What is the difference between internal and external theft in my business and how should I insure these risks?

In 2018, close to 500 000 cases of business theft were reported in South Africa. This is an alarming figure for us as a country and as such, we need to ensure that we are adequately protected or insured against these risks.

In this article we will be looking at the differences between internal (employees) and external theft (shop lifters, break-ins etc.) and how you can protect yourself against such risks.

The first step in insuring your business against theft is to consider what the nature of your business is. If you are a retailer or someone who sells a physical product from a store, you would typically be more vulnerable to theft from inside your business (internal) compared to that of an administrative office or a financial service provider. If you fall into the category of the latter, your risk will lie more towards external theft.

Internal theft is the biggest contributor to loss for most retailers regardless of the size of the industry. This could be in the form of an employee simply having light fingers or them conspiring with their friends to rip you off. As a business owner you need to do everything in your power to implement the right loss prevention practices. A substantial risk is that when you want to claim for these losses, your insurer will inform you that you have no claim because there are no visible signs of forced entry/exit to or from the building.

Let’s look at some loss prevention techniques:

  • Install camera systems with clear views of all store activities. If you notice that your cost of goods is increasing but your sales are decreasing or remaining the same, investigate the matter further.
  • Refresh on your policies and train employees. It is better that they are aware of your rules and regulations.
  • Use reports to monitor employee activity – reward the good and weed out the bad.

From an insurance perspective, internal theft is a claim that could be very difficult to prove. The insurance section that you would look at taking out would be Fidelity Guarantee, which covers you for dishonesty or theft by employees. Although this section can be quite costly, it should receive your serious consideration. Your safest bet is still to contact your broker and ask for his/her advice.

External theft is often caused by shoplifters, break-ins, robberies or other acts from people who have no connection to the store. The businesses who are more inclined to experience this form of theft are businesses that have a lot of electronic equipment such as desktops, servers, monitors, televisions etc. These are high valued items that are easy to sell and could easily cripple your business if you do not insure your assets correctly.

The sections you need to look at taking out are as follows:

Section Office contents – This provides cover for furniture, documents etc. (Items that work electronically are excluded under this section. This section also provides 25% of the insured amount for theft.)

Section Theft – Protects you against theft of the contents in your building for which you are responsible for.

Section Electronic Equipment – Under this section, you can insure your electronic items in your business.


Every commercial policy and risk is unique in its own way and is underwritten accordingly. Our best advice to you is to contact your APBCO broker who will customize your business insurance cover according to your risk.


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