We live in a world fraught with security concerns, and everyone seems to be after our money. From debit card alerts to very persistent Nigerian princes, we are always on guard for anything that might compromise our information or financial stability. Yet for many business owners, the threat isn’t in shadowy third party boogiemen; rather, theft can occur, and often does, much closer to home.
In fact, at 64%, more than half of small businesses will experience employee theft, most often in the form of money. That number is rather staggering, especially compared to the 16% of afflicted businesses that will report what happened. The reasons for silence can vary, from embarrassment, fear of negative publicity, to interpersonal issues relating to the relationship between employer and offender. Whether silent or public, though, it is very clear that there are many people in the workforce who are willing to do their employer harm.
Even worse, employers are left with few options for recourse, even if they elect to go public, as most commercial property policies contain coverage that excludes employee theft.
That said, there are options—options that are becoming increasingly more valuable—in the form of commercial crime coverage. Often called “honesty insurance”, this bond provides coverage for fraud, larceny, misappropriation, forgery, embezzlement and other acts covered by a bonded employee. In order to qualify, the offending employee must have both intentionally acted to harm the employer as well as financially benefit from their own deceit.
Currently, four types of crime coverage are available to employers.
- Form A, employee dishonesty
- Form B, forgery or alteration of documents
- Form C, theft, disappearance and destruction
- Form D, robbery and safe burglary.
Sadly, these forms are more rule than exception these days. And forms exist for more specialized exposures as well. Your coverage need likely depends on your businesses and employee structure. Policies can be purchased either in addition to existing commercial policies, or on their own. From restaurants to office environments, hotels to banks, there are options to protect businesses against employee dishonesty.
If you are interested in reviewing your commercial crime policy, or have questions on how to get started, contact the professionals at BPJ.