Employee Dishonesty Insurance
Employee dishonesty insurance can cover losses resulting from theft, embezzlement, forgery, alteration, and counterfeiting. Traditional property or package policies can sometimes cover these losses on a smaller scale. When the coverage is included within a property or package policy, the employee dishonesty limit is usually capped at a small limit such as $25,000 or $50,000.
Employee Dishonesty Insurance Coverage Within a Standalone Crime Policy
For businesses and organizations in need of higher limits, employee dishonesty coverage can be purchased within standalone crime policies. These policies can be written by the same carrier writing the property and liability coverages or through a standalone carrier separate from the insurers for the other lines of business.
Crime policies were created to deal with limitations and exclusions from traditional property policies and to offer higher limits of coverage. It is common for carriers to offer crime policies with limits of at least $1,000,000 for employee theft, forgery, and alteration.
Any company or organization with employees has potential exposure to employee dishonesty. The unfortunate reality is it is often easier for internal staff to steal from a company compared to outsiders. Staff often have a greater understanding of the weaknesses and vulnerabilities of a business or non-profit. They also often have access to checks and banks accounts based on their day-to-day responsibilities, which can lead to theft, forgery, or other improper financial transactions. There are countless stories in the news of employees who are able to steal significant sums from their employers over a period of years without being discovered.
Having employee dishonesty or crime coverage can help organizations recover from the impact of fraudulent acts or misuse of funds which could otherwise cause large financial impacts including bankruptcy. Without the proper protection, a business is at risk for having their assets drained with little to no recourse.
Employee Dishonesty Coverage Used to be Written on a Loss Sustained Basis
It used to be more common for employee dishonesty coverage to be written on a loss sustained basis (within a crime policy), where the claim is valid if the loss occurred and is discovered during the policy period. It is now common to see these policies issued on a discovery basis, meaning the claim is valid if the loss is discovered during the policy period, regardless of when the theft occurred.
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