — checks written to a vendor that does not exist, voided sales with the cash pocketed, a fake employee added to payroll, inventory walking out the back door a case at a time. Because it is designed not to be noticed, it usually runs for a long stretch before anyone catches it, and the total is large by the time they do.

What a commercial crime policy covers

  • Employee theft — money, securities, and other property stolen by your own employees
  • Forgery or alteration — someone forging or altering checks drawn on your account
  • Funds transfer fraud — a fraudulent instruction to your bank to move money out
  • Computer fraud — theft of money or property through your systems
  • Money and securities — cash on your premises and in transit, which property forms cover only in very small amounts, if at all
  • Social engineering or deception fraud — the fake invoice, or the email that looks like it came from the owner telling accounting to wire funds. On many forms this is an endorsement with its own sublimit rather than standard coverage, so ask for it by name.

Third-party crime — the one contracts require

Standard employee theft coverage pays when your employee steals from you. Third-party crime coverage pays when your employee steals from your customer, at the customer's location.

For any business whose people work inside someone else's home or office, this is the coverage that matters most: janitorial and cleaning, home health and in-home care, HVAC and plumbing, IT and managed services, movers, security guards, property maintenance. When something goes missing from a client's office, the client looks at the company whose crew was there overnight. Increasingly those clients require the coverage in the service contract before they will let anyone on site.

Three things people mistake for crime insurance

  • An ERISA fidelity bond — required to protect a retirement plan's assets. It pays the plan, not your business. Showing one as proof you are covered for employee theft is a common and expensive mistake.
  • A license or contract bond — protects whoever required the bond, not you.
  • Your property policy's theft peril — covers the outsider, excludes the employee. That is the whole reason crime insurance exists.

The question that sizes the exposure

Ask whether the same person writes checks, approves invoices, and reconciles the bank statement. If the answer is yes, nobody is reviewing that person's work, and no amount of trust changes the arithmetic. Separating those duties is the control. Crime insurance is what covers the risk you cannot separate away.

Related: What is an ERISA bond? · Care, custody or control coverage · Why carriers want an alarm, not just cameras

Educational only — confirm against the actual policy form and endorsements.