Having great employees whom you trust will do the right thing is one thing. Keeping your client list, trade secrets and other things that have made your business a success is another. An employee dishonesty bond ensures that the business you have worked hard to build does not suffer a great loss should one or more employees betray your trust.
Why Your Business Needs Dishonesty Insurance
Dishonesty insurance protects your business from financial loss when an employee or group of employees engages in fraudulent activities. The financial loss could result from stealing securities, money or other property from the business.
Evidence shows that embezzlement and fraud is a continued concern in the workplace. According to the Association of Certified Fraud Examiners, businesses lose an estimated $400 billion each year. This figure represents about 6% of annual revenues. Another alarming fact is one-fourth of employees who commit a fraudulent act have been with their employer longer than 10 years.
These activities hit small businesses especially hard because they are not large enough to absorb losses.
How This Insurance Protects Your Business
Dishonesty insurance is very similar to a fidelity bond and has other common names such as crime fidelity insurance. Regardless of the name, this insurance protects you from theft by employees. It also protects your business from losses that occur from destruction and burglary.
The policy defines who is covered, but will most likely include current or former employees. Others you may include in the policy are:
- Seasonal and temporary employees
The types of fraudulent acts are also outlined in the policy. Some common acts are safe burglary, funds transfer fraud, forgery or alteration, credit card fraud, computer fraud and counterfeit fraud.
Trust Employees, Protect Your Business
You and your HR department have probably done everything possible to hire good employees. However, the inability to foresee every scenario means that an employee could breach your trust. If so, you will need some type of protection to cover their fraudulent dealings.
Think about who has access to large financial transactions and your business assets. This information will determine whether a dishonesty bond covers everyone who works for your business. You may only need to insure employees with specific roles that put them close to certain transactions and assets.
Continue building a culture of trust and open communication within your business. At the same time, make sure your business is protected from unethical and illegal practices.