We like to think that our employees would never steal from us. According to the Department of Justice, though, nearly one-third of all employees commits some type of theft. Dishonest employees cost US companies billions of dollars each year.
Employee Theft Prevention
How can a business protect itself against dishonest acts by its employees? Standard Property and Inland Marine Policies exclude theft by employees, even if the employee is working in collusion with a non-employee. Such exclusions apply whether the employee steals during work hours, or when he’s not working.
Employee Theft coverage is the solution. Employee Theft coverage is available in a standalone Crime Policy or as part of a Package Policy that includes other coverages such as Property and Commercial General Liability. This coverage is sometimes referred to as a Fidelity Bond or Employee Dishonesty coverage. Coverage applies when an employee steals money, securities or other tangible property belonging to the employer or in the care of the employer. Coverage can be written to apply to all employees, to certain named individuals, or to those who hold certain positions within the company.
Many policies define employee as “a person the insured directs, controls and compensates directly by salary, wages or commissions.” Such person is usually considered an employee for 30 days after termination of employment, unless the termination is due to theft or dishonest acts. This is helpful when an employee who has been fired and still has a key, for example, enters the premises and steals. If non-employees, such as a subcontractor or real estate manager, have custody of a business’s money or property, they can often be added to the definition of employee by endorsement.
Recognize, too, that your employee may steal from one of your customers. If your employees are entering customers’ homes or businesses to perform work under a contract, coverage for theft of client property can be added by endorsement to the Crime coverage. Many contracts, in fact, require this coverage, which is often called Third Party Crime coverage.
Protect yourself against the financial consequences of employee theft by discussing this important coverage with your insurance advisor.