Trust is the foundation of every small business. You hire people, invest in them, and expect them to do the right thing. But the truth is, things don’t always go according to your plans. We’re talking theft, fraud, and embezzlement. Employee dishonesty, as it’s officially called, can throw a blow into your ops faster than you think. This is where Employee Dishonesty Insurance comes into play.
What Is Employee Dishonesty Coverage?
In short, employee dishonesty coverage protects your business from financial losses due to theft or fraud committed by one of your employees. Whether it’s cash, property, or even client data, this coverage has your back when an employee decides to go rogue.
And it’s not as uncommon as you might think. According to the Association of Certified Fraud Examiners (ACFE), businesses lose about 5% of their revenue to fraud each year. For a small business, that can be a devastating blow. In fact, the median loss for a small business due to fraud is a about $150,000. That’s the kind of money that could make or break your business.
Who Needs Employee Dishonesty Insurance?
Almost everyone is at risk of employee theft. Whether you own a construction business or run a café or retail store; it’s a real concern, for all types of businesses regardless of their size or industry niche.
- Retailers: Say you own a boutique, and one of your trusted employees starts pocketing cash from the register. Without employee dishonesty coverage, that loss is coming straight out of your pocket.
- Contractors: Imagine you run a contracting business and an employee starts skimming from project materials. Not only are you losing valuable inventory, but you’re also putting your reputation at risk.
- Professional Services: Even if your employees aren’t handling physical goods, they could still be committing fraud. Think of an accountant who’s cooking the books or an IT guy selling client data on the dark web.
What Does Employee Dishonesty Coverage Actually Cover?
Now, you might be wondering, “What exactly does this insurance cover?” Well, it’s kind of a broad safety net. Here are some common types of losses that are typically covered:
- Theft of Money or Securities: This could be cash stolen from your business, or even a case where an employee tampers with your bank accounts. Yikes, right?
- Property Theft: Whether it’s inventory, equipment, or office supplies, if an employee steals it, this policy can help cover the cost of replacing it.
- Forgery or Fraudulent Transfer: Employees might forge checks, manipulate invoices, or transfer funds to unauthorized accounts. If they do, you’re protected.
Why You Shouldn’t Rely on Trust Alone
The U.S Chamber of Commerce report says that 75 percent of employees have taken something from their employer, at least once. Isn’t that surprising?!. It’s not necessarily a deliberate act either. At times it begins with actions like borrowing a small amount of money or bringing home a piece of equipment and escalates, from that point onward.
Plus, employee dishonesty often goes undetected for long periods. The ACFE reports that it takes an average of 14 months to uncover fraud, and by then, the damage can be significant.
The Cost of NOT Having Coverage
If you’re thinking this is just another added expense to your already tight budget, I get it. But think of it this way—how much would it cost you not to have this coverage? According to Hiscox’s 2020 Embezzlement Study, the average loss per case of employee theft is around $357,650. That’s a ton of money! For a small business, it could mean taking out loans, laying off employees, or even closing up shop.
Ready to Safeguard Your Business?
Don’t wait until something happens. Protect your business and your hard-earned revenue with employee dishonesty coverage from Business Insurance USA. Our team will work with you to tailor a policy that fits your needs and budget. Because at the end of the day, it’s better to be safe than sorry.
