Employee Dishonesty Insurance

From businesses in the initial phases of their journey to the established large corporations, Employee Dishonesty insurance coverage has a key role throughout.

• Financial Security: With comprehensive protection for different types of dishonest acts of employees, the policy provides a safety net for businesses to secure them from any losses or damages caused by internal fraud or illegal activities which can otherwise impact the operational runaway, reputation of the company, and the overall functioning of the business.

• Risk management: The policy adds a layer of protection to the risks emerging from the dynamic human intentions within the workforce. Further, it acts as a safety measure to manage any potential risks of fraudulent activities by employees.

• Enhanced operational control: Businesses with this policy have strong internal controls, and any losses that could otherwise impact the operational runaway are managed with the settlement funds in case of any fraud caused by the employees.

• Coverage for legal costs: For any legal disputes arising due to unethical acts of employees, the employee dishonesty insurance provides legal expenses incurred to support the business, which is an additional financial burden besides the losses due to internal fraud induced by the employees.

Employee dishonesty insurance safeguards businesses from internal fraudulent activities. It is vital for businesses at all stages:

• Startups: A small act of dishonesty by an employee can also cause significant damage to the finances and loss of operational runway.

• Mid-sized companies in the growth phase: With the growing team, there is a higher chance of employee dishonesty, raising the need for employee dishonesty insurance.

• Larger organizations: The extent of the loss can be more in larger corporations given the access and knowledge to break into the systems and cause fraud.

Apart from the size and growth as a differentiating factor, Employee Dishonesty coverage is vital for businesses based in banking and finance, healthcare, manufacturing plants and retail shops, real estate and construction businesses, telecommunication, government agencies, and not-for-profit organizations.

Employee Dishonesty Insurance helps protect businesses from any losses as a result of internal fraudulent activities caused by the employees. Let’s explore the different features of the policy below:

• Retroactive coverage: Some insurers offer the policy with a provision for retroactive coverage, which secures businesses from any employee fraud that happened before the inception of the policy on the condition that businesses were not aware of the prevalence of such fraud.

• Comprehensive coverage: The policy covers different types of dishonest activities led by the employees such as theft, unauthorized transfer of documents or cash, forgery with confidential documentation, embezzlement, or internal fraud, and secures businesses from any losses or damages due to such acts.

• Customized coverage limit: With consideration of dynamic requirements for different businesses, the Employee Dishonesty insurance policy provides personalized coverage limits aligning with the unique requirements and risk potential of companies. This gives businesses the chance to choose a premium based on their budget and operational runway.

The Employee Dishonesty coverage safeguards businesses from any unethical activities or internal fraud led by the employees causing significant losses to the company. Let’s understand the inclusions of the policy:

• Legal expenses: The policy provides coverage for any expenses incurred to fight a lawsuit for any claim or demand issued against the employer on the grounds of dishonest acts of employees causing reputational damage or financial losses. The policy also covers court attendance fees in some cases.

• Theft: The employee dishonesty coverage provides compensation for the losses incurred when the employees steal either securities, cash, or both which could be planned through direct robbery or digital or offline unauthorized transactions.

• Credit card fraud: When the employees misuse the credit card funds for business expenses excessively beyond the required limit or leverage it for personal expenses, or any such fraudulent activities causing financial losses to the company with the utility of credit card, it is covered under this policy.

• Forgery and alteration: The policy covers cases when the employees commit forgery with company checks, financial transactions, demand drafts, confidential documentation, or promissory notes with the intent of personal gain using the company’s finances.

• Business assets: When the employees damage the physical assets within the business premises such as property, inventory, and equipment, through robbery, embezzlement, burglary, and vandalism, the businesses can shield the losses through employee dishonesty insurance coverage.

• Extortion and data reconstitution: The policy provides coverage when employees want to extort money from their employers. When the insured has lost important data, the policy also supports the insured with expenses to retrieve the data.

Although employee dishonesty insurance is a strong support for dynamic startups as well as large corporations due to unethical acts of the employees, there are some cases when the policy does not provide any coverage. Let’s understand the policy exclusions as follows:

• Consequential loss: The policy excludes coverage when businesses face losses due to an indirect consequence of a covered event as per what is mentioned in the policy documents.

• IPR and Trade secrets: When employees commit infringement of a company's intellectual and creative assets and use the exclusive trade secrets of the company for personal profit, the employee dishonesty insurance does not have any coverage for it.

• Kidnap and Ransom: The policy does not provide compensation for the risky situations of kidnapping and ransom by employees of the insured company.

• Fire: In the event of any property structure or contents damage, there is a distinct policy on fire insurance (can hyperlink page here), which can help with safety and security. However, the employee dishonesty coverage does not provide coverage for it.

• Prior acts and pending activities: The employee dishonesty coverage does not have any provisions for prior acts committed by the employees before the inception of the policy and after the policy is over.

• War: The policy excludes coverage for any losses to the business premises due to external activities of war, terrorism, or geopolitical tension.

When any employee commits internal fraud, theft, embezzlement, or any other unethical acts that cause financial or reputational damage, the insured company should promptly update the insurer about the incident and initiate the claims process for employee dishonesty insurance with required documentation of the employee’s work history, and evidence or records of the loss or damage caused to the company.

The insurer reviews the evidence, and documentation and appoints an investigator to analyze the nuances of the incident and verify it with the claims issued. After a thorough inspection, the insurer decides to approve the claim and the specific coverage limits as per the investigation. After the approval of the coverage limit, the insurer disburses the funds in the account of the insured, thereby settling the claims on employee dishonesty insurance.

With a customer-centric approach, Covrzy focuses on simplifying business insurance and provides you with coverage which specifically tailors to the personal requirements of the business. With Covrzy’s Employee Dishonesty Insurance, you can experience a seamless claims process with:

• Expert consultation: To understand the different facets of your business and resolve all your niche-based queries on insurance products.

• 24*7 claims support: The claims team will support you at every step from initiating the claims, documentation and evidence submission, verification, and settlement 24*7.

• Customized policies: To simplify your insurance experience, Covrzy presents tailored policies that comply with the industry guidelines and meet the unique requirements of your business.

• Affordable premium price: Covrzy offers the most competitive premium prices in the market customized according to the personalized requirements of your company.

• Digital policy management: With a seamless digital portal, Covrzy presents a user-friendly digital experience for policy management and claims initiation through our dashboard.