Employee theft is not something that most business owners worry about. We all hear stories of employees stealing money and/or merchandise but no one actually wants to believe that their employees would steal from them. This is something that always happens to someone else. Unfortunately, many business owners find out the hard way that this is not the case.
Standard insurance policies for businesses include coverage for theft and many business owners think that theft coverage will extend to employee theft, but that is not the case. There is an exclusion for theft by employee. The only way to obtain coverage for employee theft is to have “Employee Dishonesty” coverage on the policy. Many policies will include a small amount of coverage, somewhere between $5,000 and $10,000, while other policies will not include any coverage. When an insurance company is throwing in coverage, such as employee dishonesty, rather than actually endorsing the policy with the coverage, the coverage is not as broad as it could be and there may still be gaps. In many situations, purchasing true and endorsed employee dishonesty can be as low as $100 a year.
Our recommendation is to review your policy and ask the question, do I have employee dishonesty coverage endorsed on the policy? If the answer is yes, is the limit adequate? If the answer is no, call your agent and request a quote because you are now insuring that risk yourself. “Self-Insurance” is when you decide not to buy insurance and to absorb a loss yourself. Self-insuring a risk is the correct way to handle many risks, but only when you make a conscious decision to self-insure. You never want to find out you’re self-insuring a risk at the time a claim occurs. This is a decision you want to make after weighing the costs and benefits of transferring the risk to the insurance company.
To ensure that your business is properly covered, you should review your policy, review your risks, obtain a quote from your agent and then you will have all of the information necessary to do a careful cost analysis of what coverage is right for you. Once this is done you can concentrate on your increasing business’s bottom line and rest easy knowing you have the coverages you need.
Wendy Beever, CIC, ARM, AAI
