Staff Dishonesty Insurance

It’s difficult to imagine running a business without trust in your staff. Unfortunately for some businesses blind trust, especially in long-serving employees, has led to disappointment and financial loss. Fraud cost the UK’s private sector £9.3 billion a year in 2010*, with business fraud committed by employees believed to contribute significantly to this number. Staff dishonesty takes many forms. Here are some recent claims examples from a leading insurer**.

Property Company

The IT Manager of a property company purchased computer equipment at an inflated price in return for kick-backs. The loss was more than £750,000.

Motor Trader

An employee with 20 years’ service was discovered to have been stealing cash receipts from sales of motor parts. When cash was received from the customer he would pay a lesser amount into the business, keeping the balance for himself. The company suffered a loss in excess of £50,000 over a five-year period.

Restaurant

A restaurant manager and several other employees colluded to misappropriate stock. The loss to the insured was in excess of £25,000.

Although the money section of combined insurance policies provides an element of cover for theft of company monies by employees, there is no cover for other property. The limits of cover tend to be quite low and insurers always impose a proviso that discovery of the loss by employee theft must be within a specified period, typically within 14 days of the loss, so any loss discovered after such a deadline will not be covered.

While it may not be something you want to think about, broader cover with a higher limit of indemnity and a longer ‘discovery period’ is available under a fidelity guarantee insurance policy, also known as staff dishonesty insurance.  This insurance provides cover against financial losses arising from employees’ acts such as theft of money or property; funds transfer; credit/debit/charge card or money order fraud; computer fraud; or forgery.

If your existing policies do not provide the right cover for your business, a standalone fidelity guarantee policy may provide what you are looking for. Premiums are generally competitive and limits can be tailored to your requirements.

* Crown Copyright. Contains public sector information licensed under the Open Government Licence v1.0.

** Source: RSA

Last reviewed 29/3/2012

To talk to an expert in your area and get a quote, contact your local insurance broker.