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Employee Dishonesty Coverage Business Insurance

Crime: Stolen Before – What is Employee Dishonesty coverage?

“Honesty pays, but it doesn’t pay enough to suit some people.” – Hubbard, Kin

The Fastest Growing Crime

depressed business sad depression man 5 (Custom)Every year the U.S. Chamber of Commerce puts out information about how employee theft is the fastest growing crime, represents 60% of inventory losses to U.S. companies, and is the cause of about 30% of the business failures.  Many times employees steal not because they need to but rather because the opportunity presents itself.  Businesses need to make employees aware of the consequences of stealing and recognize that it is often not the new hire but instead, the long time trusted employee that steals for m the business.

A very high percentage of employees that have stolen from a business will do it again.  Besides good pre-employment screening and back ground checks, many employers purchase Crime coverage also commonly know as Employee Dishonesty coverage.

Employee Dishonesty Coverage

Employee Dishonesty coverage is often only considered by business that handle cash and over looked by other business that feel that they are somehow protected because their sales are online or done by credit card.  Many employers also miss the fact that tools, equipment and other inventory items can often times be easily taken by employees.

Although the coverage no longer requires the identification of the perpetrator, in my travels, it is obvious when the suspected employee no longer shows up for work…

When interviewing your new employee candidate, you cannot ask them if they have previously stolen.  This is a very important issue because, Employee Dishonesty coverage will not provide coverage for a loss if the employer had knowledge that the employee had stolen before.

Several years ago I received a call from a client to let me know that a night clerk had stolen a bank deposit containing a few thousand dollars.  I advised the client that he did in fact have Employee Dishonesty coverage.  He went on to tell me that he was very disappointed with this employee because he has stolen a smaller deposit a few weeks earlier and had agreed to paying the money back by a weekly reduction to his weekly pay.  I had to advise my client that we could pay for the earlier loss but not the one that had just occurred as he had prior knowledge that this employee had stolen.

Be sure to speak to your insurance agent about your business and the exposure it has to thefts by employees.

About the Author

TomTom Quirk has been providing commercial Property/Casualty insurance solutions to small and mid-size companies since 1986. Garland-Sturges & Quirk are licensed in 47 states and the District of Columbia in order to service their broad range of clients. Please feel free to contact us with any insurance related questions or needs at 408-227-9991 or tomq@gsq.comView all posts by Tom