Is there insurance coverage for embezzlement?
In some cases, yes.
A Brattleboro VT bookkeeper is charged with stealing $60,000 from the dental office where she worked over a period of several years. She has pleaded not guilty, and you can read the full story here.
Its’ an all too common story. And while the embezzler in question may be convicted and sentenced to jail time, will the dentist recover the funds that were stolen? Perhaps. Will it be a long and drawn out process? Probably.
Enter: Crime Coverage
Crime coverage can be purchased a separate policy, and can have up to 10 different categories of crimes included for coverage. However, smaller amounts of crime coverage are often included in a standard Business Owners Policy. In particular, many BOP policies do include at least some coverage for Employee Dishonesty.
Employee Dishonesty is defined very simply as dishonest acts committed by an employee that causes the named insured (the business or business owner) to experience a loss. The general guidelines for coverage are as follows:
- Acts must be committed during the policy period – in other words, the policy will not pay for your loss if you didn’t have a policy with Employee Dishonesty coverage at the time the employee(s) was stealing from you.
- Employee Dishonesty on a BOP policy typically does not accumulate from year to year. If the embezzlement occurred over a span of several years, each year will have its own policy limit.
- It will not cover acts done by this employee before you hired them or after you fired them.
- Typically there is a “discovery period”. The policy is not going to pay for losses from 30 years ago that you just discovered yesterday. The loss of funds or property must be discovered within one year of when the actual embezzlement took place. A time frame had to be established, and most insurance carriers agreed on one year as a reasonable time frame for discovery.
These are the general guidelines, and they do vary slightly from insurance company to insurance company. Typically, a Business Owner’s policy may include anywhere from $10,000 to $25,000 of coverage for Employee Dishonesty, unless you specifically requested more. If you have questions about your specific policy, talk to your licensed insurance agent. Have them review your policy for you so that you know the level of protection that you have. Information is power. Once you know what you have, you can decide if it’s enough or if you need more.
Protect yourself and your business. Be Safe.