What is Crime Insurance?
Crime/Employee dishonesty insurance protects employers from financial loss due to the fraudulent activities of an employee or group of employees. Additionally, they are protected from covered losses due to burglary and destruction. For example it can be the loss due to an employee’s theft of money, securities or other property of the employer.
Why do business owners need crime/employee dishonesty insurance?
Simply said, in the workplace fraud and embezzlement happens. Did you know that it is employees who commit workplace crime 80% of the time? An average of one in four employees at some point have committed fraud against their employer; even those who had been with the company more than ten years. It is estimated that businesses will suffer $400 billion in losses a year or 6% of total annual revenue. Without extensive safeguards small businesses are the most effected.
What is covered under a crime/employee dishonesty policy?
Most stand-alone policies cover employee thefts, robbery and safe burglaries. Coverage can also include: forgery or alteration; funds transfer fraud; computer fraud; credit card fraud; money order and counterfeit fraud. Definitions of “who” is covered should include all current or former employees, partners, members, directors, volunteers, trustees, seasonal employees and temporary persons that are under the company’s direction and control. Limits will vary by the coverage needs of the insured. Coverage for depositor’s forgery, computer and funds transfers can also be purchased with separate limits.
There are endorsements that can be added to crime/employee dishonesty policies such as third party coverage, which extends coverage to a client, that a business is under a written contract to perform services. This endorsement modifies the policy to include coverage at the client’s premises. Another endorsement can be added to cover Employee Retirement Income Security Act (ERISA) compliance. ERISA requires bond or to insure all plans assets from employee dishonesty of up to 10% or a maximum limit of $500,000. Please note: this bond is different from a fiduciary liability policy, which is not required by ERISA, but protects the personal assets of a plan due to claims of a violation of fiduciary duties.