Having a need for fidelity Insurance may sound outlandish at first, but the harsh reality is that nearly every business is eventually victimized by fraud or theft. In this day and age, thieves (including your employees) do not need direct access to cash to steal from you; merchandise, supplies and securities are all fair game. You may also be susceptible to losses in the event that finished products or even raw materials are stolen right from under your nose. Essentially, any product can be a target for thieves if there is an opportunity to make a resale profit.
While standard property and inland marine insurance policies provide some protection from criminal acts, they often do not cover losses resulting from employee dishonesty. Fidelity insurance was developed to deal with the limitations of other policies and extend protection to include the fraudulent activities of employees.
While large companies are often more likely to garner attention from in-house crime because the scale is often larger, smaller companies may actually be more vulnerable to employee theft. Smaller companies tend to have fewer anti-fraud measures and internal controls in place, increasing their vulnerability to incidents of crime.
There are certain circumstances that will determine whether or not Fidelity Insurance is an appropriate cover for your business, for example:
- The record, standing and reputation of the employee
- The “bonafides” of the employer
- The systems in place for checking accounts
- General supervision of the employee
Fidelity insurance responds to claims for direct loss to the business arising from any fraudulent or dishonest act or acts committed by employees.
Crime insurance responds to claims for direct loss to the business arising from any fraudulent or dishonest act or acts committed by employees and third parties. The cover is extended to include losses arising from electronic computer crime, counterfeiting and forgery. Given the nature of this cover it is incumbent upon the business to maintain strictly confidentiality as to the existence or otherwise of such cover.