It’s unpleasant for employers to think about, but Employee Dishonesty is surprisingly common. Dishonesty runs the gamut from the relatively innocuous (an employee calling in sick when he’s actually planning to play golf) to the criminal. You may choose to overlook employees’ occasional white lies. However, you cannot afford to let your guard down when it comes to identifying employee dishonesty that’s criminal in nature!
According to the U.S. Chamber of Commerce, employee theft costs businesses as much as $40 billion annually. Employee theft is so problematic that it contributes to almost 30 percent all U.S. business failures. Another shocking statistic? According to the Association of Certified Fraud Examiners, the median loss suffered by small businesses is almost $100,000 more than the median loss suffered by large employers. Here’s how to handle employee dishonesty that threatens your business.
Employee Dishonesty Insurance: The Most Important Coverage You May Not Have
As a business owner, you undoubtedly have a general liability insurance policy, workers compensation coverage, and business interruption insurance among other coverages. Do you have employee dishonesty insurance? If you’re concerned about how to insure against employee dishonesty, this coverage could be the best way to protect your interests.
What You Need to Know
Employee dishonesty insurance sounds straightforward, but there are prerequisites that must be met before a policy will compensate you for employee dishonesty losses. As noted in an article in Property Casualty 360°, these include:
- You must be able to prove that the employee’s harmful act was intentional, dishonest, and fraudulent. This type of policy does not protect against losses due to employee accidents or negligence.
- You must be able to prove that the employee committing the act did so with the goal of reaping financial benefits for himself or someone else. Under this prerequisite, the employee’s salary, commissions, bonuses, fees, promotions, awards, or other reasonable benefits that can be rightfully earned do not qualify as “financial benefit.”
Additionally, employee dishonesty policies have very specific “prior-knowledge” exclusions. If these exclusions exist in regard to a specific case, the policy won’t pay out. As with any insurance policy, it’s smart to discuss the pros and cons with a licensed broker before deciding if it’s a wise investment for your business.
About The Rubin Group
Based in New York, The Rubin Group provides insurance in most of the 50 states. Our full-service insurance brokerage provides insurance and risk management services to individuals in all income brackets and businesses of all sizes and types. We understand every client has unique coverage requirement and we are passionate about providing the ideal individualized coverage for each customer. Each member of our team takes the time to truly understand your situation, the particular risks you anticipate – and the very real risks you’ve not yet contemplated. For all of your insurance needs, contact us at The Rubin Group!