If Your Business Suffers from Employee-Theft Your
Insurance Can Help

A study by the Association of Certified Fraud Examiners, an Austin, Texas-based organization, found that the average business loses the equivalent of 6 percent of its revenues each year to theft and, surprising to many business owners, that the primary culprits are their own employees.

If your business has employees are you confident you aren’t getting ripped off?
Do you think there’s no way any of your staff would do anything that would adversely affect the success of the company? Don’t be naive to think that all your business’s employees are working toward the same goal—the short- and long-term success of the company.

Small businesses tend to be at higher risk to employee theft because of their lack of hands-on supervision and often lax oversight procedures. Additionally, many small business owners simply refuse to believe that one of his or her employees would steal from them. Often, it is the most trusted and least suspected staffer who turns out to be the perpetrator.

Statistics prove that background checks—undertaken during the hiring process—and other preventive measures can help solve the problem before it gets started. These measures often reveal important information about a job candidate’s credit and criminal history that could indicate that the person could pose a risk to your business.

People with considerable debts are more likely to steal, says Initial Security, a corporate security firm located in San Antonio, Texas. However, background checks only are effective in the hiring phase and do little to combat fraud by those already employed.

Businesses lose billions every year due to the slick practices of desperate, disgruntled or down-right deceiving employees. Many business owners who suffered employee theft problems thought they had a plan for monitoring employee activity. But days and days of studying the system often reveal to a thief the best way to steal a little at a time without being noticed, that is until the loss becomes large and is noticed.

Employee theft insurance is an essential coverage for all business owners. Employee dishonesty typically is covered by a standard business insurance policy. However, these policies may have a separate coverage limit—a limit that often pales in comparison to the assets, inventory or cash stolen by an employee. In addition, theft of certain high-value items other than cash or securities may not be covered.

The frequency and severity of employee theft makes it urgent to understand the limitations of your business’s employee dishonesty coverage and to secure additional protection if needed.

If coverage under the standard policy is not sufficient, it may be necessary to seek coverage under a separate policy. Often called “Commercial Crime” policies, this policy may significantly increase the coverage available to cover losses caused by employees who are stealing from the business.