Today's Oregonian reported a woman embezzeling $10,000 from a deli where she worked. As a business owner you want to trust that your employees are honest, although as in this case there are employees who will steal. The first question that business owner will as is "does my business insurance cover this?"

Most business insurance policies will include Crime Insurance, which is also known as Fidelity Insurance. This type of business insurance coverage will provide you protection against a dishonest act by an employee in which your business might suffer a loss of money, securities, or property other than money and securities resulting from a crime.

Typical Crime insurance claims allege employee dishonesty, embezzlement, forgery or alteration, robbery, safe burglary, counterfeiting and other criminal acts. Claims usually fall into two types of categories:

1. Theft (Inside/Outside) this pays for money and securities taken by burglary, robbery, theft, disappearance and destruction. The crime can take place on your premises (inside) or away from your property (outside) at a bank or at a fundraiser, for example.
2. Employee dishonesty coverage pays for losses caused by dishonest acts of your employees or volunteers, such as embezzlement, forgery or theft.

What you should take with you from the business that suffered the loss in the Oregonian article that it is necessary to have controls in place to try and eliminate theft that might occur against your business. Here are a few suggestions:

• Do you have someone other than the person responsible for reconciling bank accounts either make deposits, make withdrawals, or sign checks? If not, your should.
• Is a countersignature of checks required? If so, what is the dual signing limit?
• Are all incoming checks stamped "for deposit only" immediately upon receipt?
• Is a physical count of inventory conducted at least annually?
• Are inventory records computerized?
• Do you perform any of the following on candidates for new employment:
  • Verification of prior employment
  • Drug testing
  • Education verification
  • Credit history
  • Criminal history

If you are uncertain if your policy has Crime Insurance coverage in place contact me for an insurance review of your business so we can help you eliminate from a loss due to employee dishonesty.