Employee dishonesty insurance is coverage that aims to protect businesses from financial losses caused by fraudulent acts committed by employees. This coverage can apply to full- or part-time employees, as well as workers hired for seasonal or temporary positions. In some cases, policies can be extended to include contractors and volunteers.
What Does Employee Dishonesty Insurance Cover?
The following actions are typically covered under employee dishonesty insurance:
- Theft of funds or securities—This includes employees who divert payments, claims funds, or investment assets for personal gain.
- Forgery and alterations—This includes employees who manipulate policy documents or checks to redirect payments.
- Embezzlement—This may involve misappropriating client premiums or payments or reserving funds.
- Credit card fraud—This includes an employee using a company or client card for personal purchases.
- Unauthorized electronic transfers—This involves illegally wiring payment or funds from a client to company reserves.
- Collusion or kickbacks—These may include accepting bribes from third parties in exchange for favorable contracts.
What Is Not Covered by Employee Dishonesty Insurance?
A typical employee dishonesty insurance policy does not provide coverage for the following:
- Acts committed by known dishonest employees retained after previous offenses
- Crimes committed by owners or partners
- Data breaches or cybercrimes committed by external actors
It’s important to note that data leaks and cybercrimes can be covered by other policy endorsements, such as cyber liability insurance.
Why Is Employee Dishonesty Insurance Important?
For certain businesses, it may be required by law to carry some sort of crime insurance or fidelity bonds to protect policyholder funds. Furthermore, this coverage can help recover stolen assets faster and avoid significant disruptions to business operations.
Contact Us
Employee dishonesty insurance helps enforce a business’s accountability by financially protecting clients’ assets in the wake of internal fraud. Contact U.S. E & O Brokers in Houston, TX to discuss your specific needs or for more information.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.