I have posted previously on the importance of every employer to ensure employee dishonesty, employee fidelity and/or employee crime coverage is included within your current policies. Often this policy is the only means for recovery from an employee theft.
Even if coverage is maintained, I am confident most insureds are unaware of two common limitations within the coverage should there be the potential for a claim on the policy due to a potential theft of embezzlement.
First, the coverage often does not cover the acts or actions of an owner, partner, shareholder, or member (LLC) of the insured. So, for an example of something we commonly see where an owner or partner steals funds and/or assets from the entity and the other owners or partners, the coverage would likely not be applicable to provide restitution to the entity for the diverted funds – as the perpetrator was an owner or partner. The theory is that the insured cannot steal from themselves.
Second, the coverage usually covers any employee (defined within the policy) commonly referred to as blanket coverage. There is at least one exception to who would be covered – someone who has stolen in the past. If there is any evidence that the insured knew, or should have known, that an employee had been dishonest in the past, whether in their present employment or in previous employments, the individual is not insurable, and therefore any actions by that individual are not recoverable. Further, once potential dishonesty is discovered on the part of any employee, any loss beyond that date of discovery by the individual is generally not recoverable as well (the insured should have mitigated their loss and prevented any further theft).
This should have a direct impact on the screening and hiring process for most employers. If a potential candidate will have access to funds and/or assets within their employment, and the candidate has an issue of dishonesty in the past, it is likely if the candidate is hired anyway and a subsequent loss is suffered due to the actions of that employee, there could be no recovery through the policy. In investigating the claim, the insurance carrier will request copies of the individual’s personnel file as well as conduct their own investigation into the background of the suspected perpetrator. Chances are they will identify the past dishonesty and deny the claim.
These are not newly added restrictions to recently issued policies. In fact these limitations have existed for years. However, due the growing scrutiny we have been experiencing by carriers reviewing and investigating dishonesty claims to determine if payment should be made on the claims, it is apparent many employers who maintain this coverage are unaware of these limitations.
13 thoughts on “Employee Dishonesty Insurance – Generally Doesn’t Cover Everyone”
Its such as you read my thoughts! You seem to know so much approximately this, such as you wrote the ebook in it or something. I believe that you simply can do with a few percent to drive the message house a little bit, however other than that, that is excellent blog. A fantastic read. I will certainly be back.
Great work! This is the type of information that should be shared around the web.Shame on the search engines for not positioning this post higher! Come on over and visit my site .Thanks =)
Hands down, Apple’s app store wins by a mile. It’s a huge selection of all sorts of apps vs a rather sad selection of a handful for Zune. Microsoft has plans, especially in the realm of games, but I’m not sure I’d want to bet on the future if this aspect is important to you. The iPod is a much better choice in that case.
hey,just found your Blog when i google something and wonder what webhosting do you use for your wordpress,the speed is more faster than my web site, i really need to know it.will back to check it out,thanks!
The blog is supported through WordPress, and is hosted by 1 & 1 Internet. Beyond that I have a web designer who handles all the “behind the scenes” for the website and blog. If you want more specifics, let me know and I can get you answers.
Thanks for your comments. The blog is supported by WordPress.
Awesome blog about insurance 😀 Bookmarked!
This is such a great resource that you are providing and you give it away for free. I enjoy seeing websites that understand the value of providing a prime resource for free. I truly loved reading your post. Thanks!
Great information! I’ve been looking for something like this for a while now. Thanks!
this post is very usefull thx!
Keep posting stuff like this i really like it
Great post. I know I’ll be contacting my insurance agent to review our policies. I’ll also be dicussing this with our clients.
The blog was absolutely fantastic! Lots of great information and inspiration, both of which we all need!
Comments are closed.