As a former underwriter of this line of coverage, I can attest that, when losses occurred, the limit in force at the time of the loss was frequently insufficient to cover the entire loss. As a broker, when I meet with prospects, I frequently find that they have never considered the sufficiency of their Employee Dishonesty Insurance limit of liability. When I bring to their attention how affordable a dramatically increased limit is, most opt to buy a larger limit of liability.
Employee Dishonesty Insurance (also referred to as ‘Fidelity Insurance’ or a ‘Fidelity Bond’) is an important part of any risk management program. The prevalence of these claims is widespread and, in a weak economy, these claims tend to increase. When these types of losses occur, they are frequently caused by long time “trusted” employees and they can be very substantial; even big enough to drive a company out of business. (In fact, the U.S. Chamber of Commerce reports that 1/3 of business failures can be traced to an occurrence of employee theft.)
>Besides buying an adequate limit of liability, there are many steps an employer can take to limit their exposure to an employee dishonesty loss…I’ll save those for another blog post!
Even with the best internal control structure in place, employee dishonesty losses do occur. Make sure that your limit of liability is sufficient! Ask your agent/broker to provide you with optional quotes for increased limits of liability…you will be surprised at how reasonably priced this line of coverage can be, and, with a higher limit in place, you are better protected should a loss occur.
Tim Hutton, CPCU, AFSB
timothyjhutton@gmail.com
703 220 7771 mobile
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