At its core, crime coverage guards principally against employee dishonesty, which is most commonly manifested through employee theft and/or embezzlement.
The most common pitfall among employers is the “there’s no way this could happen on my watch” mentality. Often times, this belief persists until six or seven figure losses to the balance sheet or inventory emerge, at which point it is too late to insure the specific loss.
Without dedicated crime coverage, many businesses have suffered severe financial damage and, in a number of cases, gone bankrupt. The U.S. Chamber of Commerce estimates that one of every three business failures is the direct result of employee theft.
Additionally, an emerging fraud exposure is loss perpetrated by outside fraudsters who manipulate the electronic transfer of funds and inflict serious financial harm upon employers of all size and scope. A step towards avoiding these – and many other crippling losses to the balance sheet – begins with a well-brokered crime policy.
Today, crime coverage remains affordable and protects against losses beyond those resulting from employee dishonesty and other types of occupational fraud.
Scenarios where crime coverage can offer protection:
- A loss incurrs due to an employee who stole checks from the corporate checkbook, forged signatures and collected large sums of cash.
- A loss incurrs due to the fraudulent authorization of internal transfer requests bearing forged company signatures.
- A company incurs claim-related expenses by retaining an accounting firm and/or forensic consultants in order to determine the existence and amount of a particular crime loss.