Did you know that 90% of all theft losses of significance involve employees, often long-term employees that have located a weakness in your business? There could be a gap, perhaps, in your internal control and processes that can be exploited. The variety of schemes used by dishonest employees continues to grow as does the technology that touches nearly every aspect of businesses and grows your exposures in ways never before imagined.

Crime insurance, also at times known as fidelity insurance, is used to manage and address loss exposures resulting from a variety of criminal acts such as robbery, burglary and other types of theft including employee theft. Crime related loss exposures can vary significantly among businesses.

A noted Crime Insurance carrier shares on its website that eight out of ten crimes against businesses are carried out by employees. In addition, those crimes—generally asset misappropriation, fraudulent statements, or bribery and corruption—are often committed by a trusted employee and occur over an extended period of time. Even in non-profit companies, trusted employees or executive directors have stolen great deals of money from even small organizations. No type of business is immune!

The Insurance Service Office (ISO) form used on many insurers policies include the following coverages:

  1. Employee Theft– covers damages caused by dishonest acts (theft of money, securities, or property) by a currently or recently employed individual
  2. Forgery or Alteration- such as a counterfeit check from your business or the alteration of a legitimate check for financial gain
  3. Inside the Premises – theft of money and securities
  4. Inside the Premises – robbery or Safe burglary of other property
  5. Outside the Premises-robbery while doing business off premises
  6. Computer Fraud-covers direct loss of money, securities and other property resulting directly from the use of any computer to fraudulently transfer insured property inside the premises to an outside source
  7. Funds Transfer Fraud– loss of funds resulting directly from a fraudulent instruction directing a financial institution to transfer, pay or deliver funds from your transfer account.
  8. Money Orders and Counterfeit money– Covers loss due to acceptance of a money order that was issued (or is purported to have been issued) by a post office or express company and loss due to acceptance of counterfeit paper currency of the United States or Canada.

A businessowner can take various steps to control losses. For example, vendor control. Is there an approved list of vendors? What kind of controls are in place in the accounts payable area? Does it take two signatures to approve bills over certain dollar amounts? Or, what is the hierarchy of the approval, so that there’s not only one person approving things and in turn stealing from the company?”

Even with a strong fraud management program a crime can occur so having the protection of a Crime policy is most beneficial to a business.  Check your policy for Crime coverage and contact us for a review!

Chandra Procopia, Commercial Account Manager

Posted in: business insurance annapolis, employee dishonesty insurance, employee practices liability insurance

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