Employee Theft Insurance

Employee Theft Insurance for Businesses

Employee Dishonesty: In the mid-1950's, employees stole approximately $500 million worth of goods and money from American Business. In the 1990's, this figure climbed to a $75 billion dollar a year expense. Canadian employees steal approximately $20 billion dollars per year in money, securities, stock, and other property.

Private employers rarely reveal embezzlements among themselves. There are times when the reason for secrecy is the rather grim fact that it would not be a good idea to let people know how seriously embezzlement has impaired an organization's credit rating. There are few businesses that would not be affected by a sudden revelation that their cash position was several hundred thousand dollars lower than their books showed. If embezzlements in private business were reported and publicized as in the financial institutions, more employers would be aware of this exposure.

Is the hand in your pocket your own? There is no tried and true method of completely safeguarding yourself from the risk of employee dishonesty, but you can minimize the risk by taking certain steps such as:

Have bank reconciliation's completed by people who do not deposit funds or have cheque signing authority.
If you operate a business that is non-retail, try to have all clients pay you by postal money order or cheque.
Never have a superintendent of a rental property collect rent in cash. Obtain assistance from tenants and clients by reminding them that you are protecting their money as well as your own when you ask for a cheque.
Centralize Accounting procedures. If you operate branch or remote offices, have all month end, and year end accounting done in a centralized location.
Make sure you send random statements to customers and ask them to contact you directly if there is a missed payment on their statement. People, especially in rural areas so frequently will give cash to one of your employees on the honest assumption that the cash will make it to the office on Monday morning.
Have restricted evening and weekend access to warehouses and shops. Have just one or two keys and make employees sign for access after hours.
Make sure all shop, warehouse, and office keys are the type that cannot be duplicated without the master. If not, change locks whenever an employee leaves or is dismissed.
Avoid the "phony customer" trick by regularly contacting customers at random. Let your staff know that you will be obtaining a random list of customers at frequent intervals through-out the year and contacting those customers to ensure they are receiving quality service.
Let your bank account executive know exactly what should be transpiring in your account. They can let you know if there is a sudden change in deposit history.
Whenever possible, rotate tasks among employees. Employees who know that replacement employees will do their job on other days have less chance of creating a systemized plan of petty theft.

Protect yourself with an Employee Dishonesty Bond!! When you buy ordinary crime insurance, you are not protecting yourself against crimes committed by employees. Only an employee dishonesty bond will do that. A fidelity bond is a simple instrument. The Bond covers your loss due to the dishonest act of any employee acting alone or in collusion with others. Loss may be of money, merchandise or other property. It may be property belonging to a customer, but is in your hands for safekeeping or repair. Your employees need not know they are bonded. A blanket bond will cover all employees of the firm, even those you've hired after the bond was issued. Part of your bond premium is for investigation expenses. When your employees complete bonding applications as part of their induction routine, they are randomly and frequently checked by the Bonding company.

When determining the amount of your bond, you must give some consideration to the accessibility to cash and other negotiable securities and the value of this property. You must also think of the length of time embezzlement could be carried on before detection. Two identical retail shops could have completely different exposures to loss, simply because one shop maintains a regular monthly inventory count. This means that the shop counting inventory monthly would detect missing inventory much quicker than the shop doing a manual inventory only twice a year. The second shop would require a bond of higher denominations

Top of Page