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Unveiling the Truth: Does Business Insurance Cover Employee Theft?

By Darragh Timlin on April 23rd, 2024

While employee theft poses real financial threats to companies, many small business owners question if business insurance coverage actually helps to protect against internal stealing. 

We examine key coverage specifics across business, crime and employee theft policies.

Understanding Commercial Crime Insurance Basics

Business or commercial crime insurance represents a specialised line of coverage protecting company assets and funds specifically against internal theft, forgery, computer fraud and associated acts by dishonest employees. It covers direct losses from criminal appropriations that standard property or liability plans often exclude.

Key traits of commercial crime policies include:

  • Coverage for theft of money, physical goods, data and intellectual property by current or former staff
  • Protection encompassing cheque forgery and cyber theft by employees

While premiums and deductibles apply akin to other insurance, payouts from valid employee theft claims provide critical financial recovery.

What Standard Business Insurance Actually Covers

Typical business insurance bundles like property, liability and continuity coverage mainly focus on external risks from events like fires, accidents or supply disruptions. They don’t address internal vulnerabilities like staff stealing.

In reality, most basic business policies explicitly exclude employee theft coverage through exclusions like:

  • No protection for forgery, computer fraud or funds transfers by staff
  • Acts by employees outside of their duties or working hours excluded
  • Pre-existing losses before policy activation 
  • Inventory shrinkage not covered, only catastrophic stock loss

So without specialised commercial crime solutions, discoveries of employee theft or fraud leave gaping financial impacts.

Key Benefits of Employee Theft Insurance

Whilst business insurance coverage can be limited around staff stealing without crime policies, dedicated employee theft insurance plans provide vital protection:

  • Covers staff theft of money, physical goods, data and intellectual property
  • Extends to temporary workers, contractors and seasonal staff
  • Third party coverage for customer or visitor theft

In essence, employee theft policies plug coverage gaps in standard plans. They allow small to mid-sized businesses to recoup losses from betrayals by trusted staff.

Assessing Actual Risk Exposures

Before purchasing a specific employee theft insurance policy, it’s essential to evaluate your company’s existing security measures and identify potential vulnerabilities. Consider implementing the following practices to reduce the risk of employee theft:

  1. Install surveillance cameras (CCTV) in areas where inventory and cash are handled or stored.
  2. Conduct thorough background checks on all potential hires, especially those who will be working in financially sensitive roles.
  3. Enforce strict access controls and regularly audit permissions for sensitive data and systems.
  4. Require employees to take mandatory time off, which can help uncover any irregularities or ongoing theft schemes.
  5. Establish a system of oversight that requires multiple employees to sign off on financial transactions.

While these preventive measures can help minimise the temptation for employees to steal, some risk will always remain. This is where employee theft insurance comes in, providing a crucial safety net for your business in case of a significant loss due to employee dishonesty.

Compare Business Crime Insurance 

Employee theft is a real and significant threat to businesses of all sizes, and relying solely on standard business insurance policies may leave companies vulnerable to substantial financial losses. 

This is where specialised employee theft insurance comes into play. By providing comprehensive coverage for losses arising from the theft of money, goods, data, and intellectual property by employees, these policies offer a vital safety net for businesses.

At Brisco Business, our team of experienced professionals is dedicated to helping companies like yours identify potential risk exposures and craft tailored commercial crime solutions that provide the coverage you need to operate with confidence.

Get a Quote from Brisco Business

Compare quotes with Brisco today to learn more about our specialised commercial crime solutions or to get a quote for your business. With the right insurance protection in place, you can focus on what matters most: growing your business and achieving your goals with peace of mind.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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