DEFINITION of 'Computer Crime Insurance'

Computer crime insurance is a type of insurance policy that provides protection from crimes committed through the use of a computer by a company’s employees. Computer crime insurance covers losses that directly result from the use of a computer, and often focus solely on the transfer of property from within the company to parties outside of the company, or vice versa.

This kind of policy may be contrasted with other types of "cyber" insurance coverage purchased by individuals, for example to protect from identity theft, credit card fraud, or theft of cryptocurrency from personal 'wallets'.

BREAKING DOWN 'Computer Crime Insurance'

Insurance companies often have long histories of underwriting life, property, and liability policies, and can use actuaries to determine whether risks are changing over time. Most risks that policies cover tend to not evolve very quickly: insurance policies covering floods and fires are not covering a novel form of risk. The use of computers, smart phones, and other electronic devices, however, has changed dramatically over the past few decades.

The amount of risk that a company may face when it comes to crimes committed through computers is hard to estimate. A company may recognize that it needs to create a firewall to prevent employees from transmitting certain types of data, but creative employees may be able to circumvent firewalls anyway. Computer crime insurance policies have to properly define what devices are considered computers, and what activities done on a computer may constitute a crime.

These policies are different from other computer-related insurance coverages that are meant to protect individuals personally from identity theft, or other crimes where they are the victim - rather than where the firm is the victim of an unscrupulous employee or group of employees.

A company, such as a financial firm or a claims processing company, that chooses to purchase computer crime insurance needs to ensure that its coverage applies to a broad set of situations. For example, the coverage language may say that the insured can only file a claim if losses were caused by computer access by an unauthorized party, such as a hacker. In this case, a crime committed by an employee may not be covered, as the employee is considered an authorized user of the company’s computer system. Computer crimes perpetrated by a company's employees may also fall under a firm's blanket bond coverage as well, protecting the company from damages caused by its employees or contractors.

RELATED TERMS
  1. Cover Note

    A cover note is a temporary document issued by an insurance company ...
  2. World Insurance

    World insurance is a commercial liability policy that provides ...
  3. Liability Insurance

    Liability insurance is insurance that provides protection against ...
  4. Against All Risks - AAR

    An against all risks insurance policy provides coverage against ...
  5. Commercial Lines Insurance

    Commercial lines insurance helps keep the economy running smoothly ...
  6. Commercial Package Policy (CPP)

    A commercial package policy is an insurance policy that combines ...
Related Articles
  1. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  2. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  3. Insurance

    When Should You Get Supplemental Life Insurance?

    For individuals with larger families and responsibilities, supplemental life insurance may bridge the shortfall in coverage from term or whole-life policies.
  4. Insights

    A Cost-Benefit Analysis of Mass Incarceration

    The Council of Economic Advisers' latest report offers a fresh perspective on mass incarceration: weighing the costs and benefits to society, it shows how economically ineffective the policy ...
  5. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about homeowner's insurance to protect their residence.
  6. Insurance

    What is Insurance Fraud?

    Fraud exists in every type of insurance, although the stakes tend to be highest with life insurance.
  7. Insurance

    What Is and Isn't Covered by Homeowner's Insurance

    Understanding what your insurance covers can be confusing. Learn what almost all insurance policies have in common so you're prepared if disaster strikes.
  8. Insurance

    Insurance, Excess Insurance, and Reinsurance

    Understanding the differences between insurance, excess insurance, and reinsurance might help you avoid being overinsured or underinsured.
  9. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  10. Financial Advisor

    Why Do Businesses Benefit From Life Insurance on Employees?

    Companies can buy life insurance on their employees and collect the benefit proceeds. Find out why companies want to benefit from the death of their employees.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  2. How does the insurance sector work?

    Learn more about the insurance sector, a historically safe place for equity investors and the home of some of the largest ... Read Answer >>
Trading Center