Pecuniary Insurance: Definition & Types

Instructor: Janice Bailey

Janice has taught reading, writing, Microsoft Office 2010, Visio, Project Management. Her Masters of Science is in Applied Criminology with a Business Emphasis

There are many risks today in the business world. Pecuniary insurance can be a smart investment for protecting your business as it covers different types of unforeseen financial losses.

Defining Pecuniary Insurance

Having your own business can be precarious especially when unforeseen events may expose it to many ups and downs, either external or internal. But back up can be available during uncertain times. One protection available to business owners and something worth checking out is pecuniary insurance. Pecuniary stems from the Latin word ''pecunia'' which means ''money.'' It is a type of insurance similar to casualty, yet in this case it covers only financial losses. So, any money lost under conditions specified in your policy will be reimbursed once a claim is made to the company who issued your policy. All financial losses must be reported to your insurance company according to your plan specifications.

Types of Pecuniary Insurance Coverage

Pecuniary insurance covers a small group of casualties related to financial loss. Some of these are:

Financial loss due to theft or an accident -- An example would be losing money stored inside your business due to a natural disaster such as a fire or hurricane, or theft of your cash on the way to the bank.

Financial loss due to embezzlement or fraud -- This is usually due to money lost from criminal activity within the company. An example would be a dishonest employee, perhaps a secretary or an accountant.

Financial loss due to disruption or shut down of business -- Examples would be when a business is shut down due to damage from a flood or fire. Pecuniary insurance will make up for financial losses. But it is not the same as casualty insurance, casualty only covers material items broken or destroyed, on the other hand, pecuniary insurance only covers the financial loss.

Case Examples

Jacqueline owns a cleaning business called ''Amore Clean Team.'' They recently switched to a new accountant when their former accountant retired. In order to safeguard her business, Jacqueline would occasionally review her financial records for irregularities. One day and to her dismay while reviewing her records, she noticed irregular figures concerning bank deposits.

Jacqueline decided to hire an auditor to review her books. An auditor is a person trained to examine and verify accounts. Unfortunately, the auditor did find a misappropriation of funds while checking the multiple deposits made at different bank locations. They did not compare to figures written by Jacqueline herself in her own backup records. There was only one employee in charge of the funds at that time and it was the new accountant. It was evident that Jacqueline would have to report this to the police and fire him. The amount misappropriated was $8000, Jacqueline filed a claim with her insurance company for the loss of $8000 due to fraud concerning a disloyal employee. She was glad to have pecuniary insurance to cover her monetary losses.

Fire accidents are usually covered by pecuniary insurance
Building on Fire

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