Employee Dishonesty Coverage (2024)

FAQs

What does employee dishonesty coverage cover? ›

It compensates business owners for employee actions that may cause physical or financial harm to the business. Some activities it may protect against include financial forgeries, cybercrimes, loss of business property, embezzlement, and unauthorized money transfers.

Example of Employee Dishonesty Claims

Embezzlement – Employees with access to company funds or financial records embezzle money over time. For instance, an accountant might manipulate financial records to siphon off company funds into their accounts.

In addition to being referred to as a fidelity bond, Employee Dishonesty Insurance is sometimes also referred to as: Financial Institution Bond. Commercial Crime Policy.

Commercial crime insurance protects business owners against dishonest acts by employees. Dishonest acts are not covered under general liability, professional liability, or property insurance. Covered events include damage to business property, employee fraud, and theft of your property or client's property.

Types of Behaviors Covered

Employee dishonesty coverage encompasses a variety of wrongful acts, including but not limited to: Theft: The unlawful taking of company property or assets. Fraud: Deceptive actions aimed at financial gain or causing a loss to the company.

Employee dishonesty is any fraudulent act committed by an employee or a group of employees and one that could potentially result in financial losses for a company.

Dishonesty is acting without honesty. The term describes cheating, deficient probity, lying, deliberate withholding of information, being deliberately deceptive, or showing knavishness, perfidiousness, corruption, treachery, or deficient integrity.

Employee dishonesty coverage is also referred to as 'Employee Theft Coverage' or 'Fidelity Coverage', depending on the insurance company.

Acting in a way that's deceitful or false is dishonesty. If your best friend claims she'll be studying all weekend, but she's actually planning to go out with other pals, that's dishonesty. The word dishonesty implies that someone's lying, but it also encompasses cheating or being deceptive.

Even though employee dishonesty bonds are considered to be a category of surety, they are slightly different from other surety bonds. The most important difference being who pays for losses and claims.

What is the difference between employee theft and employee dishonesty? ›

Response 2: Theft by an employee is employee dishonesty. Theft by a non-employee is referenced as simply theft.

An employee dishonesty bond is a type of insurance coverage that protects businesses from losses caused by employee dishonesty, theft, and fraud.

What is covered under an employee dishonest policy? Can an employee dishonesty policy also cover an Employee Retirement Income Security Act (ERISA) bond? Yes, an endorsem*nt can be added to include ERISA compliance. ERISA requires a bond equal to 10% of the assets up to a maximum limit of $500,000.

A better reading of the CGL insuring agreement reveals that coverage is triggered if the bodily injury or property damage is caused by an "occurrence" that takes place in the "policy territory" and only if the bodily injury or property damage occurs during the policy period.

Discovery Period

In order for a loss to be covered, it must be discovered no later than one year after the end of the policy period. Example: An employee embezzles funds during the policy period, which ends on December 31, 1994.

What Is a Fidelity Bond? A fidelity bond is a form of business insurance that offers an employer protection against losses that are caused by its employees' fraudulent or dishonest actions. Also known as an honesty bond, this form of insurance can protect against monetary or physical losses.

If they're asking for coverage of theft of the third party's property by your client's employee, that's a very different animal than employee dishonesty, which usually means theft of the employer's property by an employee. Response 2: Theft by an employee is employee dishonesty.

Wrongful Act in More Detail

It can also refer to a legal term subset of the larger tort of negligence. A wrongful act is generally not covered by an insurance policy, meaning that the policyholder is ultimately liable for any damages resulting from their wrongful act.